Playing to Win

Recently, I was listening to an old tape of mine that included an interview with former Notre Dame football coach Lou Holtz. In that interview, he was asked how he motivated his players to win so often. His reply was, “I don’t ask the players if they want to win. I ask them if they can live with losing, because if they can, that’s exactly what they’ll get because it’s so much easier to have.”   I thought to myself, “Wow! Isn’t that exactly what we are facing in the dairy industry almost every year?” In recent discussions with other industry colleagues, one of them commented that it used to seem like one out of every three years was a real financial challenge for dairy producers. However, in the other two of the three years, a producer could regain his financial position. We then recalled the impact of low milk prices in 2006, 2009 and 2015-16, along with high feed prices in 2008 and 2011-2015.   What Coach Holtz was saying is that we need to focus on winning. Considering the current and future trends in the U.S. dairy industry, including banks being tighter than ever, it is clearly time to sharpen our focus.   How does this impact you as a producer? Unless you are in the process of “playing your last game,” you will definitely want to plan on sharpening your tools. Consider visiting my website at www.success-strategies.com to review the tools available there to help you develop a bigger future.   As I’ve written previously, start to observe the trends. Are you using them to your advantage or do you find yourself fighting them? Do you have a solid strategic plan in place and are you using CPA prepared Financial Statements to regularly measure the impact of your labor efficiency, your changes in herd size, and your other cost cutting measures? Do you have a marketing plan in place for most of your milk? When milk prices are higher, as they are trending today, we should attempt to reduce our debt levels, because, as I explained above, we never know when the next downturn might be coming. Are you currently starting to do so? Will you be prepared when the next downturn arrives? Develop a plan today that allows you to get beyond just producing milk and allows you to work smarter, not just harder.   If I can help you as you think about developing a brighter future, please let me know by e-mailing me at john@success-strategies.com. Most importantly, please set aside some time to consider our industry trends. What’s next? It’s your move.  

“We have forty million reasons for failure, but not a single excuse.”

   Rudyard Kipling

 

Building a World Class Team! – Part I

At a Leadership Conference at Duke University several years ago, I enjoyed a keynote address given by Duke University’s head basketball coach Mike Krzyzewski entitled “Building a World Class Team.” His message centered on his experiences developing the USA Basketball Team that competed in the Summer Olympics. He also outlined what he felt are the primary keys to positive leadership and sound teamwork. Perhaps, you will find these helpful as you develop your internal management team and build relationships with other professionals you work with. The attributes he described include:  

  1. No Arrogance – He is dealing with a team consisting of professional NBA players, some earning up to $10 million per year. Are there some egos involved here? They have learned to put the team first and themselves second. This is no small task, but it can be accomplished in your operation, too, by helping your management team to share your vision for success and put their individual egos behind your team’s progress.
  2. Collective Responsibility – Simply stated, we win together and lose together. Is the loss of a game the responsibility of the player who missed the last second shot from 20 feet out? I don’t think so. Collectively, if we had played better throughout the entire game, maybe we would not have been under such pressure at the end. The same holds true for your business. When your milk flow is down, don’t blame the Nutritionist. Maybe we should have watched the breeding program closer to ensure better heat detection and more pregnancies, resulting in more fresh cows.
  3. Work Together to Get Better – Remember, in a great team setting, I don’t lose if you win at whatever role you play. We both win! Life is not a “zero-sum” game, as many of us have been told in the corporate world. Rather it is the summation of a series of win-win situations through which we grow. We need to work together to get better collectively.
  4. Confront Underperformers – There are so many examples in our world where we attempt to “equalize” everyone’s results, especially today with our “entitlement” society. I need not single out any sector or institution, because you already know what I’m talking about. As I said above, work together to get better & cultivate excellence.

In Part II, coming in my September 30th blog, I will continue with the final five points.

