Every good CEO starts by working in the business; correcting problems, improving operations, building teams. Getting to know “the business”. Some years are great, others are tough. Occasionally you hit a breakthrough and the company booms for a period, expanding dramatically. Eventually, that growth spurt dissipates and it’s time to look for what’s next.

What’s next? That’s a question that can only be answered when you’re working on the business. The challenge for most leaders is knowing when and how to dial their time appropriately between working in the business and on it.

In 1993, Lou Gerstner took over top spot at IBM during the company’s darkest days. Lou jumped deep into the business. He had a lot to fix. Instead of getting stuck permanently in the business, he balanced his time by also working diligently on what IBM should become, keeping, in his words, “what we stand for” but changing “how we do things”. His successor, Sam Palmisano adopted the same approach, saying “it is about creating and nurturing a culture of long-term thinking”. With 31 consecutive quarters of earnings growth, Lou and Sam’s focus on the business has paid off in exponential returns.

Working in the business can be addictive though. Do it long enough and it becomes your comfort zone. That’s what makes it a tough habit to break. There are a few markers to look for that can help you determine when it’s time to turn the dial from in to on.

When you’re executing strategy:

Make sure strategy you approved is being executed and that you’re adding significant value only you can add. You want your finger on the pulse but not your hands wrapped around anyone’s neck. It literally chokes the ability of your management team to shine and everyone’s motivation to think about the future.

When you’re involved in day-to-day operations:

Why are you still involved in day-to-day operations? Didn’t you already fix the major systemic problems? When there is an issue that only you can address, put your brainpower and muscle into it in a way that empowers your team and inspires your employees, then get out of the way. This is what separates great leaders from people who just run companies.

When you’re making decisions:

Decisions demand a lot of time. You have to read information, listen to presentations, go to meetings. Think. The decisions you make should only be the ones that no one else in the company can make. If that still includes most of the decisions, you have the wrong team and wrong decision making processes. Leading a company does not mean being the “go-to person”.

It’s about balance. You should spend some time working in the business. It’s the only way to keep yourself grounded and tuned to the rhythm of your company. Habit #3 of Stephen Covey’s 7 Habits of Highly Successful People states, “Put first things first”. What is urgent and what is important? If it’s urgent, it’s likely something that requires you to work in the business, but not at the complete expense of working on it. At least not for long. The important stuff, the things you should be focusing on, produce opportunities that will define your company’s success for years to come.

In a recent McKinsey Global Survey, 84 percent of executives said innovation is extremely or very important to their companies’ growth strategy. Innovation comes from exploring possibilities. Working on the business.

How do you find more time to work on the business? Ironically, you do it by working in the business, creating the conditions that give you time, energy and emotional freedom to think creatively about the future.

1. Assemble a trusted senior team, giving them the authority and criteria to make good decisions.
2. Organize your company around a culture of collaboration so nothing gets lost, everyone is inspired to think and ideas circulate to the highest levels.
3. Establish a rock steady process for getting things done right.
4. Conduct frequent situational analyses with your people to determine where you can add the most value working in the business, then spend the rest of your time working on the business.
5. Finally, discipline yourself to turn the dial when needed, and only for as long as it makes a real difference.

As Jack Welch put it, “Shun the incremental, and look for the quantum leap.” Get the right balance of working in the business with on it, and both you, and the company, will realize the greatest returns.

In business, proving you’re courageous is done by making a decision. A strategic decision. The risk? That you fail. For the company, failure could mean anything from a marginal write-off to bankruptcy, with lots of room in between to manage the outcome. For the decision maker, sometimes just a degree or two separates being considered courageous from being called stupid. Yet, strategic decisions have to be made.

Changing the business model.

Introducing a new product or service line.

Repositioning the brand.

Opening a new market.

Making an acquisition.

Admitting to customers that you made a mistake.

One person, aka the CEO, may make the final decision on big strategy, but one person can’t do it all alone. Everyone in the company is in some way responsible for either the development of strategy or its execution, or both.

How strongly your people believe they can experiment, learn and apply new thinking will determine how courageous they feel. The more open and collaborative the culture, the more courage the company inspires. The more transparent and responsive the communication, the more adaptive and nimble the structure, the more inclusive and accelerated the idea development process, the more courage your company generates.

By creating the conditions for success in your company, you also create the conditions for your people to act courageously in their thinking, support and implementation of strategic decisions.

The courage to push into new territory. The courage to say something out loud that hasn’t been said out loud before. The courage to try new things and the courage to fail at them, within manageable boundaries, of course. And the courage to do what it takes to succeed.

Put your people in a position to prove they are courageous, and they will rise to opportunity.

