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  • Strategic Leadership: Sharing Information to Grow Your Business

    Published on Wednesday, May 9, 2012

    As I was reading this great article in the New York Times this morning it struck me that each of the business leaders profiled was using elements of the trustworthy leader's Virtuous Circle to strategically move through the uncertainties being faced by each business. It's not often that such a useful, timely example of the power of trustworthy leadership is available so I thought I'd use this story to illustrate both the practical steps a trustworthy leader takes to move through uncertainty and also the profound beliefs that rest behind an ability to take action.

    Small business owners can feel particularly pinched in a tough economy as every sale, every invoice makes a huge difference to business survival. When things get tight, the initial reaction may be to cut costs by reducing staff, cutting hours or changing product quality. Yet these actions don't set a company up for success when the economy picks up, can harm current sales that are still available, and can be hard for a business owner to swallow. Luckily the companies profiled in this article made other strategic choices – expansive choices that involved primarily engaging followers and sharing information – two key elements of the trustworthy leader’s virtuous circle.

    At the first company profiled, Bandals, a small business in Rochester, MN, founder Tom Sesti is looking for ways to respond to increased costs for raw materials and manufacturing expenses. He’s conceptually clear on what needs to be done and knows his business well enough to do the initial market analysis that narrows his choices. What I noticed in the article as key to his strategic decision-making process and ability to move through the uncertainty he was facing is his willingness to share information with others who have a stake in the success of the business.

    He spoke with his sales team and retail customers about the options he was considering and their input helped him to choose to pursue two successful new strategies to help his business grow. While this might seem like a small part of the overall activity involved in pursuing success in a down market, these key linchpin activities are often what will make or break a brilliant opportunity.

    Many entrepreneurs have a great understanding of their product because they are the ones who came up with the idea, developed the prototypes, tested and sold the first products. Yet moving into the broader market, finding new customers and sales opportunities, working with suppliers – all of these activities can require strategic knowledge and skill outside of your scope. What do you do?

    You can try to come up to speed, learn everything and make the decisions yourself. Or you can respectfully engage followers - who have a stake in the success of the business – and share information with people in ways they can understand and use to participate in the discussion and influence the outcome. This key activity can provide a leader with the input he or she needs to make the best choice among options while faced with uncertainty.

    At the second business profiled, Odin, we see further evidence of the success of trustworthy leadership. Odin was founded in 2002 to exploit the opportunities that a new technology, RFID or radio frequency identification, could bring to the marketplace. In 2009 the company was being squeezed by the slow economy and their own long product sales cycle. Having already reduced overhead expenses by 15%, CEO Patrick Sweeney knew that further cuts would not help the company move forward. So he decided to look for other uses of his current product – to try and expand his customer base. This choice is by itself an act of leadership - leaders are responsible for making the strategic choices that will enable their organizations to take advantage of opportunities on the other side of uncertainty. Whether or not a leader is successful is, I believe, greatly determined by his or her practice of trustworthy leadership.

    In the case of Odin and Sweeney it appears that success was achieved. And what did Sweeney do to insure that his strategy for moving through uncertainty – finding new uses for a current product – would be successful? He called together the top seven executives at his firm for a day long brainstorming session. They suggested, evaluated, debated and ultimately decided upon a small group of ideas to pursue. The brainstorming meeting was one step in the full process of trustworthy leadership that lead to success, yet it is key.

    What I noticed in reading through the brief account covered in the NYTimes article is how a leader engaged his followers and shared information in such a way that people could use it, participate with it and influence the outcome. Sweeney engaged his followers (some might say colleagues which is exactly how a trustworthy leader sees his/her followers) by inviting them in, asking them to accompany him and each other, and by staying connected with everyone as they evaluated the options before them. He shared information with people and they all shared it right back with each other – everyone benefited.

    This is what happens when leaders move through their virtuous circle of trustworthy leadership. My guess is that Sweeney did not consciously say that he is honored to be a leader and will include everyone prior to setting up the initial brainstorming meeting in which he engaged followers and shared information – yet that’s what is happening here. I encourage people to read more about Odin as their business success appears to be notably intertwined with the successful practice of trustworthy leadership throughout the company.

    The third company highlighted in the NYTimes article is Credit Sesame, a financial services firm that helps individuals to make smart decisions about loan terms and debt management. Founder Adrian Nazari has been through the ups and downs of the economic roller coaster during the past seven years with his initial business, Financial Crossing, reaching out to banks as their primary customers. With all of the changes in the banking industry during 2008 the business fell apart – yet Nazari knew that his product was sound and useful. So he did what all leaders need to do – tried to find a way through the uncertainty all around him to take advantage of opportunities he knew were out there.

    And Nazari – just like Sesti and Sweeney – took steps to engage his followers/colleagues and share information. As the article says, he and his management team studied market research, surveyed consumers and discussed options. Nazari took responsibility for making significant strategic decisions – like changing the company’s target market from banks to individual consumers - yet others were engaged along the way and were given information that allowed them to participate and influence the outcome.

    Credit Sesame is still gathering steam yet the initial evidence is that their move through this particular moment of uncertainty will be successful. They have 24 employees and a growing customer base. The continued financial uncertainty faced by consumers and interest in tools that provide credit management solutions shows that Credit Sesame has tapped into a ready and growing market.

    All three of these stories are presented in the NYTimes article as small business success stories – and they certainly are that. Yet they are also powerful trustworthy leader success stories. In each case, the leaders of these small businesses faced significant moments of uncertainty when the strategic decisions they needed to make could go either way – towards success or failure. Relying on the elements of the Virtuous Circle of Trustworthy Leadership gave each leader, and each business, the strength needed to come out on top.

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