Building a World Class Team! – Part II

Continuing from my September 15th post, “Building a World Class Team! – Part I:

  1. Teach Your Legacy to New Talent – We can all learn from others. Everyone’s experiences are valuable, so why not make it a point to teach the younger “players” in your organization? Why force others on your team to learn by making the same mistakes you’ve already experienced? Pass your experience on!
  2. Create a Vision – Set goals for your Team and tell them what’s in it for them. For Coach K, it has been to win multiple gold medals for the United States. For you it might be to increase production per cow to a certain level or to reduce the average days open in your herd and shorten your calving interval. You decide. You might be surprised how interested your employees are in helping you reach your goals. A lot of people enjoy working for someone else. Thank goodness, because we certainly need good employees. They simply want to be aware of what your vision is for the business, because they cannot help you achieve a goal you do not have…
  3. Be Worthy to Win – Work hard and play by the rules, but play to win! When you do reach your objectives, be sure to share the success with your team. You probably could not have done it without them. I know that’s been true with my Team at Success Strategies.
  4. Use the Power of Words – When Coach K autographed his book for me, he stated, “Always believe in the ‘Power of Words.’” This can be a word of encouragement or, as he shared in his book Beyond Basketball, it might be as simple as stating “I believe in you” when you are interacting with a teammate. Words can also be a powerful visualization tool for people. Be sure to use them wisely.
  5. Have Passion! – Be excited about what you do. Whether you’re an owner, milker, herdsman or Cooperative Board Member, play your role to the fullest extent possible. My dictionary defines Passion as “Great enthusiasm.” Coach K described it as “…extreme emotion. When you are passionate, you always have your destination in sight and are not distracted by obstacles.” However you define it, be sure to demonstrate it on a daily basis as part of your success routine. I am confident that you will be glad you did!

   

Dealing with Adversity!

Since early 2015, the dairy industry has been a difficult place to operate. Despite feed costs dropping considerably these past two years, the decrease in this expense area pales in comparison to the precipitous drop we have seen in milk prices since the end of 2014. Occasionally, I have had a Client remind me just how tough it is out there right now, after which I remind them that I not only analyzed their cash flow numbers this month, I also saw similar results at numerous other operations.   Believe me: I do understand how difficult it has been for all producers. It has been brutal. I’ve been asked to compare this 2015-2016 time period to the calamity of 2009. Frankly, 2009 was simply devastating for many producers, but the last 20 months have been like “dying a death of 1,000 blades.” The pain has just gone on far too long.   I recently read a fabulous article by New York Times best selling author Brendon Burchard (visit www.brendon.com). Whenever I get worn down by events, I love to read some of his work or listen to one of his presentations. In this particular article, he discussed how we can deal with adversity when it strikes and outlined five major points:  

  • “Have confidence.” – He goes on to explain that this is a natural outgrowth of believing that you can overcome the difficulty you are facing. Becoming negative will do nothing but lead you into depression, so simply remember that you can, indeed, figure things out.
  • “Keep perspective.” – Regardless of how difficult things may seem, it is quite likely someone in the past has faced the same problem. If others have overcome this, you can too. He also reminds us that each of us has survived hardship before, and we can do it again.
  • “Schedule Action.” – A far superior course to waiting to see what happens would be to make certain that you schedule specific actions to deal with your problem. Set action steps you can take each and every day to handle this. Do not, under any circumstances, delay action. Avoiding actions will only make things worse.
  • “Ask for help.” – Believe me. In nearly every one of the financial turnarounds with which I have been involved, I wished the Client had come to me for assistance sooner. It amazes me how many times during the past 18 years of consulting I have found myself saying, “ Boy, I wish they had gotten me involved six months ago…” As my business coach Dan Sullivan says, “All progress begins with telling the truth.” In other words, face reality and openly discuss your challenge with someone who has been there before and who can help you.
  • “Honor the struggle.” – Brendon explains that this represents a crucial element to having success in life. Sometimes we have to face adversity because we simply cannot control everything. Just accept that and guard your attitude.

