The key to growing your company is to prevent problems rather than solve them. There are two parts to this: Attitude and Skill.

Attitude – you must not like being the hero
Heroes solve problems. Usually at the last moment in dramatic fashion with a fanfare and a flourish of cape – just before they dash off to a secret place where they can transform into their secret identity. If this turns you on, it will be hard to stop solving problems. You won’t get the same kind of attention or validation. Because when problems are prevented, nobody knows. How many colds didn’t you get last year? How many times did your roof not leak, or the bridge you were driving on not collapse? But all of these things took some not inconsequential degree of effort – the first by your immune system, the second by your builder and the third by a whole slew of people: some who paid taxes, others who allocated them to public works instead of flashier projects, and still others who built and maintained the bridge.

If, in your heart of hearts, a smooth running transportation system is not more satisfying than charging on the scene in a cruiser with lights flashing to set up a detour and save folks from driving over a rotted out bridge, then the best you can hope for is a company that stays small enough that the problems don’t kill it, and you can still be the hero.

Skill – root cause analysis
The skill in problem prevention is to find and cure the root cause of the problem, not the most obvious symptom. Cash flow is a prime example. It’s common wisdom that the reason most companies die because they run out of cash. Well that’s like saying in the 1700′s the two main causes of death were consumption and heart failure. They figured if you didn’t die of consumption, then it’s a sure bet that your heart had stopped. Obviously medical science was in its infancy.

The knee-jerk reaction to cash flow problems (in start-ups anyway) is to raise more cash. This almost always prolongs the agony rather than cures it. If cash is tight because sales are too low the solutions are a whole lot different than if cash is tight because costs are too high, or collections are not efficient. More cash is rarely the ultimate solution to any of these.

Common Sense & Quick Fixes don’t usually work
Two quotes from http://www.isixsigma.com/library/content/c050516a.asp are enlightening. The emphasis is mine.

“Research has repeatedly proven that unwanted situations within organizations are about 95 percent related to process problems and only 5 percent related to personnel problems. Yet, most organizations spend far more time looking for culprits than causes and because of this misdirected effort, seldom really gain the benefit they could gain from understanding the foundation of the unwanted situation,” according to Gene Bellinger, who writes on the web site Systems-Thinking.org

Alexander Dunn, director of Assetivity Properties Ltd., in a paper posted on the Maintenance World web site, quotes a study which showed, “…that, when trying to prevent unacceptable events from happening again, 10 percent of participants immediately sought to place blame, 26 percent immediately expressed an opinion of the causes and offered an opinion without investigating the problem, and only 20 percent of participants examined the problem in sufficient detail to be able to identify an effective solution.” From these statistics, its clear that effective problem-solving is far from common sense.

The 5 Why’s
One technique used to find the root cause is to ask why five times. Suppose your car won’t start because the battery is dead. Calling a tow truck to provide a jump start is solving the problem. But asking why five times might result in prevention.

1. Why won’t my car start? – the battery is dead. [SOLUTION: Jump Start]
2. Why is the battery dead? – the alternator is not charging.
3. Why is the alternator not charging? – the belt is worn out.
4. Why is the belt worn out? – they don’t last forever and this one has not been changed in a while.
5. Why did I not know about this until my car wouldn’t start just on the morning I had to get to a meeting with an important client? – because I’m too cheap (oops I mean too busy) to spend money (oops I mean take time out of my important schedule) to get my car inspected and serviced when it has no symptoms. [PREVENTION - Regular, proactive maintenance program]

You can see from the example that the key is asking the right questions. You might also note that five is not a magic number – the point is to keep asking why till you find a root cause and five is often enough for that. According to wikipedia, this technique was developed by Sakichi Toyoda.

Takeaways:

• Are you more prone to problem solving or prevention?
• Do you prefer to be a hero?
• Are you willing to allocate time to find and fix the root causes?

[tags] CEO Skills, Problem solving, Small business, entrepreneur [/tags]

We all know about working smarter not harder. But Seth Godin has an interesting insight that we often confuse working longer with working harder (or smarter).

Here are a couple of choice quotes (but you should really read the whole thing – especially on Labor Day).

None of the people who are racking up amazing success stories and creating cool stuff are doing it just by working more hours than you are. And I hate to say it, but they’re not smarter than you either. They’re succeeding by doing hard work.

Hard work is about risk. It begins when you deal with the things that you’d rather not deal with: fear of failure, fear of standing out, fear of rejection. Hard work is about training yourself to leap over this barrier, tunnel under that barrier, drive through the other barrier. And, after you’ve done that, to do it again the next day.

Entrepreneurs, especially need to hear that working long is attractive because it helps you avoid the hard stuff while feeling like you’re doing what you should. And the hard stuff that really pays off doesn’t have to take long.

Takeaways:

• Sometimes longer is easier because it helps you avoid facing the really hard decisions.
• If you always feel like there are not enough hours in the day, you’re probably doing it wrong.

UPDATE: I have a client who loves to work 17 hour days (except for weekends when she only works eight). She also wants to grow her company and sell it for 20 million dollars. She doesn’t realize why her long hours will make it harder for her company to be worth that much. Here’s why.

Anyone in a position to pay $20MM for her company, won’t be in a position to step into her job and work those hours. If they have to figure out how many people it will take to replace her, how those people will fit into the organization and how it will affect the bottom line, then the company will be a lot less valuable to them than if she’s already A) figured it out and B) implemented it for enough time to work out the kinks.

Let’s say her company is worth $5 Million today. She can wait till it’s worth 15 before she does those things, OR she can do them now. The sooner she does them, the more pervasive the systems and culture of scalability will be within the company when it is time to sell. That will make it worth more sooner.

The most value she can add is to replace herself so completely that when she does sell, neither the customers, the staff, or the suppliers notice any hiccup at all.
[tags] entrepreneur, hard work, productivity, small business, CEO Skills [/tags]