The great CEOs are lazy — Main cocepts

The types of hats

Type of hats to wear to manage your business:

The learner: Continuously learn, inside and outside the company. This hat provides a solid background to understand new problems based on the previous knowledge and experience.

• What type of knowledge do you need?

The architect : This hat will focus on improving the current business or even new business. The main idea is to build a superior business model, high margins, compelling offer, low capital needs and recurring revenue. Question answered here is What?

• What improvement in the business model can be done ?
• What possible business?

The coach: Coach’s hat on, time to focus on how to acquire talents, improve it, divest yourself of underperforming teams members.

• Improve the team training!

The engineer: Hat to implementing and improving processes, based on the business value. This requires performance metrics, Usually question using this hat, How?, how to make functional and systematic improvements to your organization.

• How to show more value to the current business ?

The player: The player that requires the CEO to understand each functional area such as: sales, marketing, product design, accounting, operations and so forth. The goal is to identify opportunities.

• Understand the overall process

Architect hat — Business model problem

The main function is:

Measure progress, answer questions like, what changes would bring the greatest returns, what are the main risk factors?

Possible problems in the business model

Lack of momentum : When feeling stuck, work without returns. Solve with a mafia offer (Irresistible offer);

Lack of capital: When is required a money infusion to an growth opportunity;

Low gross margin: How much you earn after taxes, returns, discounts and production costs; Low Gross Margin (%) = Gross profit/ revenue; Unacceptable 30% lower

Lower profit: <10 % is not acceptable

1. Low recurring revenue: <50%
2. Low return on investment (ROI): <15 %

Coach hat — Talent problem

The main function is:

Figure it out the main

1. Cover low-performance employee;
2. Wouldn’t rehide the employee;
3. Your team does not have a commitment to learning;
4. An employee isn’t committed to team performance;
5. Ideias an energy don’t bumblue up to you;

Engineer hat — Processes problem

The main function is:

Figure it out the the process problems

1. You goal is to make ordinary people perform like a superstar
2. Make effort to develop a business offer and value proposition and connecting to the clients
3. Waste of resources — Examples from Toyota

Time, Inventory, Motion, Wating, Over-processing, Overproduction, Defects,

Improve cycle time: The larger don’t eat the small & the quick eat the slow; Invest in how the customers think about your products, services and value; Improve your services for the most important clients.

Player hat — Dive into help

The main function is:

Understand all the processes and constraints, assign economic values to each one based on what could impact the business.

Need to help a team; Time to set an example; Need to cover for someone you terminated; Use player mode to learn — Just figure out where the problem is and then how to solve it.

How to follow wearing each hat in the right time

Most of the time the starter hat is the Learner hat, this requires understanding the potential problem, like a diagnostic. Based on the least change to great impact, it is reasonable work on the Business model (Architect hat), after a better understanding of it the company life will be easier. Tackle (Enfrente) the employee talent issues and coach them, at the beginning it is not necessary the greatests talents — Remember, depending upon a highly qualified employee demands great expenses . When the business model and right people are on board, it is time to Engineer hat, your team is going to eliminate many issues. Finally return the Learn hat e Player Hat (Understand the whole) to focus on accelerating growth, a new customer, new product or new geography. All mentioned before is based on the book Lean Startup.

Key points

Constraints are controllable (If not, it is not a constraint)

Constrain are in the following areas:

Economics — Revenue, Margin assets; Risk — Negative impact to the business; Pain — Recurring difficulties, internally or customers; Strategy — Mafia offers expansion opportunities.

Business model problems

Lack of momentum; Low gross margin; Low profitability; Low recurring ;Revenue; Low return on capital; Employed; Low performance.

Talent problems

Lack of new ideias; Unwilling to learn or not commited.