  I hope you find Brendon’s thoughts and my application of them to our industry helpful. And, please remember: Your attitude determines you altitude! Harvey Mackay, Best Selling Author & Speaker

Keeping Your Business on Track!

For a fascinating example of speed and action combined, just watch what happens in the pits at an Indy car race. As outlined in Fast Company’s book The Rules of Business, there are four primary rules that guide both the driver and his pit crew in their respective roles.   “The faster you go, the more you need to talk.” Everyone needs to be clear about what is going to be done by whom and when. Constant communication is vital. Strong communication can present the difference between success and failure. When you are running a business, sound communication between participants, including key employees is crucial. This is especially true in today’s dairy environment!   “Don’t panic when someone overtakes you early on. Stick with what got you here.” If you complete a goals and disaster agenda outline, you should be well prepared to stay on the track to success. Plan your work and work your plan.   “Whatever it takes, stay in the race. Keep moving and fix problems on the fly whenever possible.” Yes, stuff happens, so stay prepared to make adjustments. Maintaining a positive attitude can often make the difference.   “Make the most of downtime. It is inevitable that there will be some downtime. Make the necessary repairs and re-energize.” I admit that in my hectic professional role this is often one area that I overlook, too. However, we need to take the time to recharge our bodies and brains so that we continue to exhibit clear thinking, i.e. a good night’s sleep and an occasional trip to Starbucks to just think is not a crime… To survive and thrive, we need to move faster, act more decisively, and respond more courageously. There has never been a better time to increase our efficiencies than now. Just because you have always done something in your operation, such as raising your heifers on site, does not mean it makes the best sense today. Consider all the relevant factors – cost, environmental pressures, employee impact and other issues. Then decide what works best for you. Are there some “roadblocks” in your operation? Are there items that are affecting your overall performance or productivity? Could today be the best time to change those items? Are you tracking key efficiency measures such as?

  • Cows per full time employee
  • Pounds of milk per cow per day
  • Feed Cost per cow per day
  • Number of days in milk for your herd (This tells a lot about your breeding, your number of fresh cows and other factors.)

You decide which factors are most relevant for your operation. Compare your results to the rest of the industry but also compare this year’s results to your business performance in prior years. This will tell you whether you are going forward or backward. Knowing this can be critical to your financial results. So, take a close look. I think you’ll be glad you did!

What’s Next?

Wow! 2015-2016 have been difficult in the dairy industry. No one, as I write this, has been cash flowing with milk in the neighborhood of $14-15/cwt. Can anyone at this price level? Given the rising cost of so many inputs and the recent difficulty of acquiring the financing you need, how can you? Most banks seem to understand this, but there is, at best, the possibility of delays on loan renewals. Thank goodness, we are seeing relief on feed costs. However, in the entire scenario of finance and the world economy, my biggest concern revolves around the seeming presence of paralysis – that is, the inability to make a decision.   What can I do now, you ask? Here is what I have been doing with clients for years in an attempt to free up any paralysis of their thinking. This concept was actually developed by Dan Sullivan, president and founder of The Strategic Coach organization in Chicago. As you go through this process, please keep in mind what Dan has often reminded his clients of, “All progress begins with telling the truth.” Here’s how it works:  

  • Take a sheet of paper and draw lines to break it into four quarter sections.
  • In the top left quarter, write “DANGERS” and list the items that are possible sources of loss for you, e.g. low milk prices, lack of feed inventory, reproductive problems in your herd, etc.
  • In the top right quarter, write “OBSTACLES” and list items where you are stuck, i.e. can’t seem to move forward. Possibilities here are your present cash flow, the need to plan for the next generation or other areas.
  • In the bottom left quarter, write “WEAKNESSES” and make a list of items where you are lacking a resource. Some examples might include new financing needed, a feed loan that is presently greater than the value of your current feed inventory, or the lack of CPA prepared financial statements.
  • Finally, in the bottom right quarter of your sheet, write “SETBACKS” and make a list of all items that you have actually lost in the current downturn. These might include your profitability, your lending relationship with your bank, some of your former suppliers or other items.