How much time went by before you developed the concept, tested it with market research, launched it, measured the results, tweaked the program and realized a return?

Eighteen months. Half a year?

How about a day, or less?

Get your company ready. The timeframe to transform ideas into actions is counted in hours. Online hours, that is.

Follow this example. Justin is in charge of an online golf store.

• One afternoon it occurred to him that women golfers are a big and growing market.
• That evening Justin logged into the company’s Facebook page and posted a question. “I’d like to put together a golf package specially for women. Any ideas?”
• The first hour, no responses. He was confused. Why was it taking so long to get feedback? The reason was that the Facebook page was still new and only had about 1,500 friends. With a bigger audience what was about to happen would have simply happened faster.
• The second hour, a couple of responses.
• By the fourth hour, before going to bed, he had several solid ideas generated from a committed customer base.
• In the morning he created an offer, posted it to the online store and emailed a trial segment of their online community.
• Within minutes, sales. Within minutes!

What if it didn’t work? Adjust the offer. Email another trial segment and know within minutes if it’s working. Then blast the offer out to all relevant customers and feature it on the homepage.

Idea to action to result in hours. This is business online.

If it feels a little unsettling, rest assured this level of intensity probably already exists in your organization’s sales department. Sales managers often challenge their reps to think and act the same day.

“Who are you going to call today? How many of those calls will convert to meetings? How many of those meetings are you going to turn into proposals?” And on it goes.

It’s not just sales that translate into doing business online. Solidifying and expanding customer relationships, Brand building, thought leadership positioning. All of these objectives can be turned around on a dime if you have the right foundational pieces in place.

Obviously, you need a “living” website and “thriving” online community. That’s as fundamental to success as having a product or service to sell. Welcome to today.

Beyond that companies have to be strategically aligned, resourced, structured, and their people emotionally prepared to think and act in real time.

Strategically Aligned

Most companies have, we hope, a well articulated Long Term Strategy that takes the business from where it is today to where it could be in five, ten, twenty years. Then they create a Near Term Strategy that delivers on this year’s objectives, usually monetary, but also provides the stepping stones for achieving the longer term plan. Anything that’s created on a daily basis – real time – has to be aligned with both the Long Term and Near Term Strategies.

Resourced

The right people have to be working together in a collaborative mode, from employees who have a hand in the development, marketing, sales, IT, operations, finance, to the decision making manager and executive.

Structured

Generating ideas and transforming them into actions within hours requires a direct and immediate chain of approval. Ideas cannot bounce around in emails or gather dust on a desk before getting to someone who can say, “let’s see what this looks like set up”.

Emotionally Prepared

There are people in your company who may not be ready to think fast or act fast. It scares them. They’re not used to it. Train them in the process. Demonstrate how this real time way of working doesn’t add more pressure, it infuses more fun into your culture. It’s invigorating and inspiring and infinitely more satisfying.

Create the conditions for your company to think and act in real time, and literally witness success in quicker increments. Finally, every hour really does count. How are you going to spend it?

Achievement or Fulfilment

Achievement definitions are generally linear.

Cross the finish line and you’ve won. Be the last one left standing on the reality show and you take home the prize.

Author John Watson described it with succinct simplicity, “success is the completion of anything intended.” To the point. All encompassing. But feels a little…empty, doesn’t it?

Then there’s the other extreme.

In 1904, Bessie A. Stanley entered the Heart Throbs writing competition with a warm entry about success. [Somehow it became attributed to Ralph Waldo Emerson, maybe because their submissions both appeared in the same book a few pages apart.] Later, after Hallmark put it on a card, it became the famous prose found on affirmation websites and needlepoints to this day.

To live well, to laugh often, to love much, to gain the respect of intelligent people, to win the love of little children. To fill one’s niche and accomplish one’s task, to leave the world better than one finds it whether by an improved flower, a perfect poem or another life ennobled. To never lack appreciation of earth’s beauty or fail to express it, to always look for the best in others, to give the best one has. To make one’s life an inspiration and one’s memory a benediction. This is success.

Endearing. Inspiring. But it doesn’t exactly cover your company’s payroll.

Success is not just cold, hard accomplishment, nor is it a Sunday afternoon Made For TV movie. Success needs both achievement and fulfillment, in some kind of symbiotic, measurable and emotional balance that makes companies profitable and stakeholders feel good about being part of the equation.

The achievement definition of success is easy to recognize. Set a goal. Reach a goal. Tah dah!

The fulfillment definition; that has to come from your company’s Purpose and Core Values – the foundation of your organization and the guideposts for your most critical strategic decisions.

Achieve your strategic business goals, fulfill your Purpose and Core Values; that must be success, right?

Well, here’s where success gets tricky.