Process and system problems

If you need to hire superstars all the time; Cycle tie is poor; Non-value-added (TIMWOOD); Current systems and processes do not align with your target customers values

Order of attack:

List the points of constraint; Rank them based on economic impact; Risk; Pain; Ties;

Getting deeper into LEARNING HAT

Learn from other industries:

Most of problems someone already solved and it is possible to solve the current problems based on them. The ideias from companies like airlines and hotels provide examples to implement ocean-bound freight markets (Mercado de frete marítimo); Make time to travel.

Getting deeper into ARCHITECT HAT

• Attributes of great business models

Architect strategies

Moat building

Bufft’s advice, spend time expanding the size of your moats which predicts the longevity of business. Sacrifice short-term financial performance to improve the business model.

Data moat; Network moat; Intellectual property moat; Switching-cost moat — Increase costs to switch from your brand to a competitor;

Speed moat: The larger don’t eat the small, the quick eat the slow. It means acquiring customers faster than your competitor does.

Talent moat — Hire the best in all the fields.

Recurring revenue:

1. Repeat — Repeat customers, with built affinity programs
2. Basic recurring — Make difficult to cancel by adding the credit card
3. Contracted recurring — Make harder to the customer change
4. Sequential and recurring — Upgrade a new product
5. Networked recurring — The more someone uses the product or service the more each individual customer gets out of the experience (Network effect)

Capital velocity

Metric that controls your growth without eternal capital. Can predict how fast your business can grow before it runs out of money. There is a relationship between capital velocity, margin speed and business growth.

Example:

Already have 60 days of accounts paid

60 days of inventory — Capital intensive (Have lots of equipment)

10% gross margin — Margin low (Competitive business)

Capital velocity = (365/net working capital in days)

Capital velocity = (365/60 inventory + 60 net accounts receivable) = 3 cash

3 cash * 10 %

Capital velocity 30 % — Low capital leverage

You turn your money only three times a year and have a 30 percent annual return on working capital.

• How to change it?

Get sonner payment; Expectation of growth (Get 30 days to be paid instead of 60); Increase 5% price.

Mafia Offer — We’ll make him an offer he can’t refuse

Something twice as good for half the price as our competitor; Understanding what your customer values — Price or experience — for a company in luxury business discounts does not make sense, but in a usual hotel it could be differentiated; Simple is hard.

1. The man who chases two rabbits catches none
2. The more you focus and begin to gain recognition for how good you are on the thing you have focused on the faster you grow.
3. Say no to anything that doesn’t add value to the business.
4. ’Don’t do’ list should be ten times as long as your to ’do list’

Getting deeper into COACH HAT

1. CEOs need to be personally involved in recruiting A players, from assessing whether they will fit into the culture.
2. But it’s far more practical and sustainable to focus on building a system and a strategy that allows everyone on your team to perform like an A player even if they don’t have A-caliber talent.
3. Startup stages
4. Bootstrapping — Change time for money
5. Middle-Growth stage
6. 1th transition 7 people
7. 2th transition — 50 people, 6 leaders
8. Communication becomes harder
9. 3th 200–300 headcount
10. More divided and specialized work

Getting deeper into ENGINEER HAT

1. Components of a business are: business rules, IT systems, training and company values & culture.
2. All business compete in three levels: Cost, customer intimacy and innovation. It is impossible to excel at three levels, therefore is inevitably be trumped by firms that focus only on one.
3. Measure to improve
4. Focus on applications to get the most out of your IT and before you start any attempt to solve business problems with IT certify if you are doing something relevant to the business and not only losing money and time with it stuff.
5. The key takeaway here is that you can align systems with your promise to your customers, and in doing so, you can create a competitive advantage.
6. Surprise your customer.
7. It is not the big that eat the small it is the fast that eat the slow
8. Be prepared to a request for proposal (RFP);

Question to be done before a contract:

Have we done this business with this firm before?; Did we help write the specification for the job?; Have we done this kind of work before?

New business should have 70% of probability to win

Getting deeper in the PLAYER HAT

1. Understand the problems of your company
2. Create a don’t do list
3. 70% rule delegation
4. 80% rule feedback