  After you have made your list that fits into each category, review each of them and ask yourself if all the items on the lists are equal to each other. Circle the item on each of the four lists that is most critical. Which of them is most important to the future of your business? What can you do about each of these four top items?   Remember, our objective here is only to “UN-paralyze” your thinking. It has been my experience, thus far, that this exercise frees up clients’ thought processes and then accomplishes two other tasks. First, it identifies specific problems you are facing. Additionally, it helps you to identify potential solutions, and that is what this is ultimately about.   As Victor Frankl said of his experience at Auschwitz, the vilest of Nazi concentration camps, his survival depended upon the realization that his old life was over. His new life and future would be vastly different. The same holds true for us in the dairy industry. The old game is over. We are in a new game now. Even when we start to see the next upturn (and I hope we do soon), we will all need to update our thinking and processes. The scrutiny to which we will be subjected is going to be intense.   Is this a bad thing? Not necessarily. However, we must each decide if we truly wish to operate in this environment and, if so, be prepared to change our thinking. How will you deal with this and move forward in your dairy business? Hopefully, this process will assist you to accomplish that task. I suggest you give it a try. I think you’ll be glad you did!

Back to the Future

These past two years have forced many producers to decide whether they are truly committed to being in the dairy industry long term. Our industry is no longer designed for those who are “faint of heart.”   Assuming you have decided to stay in the dairy industry and are not reading this from the sidelines, you definitely will need a plan going forward. Every new client that we work with at Success Strategies, Inc. goes through a challenging set of questions to help them set objectives and determine where, specifically, they want to be in three years, five years and in the long term. I call this the Discovery Process™ because it assists producers to do some soul searching about where they want to take their business, and perhaps just as important, it forces them to outline what their strengths and weaknesses really are.   What factors do you have going for you in your business? What items are presently working against you? What can you do about them? What options are available to you to overcome weaknesses or challenges?   As we complete this initial process, I believe that it is essential that we focus on being optimistic. Please note that I did not say to be naïve. Just be optimistic. The primary benefit I find from maintaining a sense of optimism is that it leads me to be more proactive in my decisions instead of being reactive. A sense of optimism will help to keep you moving forward. In 2003 (following 20 months of low milk prices), I gave each of my clients a placard entitled “The Light of Optimism” for Christmas as a potential source of encouragement. I am amazed at how many clients still have that gift in their offices.   Remember, the key is to keep making forward progress, even if it is in small increments. I get very concerned when people throw their hands up in frustration and give up. On the contrary, never let what you cannot do interfere with what you can. There is always something you can do. Instead of stating, “I can’t,” ask yourself if that is what you really want. If not, start thinking about what you can do. Maybe you could not cash flow these past two years, but you could do some other tasks. How about cutting some expenses to reduce your losses? How about building a margin in with Puts and Calls?   Additionally, the last 24 months has been a crucial time to keep your Loan-to-Value percentages on your herd loan and feed line within compliance. While I realize this has been difficult, it was not an impossible task. My clients verified that during the last 24 months, but, once again, I feel it is part of having a plan on everything your do… As my good friend and motivational speaker Les Brown says, “Wherever you are in life, you made an appointment to be there.”   To summarize, think about what you want for your business. Do you have a clearly defined plan for your operations? Be honest with yourself, and think about the following points:

  • Have you determined what you want to achieve?
  • Are you optimistic about your odds of getting there?
  • Are you taking all the necessary steps to reach your objectives?
  • Don’t worry about always having the right answer. Sometimes, it is more important to ask the right questions such as: “Given the current state of my business, what can I do to improve my results?”
  • Don’t forget to run the “What If” scenarios. These can be critical to your success.
  • Finally, if you need help, get it. Talk to your CPA, your banker and others who have had similar challenges. If I can help you, please let me know. My e-mail is john@success-strategies.com. Also, be watching for my new program in 2017 entitled Six Hours to Your Best Year Ever!