What you consider success today may not be how you will view it tomorrow, or next year, or in ten years.

Typically, your company’s Purpose and Core Values – the things that make up the fulfillment definition of success – don’t change very often. Yet every year when you assess your company’s performance you establish new goals and priorities.

One year you might have defined success, in part at least, as delivering above average industry returns while the next year laying off only 20% of your workforce and staying in business was a big win.

There must be another variable at work that frequently requires you to redefine your company’s achievement definition.

There is. It’s called…Potential.

How well can our company do in the next year considering existing sales channels, market penetration and a tight marketing budget?

How well could we do over the next ten years given our product pipeline, resources and other business models we can test?

When you ask future-state questions of your management team, you’re defining success based on what you believe your company has the potential to achieve.

Competition, technology, consumer preferences, even the integration of social media changes the potential for some companies to explode in growth while others miss the cues and implode as their potential dries up. An example in the making for 2011 is Netflix vs. Blockbuster.

There are forces working for and against your company all of the time. Some controllable, others not. That will never change. Potential however, does change; inversely related at some points, exponentially related at others, and almost never constant for long.

By taking action to improve your potential, you create the conditions for your company’s success.

Learn from mistakes. Experiment with ideas. Try new things.

Collaborate with your employees. Engage your vendors. Listen to your customers.

Pay attention.

Adapt. Evolve.

Revolutionize.

That’s the way it’s done.

Success then, must be a series of accomplishments that achieve your goals, fulfill your Purpose and Core Values, and continually improves your Potential.

Success is not an ending; it’s a better beginning.

Enthusiasm is nice. You can’t help but get excited being in the same room with someone who is “really, really enthusiastic”. It’s fun. It feels great. But it’s not passion.

Passion isn’t about personality, and it isn’t infectious.

Passion does not rub off on you while you’re working with someone who is passionate about what they do. You might even think the guy is a little nuts because he’s so “passionate” about something that you simply don’t get.

Passion is about believing. Believing strongly, deeply and completely.

Before you can believe strongly, deeply and completely, you need something to believe in. It has to be something that drives you, inspires you; something that gives you a true sense of purpose.

Passion is ignited by Purpose.

Purpose comes from the centre of your universe. The primordial soul soup. You feel it in your gut. It’s based on your core values and drives your vision of what’s possible.

But Purpose doesn’t really mean much if you can’t transform it from a feeling into something you can put a framework around to help you venture forth and pursue it. Otherwise it can’t be a passion. It might be something you’re enthusiastic about, but it’s not passion. Passion needs to be fulfilled. Passion is ignited by Purpose, and the only way to discover your purpose is by doing some deep thinking.

Deep Thinking clarifies Purpose.

It allows you to put your arms around it, and equally important, gives you the language to communicate it. That gives you the opportunity to work with others to build on it, evolve it, create strategy to bring it to life and watch as more people in your company begin to share that belief.

Deep Thinking clarifies Purpose which ignites Passion.

Deep Thinking is a tactical step in which you decide what, how, when and who will actively work on figuring things out. It’s one of the conditions that creates the conditions for success of your company.

Deep Thinking

How well your organization deliberately seeks, shares and uses insights to understand what’s possible and how to get there.

Purpose

How well your management builds on your organization’s Core Values to explore possibilities and form a vision, mission and strategy that fulfills your Purpose.

Passion

How strongly your people believe that their own Purpose and Core Values align with those of your organization.

Weaknesses, by traditional definition, are attributes of your company that are inferior to your competitors. A common response to identifying weaknesses is to try to fix what’s wrong or improve it. Only one problem. Just because something you’re doing as a company might appear to be “inferior” doesn’t necessarily mean it’s a weakness or an “area for improvement”.

We prefer to define a weakness as something that your customers really value that your competitors are doing a better job of satisfying AND is diminishing your potential returns.

When looked at from the external (customers and competitors) to the internal (what you are good at and can make money doing), you understand weaknesses more deeply from a strategic perspective that enables you to make smart decisions about where and how to invest your resources. You simply can’t afford to fix or improve everything, nor should you try. It’s more lucrative to pour yourself into what is most highly valued by your customers that you can do better than competitors AND make the greatest return, which happens to be our definition of a strength.

Over the last decade, while every giant electronics brand in the world was turning its camcorder products into portable Hollywood studios, a company named Pure Digital launched a somewhat pedantic version with minimal point-and-shoot options and just “good enough” picture quality. It cost hundreds less; was small, easy to use and customers could record and upload in 10 seconds. Within two years the Flip Ultra was the biggest selling camcorder. The company was subsequently acquired by Cisco for over half a billion dollars.