Start reviewing your available options today. There is no better time to start than the present moment. Think about it.     “Someone has to take responsibility. I will.”              Winston Churchill, Former Prime Minister of Great Britain

Are You Ready for Some Positive Change?

Do you ever feel like your operation needs some fresh thinking? I do. That’s precisely why I read so many different books and publications…to get great new ideas. It helps to build exciting new challenges into our daily activities. Maybe it’s time to change our thinking in the Dairy Industry, too!! Author Seth Godin, in his book The Big Moo, explained his thoughts on organizations. This can include your business, your bank, your vendors, and even your milk cooperative. He states: “There are two kinds of organizations. One kind likes to be on the cutting edge, to do what hasn’t been done before, to embrace the new. The other kind fears that, and holds back to allow someone else to go first. The United Way was facing tough times because they were afraid to change. The Saddleback Church in California was doing wonderfully (10,000 percent growth over several years) because they love to change. Companies that are good at being edgy will always find a way to thrive. The sure way to fail, it seems, is to attempt to compromise that affinity for edginess for the mass market. It’s harder than it looks. But what if your organization embraces its stuckness? What’s it going to take for you to start changing? What do you do when the market is moving away from you, not toward you? It seems to me that if you wait too long, it’ll be too late to do much of anything at all. Instead, recognize that change is coming, that the reality you operate in is dying out, and start practicing how to do the next big thing. Betting on change is always the safest bet available.” The lesson here is quite clear. We all need to be open to change. The outcome for businesses that refuse to change is equally obvious: They’re going to get crushed! I’d like to conclude with one of my favorite quotes from the Successories Corporation in Chicago, Illinois: “Our destiny is shaped by our thoughts and our actions. We cannot direct the wind but we can adjust the sails.” So, always be open to change and new ways to operate! Also, be sure to watch for my upcoming program in early 2017 entitled Six Hours to Your Best Year Ever!

Changing the Way We Look at Business

As you proceed through this year, it might be beneficial to change the way you approach your operation. No doubt, most producers will be excited about changing the way they look at their business, particularly following the blood shed on dairies the last two years. However, the first step to attaining different results will be to change the way we think. In their book entitled Change the Way you See Everything authors Kathryn Cramer and Hank Wasiak remind us that we need to “Leap out of bed with Your Vision Turned On! The difference between a person who is vitally engaged in life and someone who is merely going through the motions is a vision fueled by passion.” They go on to describe some of the “side effects” of this passion: Enthusiasm, Confidence, Optimism and Unbridled Conviction. Sounds like a very positive change after 2015-2016, doesn’t it? So, how do we get there? How do we increase our passion levels for the dairy business, given the “pain” inflicted these past two years? To start, I believe it is beneficial to review what one of my favorite economists of all time had to say. The Italian economist Vilfredo Pareto stated that: “Increased productivity comes from continually identifying areas where you can achieve 80% of your results from 20% of your efforts.” You know this as Pareto’s Law or the 80/20 Rule. Can this work on your dairy business? I believe so, but this is not an invitation to take shortcuts. Rather, it is a chance to identify those areas with the greatest payback for your efforts and to spend your time on those specific areas to produce the most optimal results! So what are those areas that will produce the most optimal results? Only you can answer that question. However, I am happy to provide you with a couple examples. I work with a client with whom I hold Management Team Meetings once per month. During a recent meeting, one of the partners mentioned to me, in private, that his brother was not spending as much time as he was “out with the cows.” While I recognized this, I believe it is important that we apply Pareto’s 80/20 Law here. The same partner who was not spending as much time with the dairy herd had just completed a negotiation with two of their vendors that provided them with a savings of $125,000! Could your operation have benefited from an extra $125,000 last year? That result appeared to me to be an excellent example of applying Pareto’s Law. A second example that comes to mind was with a Client whose son was also not spending as much time with the herd as his Dad would have liked. However, the son had managed, through the use of a combination of fixed price contracts, Put Options and several Call Options, to achieve an overall milk price of nearly $14/cwt for all of 2009. Was this smart? Absolutely! Can he pull this off every year? Not likely. However, his actions in 2009 provided their business with a substantial benefit at a crucial point. Management Guru Peter Drucker stated that “the business enterprise has two basic functions – marketing and innovation. The rest are all costs.” Managing this producer’s margin was an excellent example of how using innovation can provide your business with genuine benefits. What are the specific areas within which you need to focus more of your efforts? What activities will provide you with the largest return on your investment of time? Is it your milk marketing? How about your business planning and goals for this year? You are probably the one best suited to decide. However, I am confident that if you put your phone on “silent” for 60 minutes and give this issue some serious thought, you will come up with the right answer. As a result, you will likely hit your business objectives this year by focusing on your desired outcome. Give it a try. Remember, it’s your business!  “Wherever you see a successful business, someone once made a courageous decision.” Peter Drucker    

Are You Putting Your Business at Risk?

When I meet with my Clients, I often remember reading an article in Inc. magazine written by Adam Hanft that was entitled “The Risk of Doing Nothing.” I thought the article had some themes that were particularly fitting for the dairy industry. I realize that it is often more comfortable to do nothing when so many items look bleak.  However, doing nothing can often put you at greater risk than boldly moving forward with what looks like the correct option.  Look what happened to Montgomery Wards as they stood by and watched Wal-Mart become, not only the largest retailer around, but also one of the largest companies of any kind.  As I write this blog, I am comfortably seated at my favorite café owned by a company called The Roasterie in Kansas City, Missouri. While they appear to be thriving, think about the comparison between this company and Folgers, who also had a large operation here at one time. Wow! The key is to break the “Continuum of Paralysis.”  As Adam Hanft so accurately states, “No one decision to defer action ever looks all that monumental at the time.”  However, over time, look out!  The sad part is that indecision rarely punishes current management, but it often “mortgages the future.”  Thus, for those of you with another generation potentially coming into your business, can you do better for them? Here are some things to do to get through the current situation:  

  • Do not misinterpret the industry situation of the last two years as an excuse to keep your finger on the Hold Button.

 

  • Rather, look at your Costs/cwt, your Volume of milk produced, Labor Utilization, and how you might spread your Fixed Costs out even further.

 

  • Just as important – Ask yourself, “Is there a better way we could do this…?” Often, your Management Team can offer you some suggestions.  Recently, one of my clients made some simple changes in their feeding program and also changed the age at which their heifers were being bred.  These adjustments boosted production nearly five pounds per cow per day and reduced their heifer raising costs.  This has been very helpful to their bottom line!

 

  • Along that same line, be open to new ideas. We must overcome the ongoing temptation to think that it is more risky to try new ways of completing tasks than it is to keep everything unchanged.  In this dairy industry environment, doing nothing can get you run over!

 

  • Put together an ACTION AUDIT and see how well you stack up against the rest of the industry. Are you currently doing everything you can to stay competitive?  Are you taking the time to complete and measure the small tasks that can have a large impact on your operation?  This is not just about costs per cwt.  It is also about how your operation is faring in terms of Cows Milked per Hour, Labor Efficiency (cwt shipped/employee), Heifer Efficiency (e.g. age at first calving) and many other items.

 

  • One other thought as you compare yourself to the industry. You will likely notice that you are doing better than others in terms of costs/cwt in some areas and not as well as other producers on other items.  Sometimes your facility can restrain your performance in comparison to a new operation, but how are you doing compared to your results five years ago? Are you doing better or worse?

  To summarize, don’t just resist change.  Remember that the best time to plant an oak tree was 20 years ago, but the second best time is TODAY!  Make an appointment with greater levels of success.  As one of my favorite motivational speakers, Les Brown, said about making improvements in your business, “You gotta be hungry!”  Consider the possibilities of his statement as you continually strive for excellence. Remember, it’s your business!