Pure Digital could have treated an obviously inferior quality product as a weakness. Instead, they looked at what was going on externally and gained insights as to what customers really valued – good enough quality with a simple uploading process. Once they figured out how to offer this simple value proposition, they hit one out of the park with their product. By adjusting your definition of a weakness, you can more effectively determine how to deal with it, and maybe even turn it into a strength.

Old school thinking describes a strength as something you’re good at while a weakness is an “area for improvement”. Whether you’re talking about an employee or your company, these traditional precepts for strengths and weakness actually do more to distract you from seeing the opportunities than they help to clarify them.

Strengths are not only things you’re good at! Just being good at it is not enough reason to do more of it, or that you can maximize your growth by concentrating on it.

From a strategic point of view the best definition of a strength is something that your customers really value that your company can do better than competitors AND will deliver the greatest returns.

Looking at the strategic definition of Strengths, Amazon in 2005 identified a significant opportunity to develop an enhanced revenue stream and protect a future vulnerability from competitors. The company recognized its incredibly broad customer reach and product selection as a strength, but realized it delivered very low margins, especially compared to what online behemoths like Google and eBay were raking in. As a result, in 2006, Amazon launched a new strategy to leverage its existing business while improving margins through the introduction of Fulfillment by Amazon and Amazon Web Services, both of which addressed underserved markets producing higher margin returns.

Returns need not be measured by revenue alone. Returns include a broad spectrum of value propositions including enhanced brand awareness, new distribution channels, strategic partnerships that open new markets, bigger and faster pipeline for new products, and many other key strategic benefits in addition to more dollars.

To really understand if a strength is indeed a strength for your company, worthy of further development and investment, you have to understand why it’s a strength, where it leads and what it could mean to your business. That requires gathering customer insights that help you to align what you can do as a company to what consumers really want and value. Without that critical evaluation, the thing you identified as a strength might end up draining your corporate energies, cause you to miss the market opportunity and eventually become a deadly weakness.

We make luck possible.

Companies aren’t successful or fall apart because of some magical stroke of luck. We do things, right or wrong, that impact the eventual outcome. Sure we get blindsided, and yes, we score a fluke every once in a while, but even those don’t happen without our contribution.

The secret, that’s not really so secret, is that we Create The Conditions (that create the conditions) For Success.

The first Layer of Conditions is Doing. These are the conditions that you have control over and can implement in a way that works best for your organization, forming the cornerstones of your corporate culture – Taking Action, Collaboration, Reality Checks and Deep Thinking.

The second Layer of Conditions is Feeling. You can’t control how your people feel but you will absolutely influence how they feel by what you do as a company to Sharpen Performance, Share Responsibility, Establish Confidence and Clarify Purpose.

The final Layer of Conditions is Believing. You know the old saying, “you have to see it to believe it”? Not entirely true. You first have to feel it to believe it. Believing then becomes your company’s most powerful force for change, Unlocking Talent, Securing Commitment, Inspiring Courage and Igniting Passion to succeed.

Time to pull together your numbers, check what you did last year that you can refurbish, then sketch out some rough plans? Welcome to budget planning mode.

The problem is that budget planning requires strategic planning, and strategy shouldn’t be condensed into an annual event. It’s not simply about gathering together the troops, spending a few days or weeks figuring out your plan, then taking the rest of the year to implement.

As soon as your strategy is agreed upon, it’s just slightly out of date. The world isn’t statically waiting to receive your strategy. Competitors are hyperactive. Customers are bombarded with options. Suppliers are changing. Employees are coming and going. The economy is up in the morning and down by the afternoon. Everything is in constant flux and you have to adjust your strategy accordingly.

Of course, you need to establish your strategy for the year and beyond. But once you’ve got that in place, you should be meeting on a regular basis to assess the progress of your execution and recalibrate the strategy based on what you’ve learned. That way, when it is time for planning, you’re not waiting for a strategy intervention to allocate your budgets.

When is a question more influential than an answer? Almost always. Effective leadership isn’t about telling people what to do, it’s about getting people to want to do it.

The great thing about questions is that they pull people into the process. Questions get people thinking, and isn’t that what you really want from your employees? Okay, not everyone feels the same way. There’s the old school leader who has been known to declare, “I don’t pay you to think. I pay you to do your job.” That’s a problem for two reasons. One, there aren’t too many jobs where good thinking couldn’t improve the results. And two, that approach rips the heart right out of your employees. The only thing you’re left with is someone who does just what’s needed to get the job done. Just.

Questions create engagement with the problem, which leads to involvement in the solution and ultimately, commitment to implementation. Asking questions more often, rather than always giving answers, helps employees to take responsibility and ownership of the situation. It helps create the conditions for them to want to do it.