Tip of the Spear Ventures

A Family Office that behaves like Venture Capital | Private Equity | Business Consulting

sam palazzolo

COVID-19 Leadership: Are You a Success or Failure? 3 Action Areas!

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The Point: Grade yourself on your COVID-19 Leadership – Are you a success or a failure? You work your entire career to build your leadership brand. Day after day, week after week, and year after year you put forth a valiant effort (or, what we’d like call your “Blood, Sweat, and Spears!”) However, it only takes a moment to wipe out your leadership brand. And with the pandemic gripping the economy, the spotlight shined brightly on your leadership brand. Are you a success or failure so far? In this post, we’ll explore COVID-19 Leadership and determine if you are a success or failure as well as provide three action areas… Enjoy!

COVID-19 Leadership – Are You a Success or Failure?

As we prepare to turn the corner into 2021, I would ask are you a success or failure during these COVID-19 Leadership times? The Greek Philosopher Socrates is quoted as saying “Life contains but two tragedies. One is not to get your heart’s desire; the other is to get it.” 2020 was supposed to be a difficult year for leaders at all levels, as forecasters predicted an economic slowdown a year ago in 2019. Well throw on top of that economic financial recession the suffering and death resulting from the pandemic. COVID-19 has been a time where leaders have potentially experienced both of Socrates tragedies… Simultaneously!

If your heart’s desire as a leader is to be the best leader possible, the actions you have taken and are taking in response to this most disruptive leadership challenge will shape your leadership legacy. You may have achieved success in previous years, making what now seems like the “right” call (or decision) after “right” call. When times are good, it’s easy to get it “right” as a leader. However, now that we’re in a medically induced recession, the “wrong” call or decision is all too common.

The Reason It’s Lonely at the Top – Decisions

Leaders who consider themselves as employee-focused and friendly found themselves in the unenviable position earlier this year of making “tough” decisions. But some leaders chose to make these “tough” decisions actually an “easy” decisions or easy way out of bad business decisions. For example, after considerable review of their organization’s financial performance, many gathered their team members on virtual conferences not to announce a way forward but to share their decision to furlough (i.e., fire, layoff, dismiss) otherwise loyal associates with little to no sensitivity. Worse yet, some other leaders elected to adopt the strategy of “no action” and did nothing (Yes, doing nothing is a choice and therefore a decision). It was only a small minority of leaders who elected to pursue the aforementioned way out or forward (Truly the “tough” decision!)

As the pandemic gripped the globe, I was asked to act as an outside leadership and change consultant on several C-suite level COVID-19 taskforces for our clients. In this role, I had a front-row seat on vastly different crisis leadership approaches. Those differences prompted me to ask the C-suite leaders I worked with what they were learning as a leader from the pandemic. Not only were these C-suite leaders eager to discuss their strategies and insights, including their uncertainties and fears, but they also wanted to hear what other leaders were doing (Perspective on not only successes, but failures as well). These discussions seemed positive, productive and progressive, allowing the C-suite leaders to reinforce certain behaviors moving forward as well as discard others. With doubt, uncertainty, and a lack of clarity we both found value in taking the time to reflect and strategize for a better tomorrow today.

The Power of Zoom

These C-suite leader conversations as measured through Zoom-metrics have consisted of 2,000+ Zoom meetings and 200+ Zoom webinars being conducted on a variety of topics (Leadership, Change, Strategy, Accountability, Delegation, Sales + Business Development, Marketing, Human Resources, Operations, and Finance). C-suite leader attendees were from a variety of industries (Automotive, Banking/Finance/Insurance, Biotechnology + Pharmaceutical, Government – Federal and State, Retail, and Technology – Hardware and Software) representing for-profit and nonprofit organizations, and were geographically dispersed across North America, South America, Europe and the Middle East.

It’s important to note a finding that presents itself in these difficult leadership times, that being leaders – especially high performing ones – are extremely harsh critics of their own performance. While most organizational stakeholders (representing company peers and subordinates) would gage the C-suite leader’s performance as Above Average on a five-point Likert scale (Excellent, Above Average, Average, Below Average, and Very Poor), most C-suite leaders ranked themselves as Below Average (with the harshest of critics ranking themselves Very Poor). That’s right, these seemingly superior C-suite leaders who during previous times reflected little/no self-esteem or self-image issues, now during COVID-19 were convinced that they were not leading up to their fullest potential (perhaps the key is developing “self-compassion” skills as Margaret Wehrenberg Psy.D. shares in her Psychology Today article titled, “What to Do When You Are Your Own Worst Critic”).

COVID-19 Leadership: Are You a Success or Failure? 3 Action Areas

So, during this COVID-19 Leadership moment, do you consider yourself a success or failure? The aforementioned conversations focused on leaders, regardless of their success or failure orientation, excelling in three (3) broad action areas. COVID-19 leaders want to be known for leading with:

  1. Courage (Having created environments with effective Strategies, Action Plans, Goals, Communication, Organization Alignment, Operational Excellence, and Organizational Proficiency)
  2. Poise (Having created environments with Contingency Planning, Organizational and Team Member Prioritization Rankings, Science versus Art, and Championing Ethical Leadership), and/or
  3. Dignity (Having created environments present with Calm, Morality, Compassion, and as odd as it sounds Love)

SUMMARY

I would ask you the same questions I asked these C-suite leaders in closing:

  • What do you want people to say about your leadership during the pandemic?
  • How sure are you that you will be perceived that way?
  • Most importantly, what can you do today to ensure your desired legacy is realized now and into the future?

Sam Palazzolo PS – If you liked this article, you’ll love my “Best Leader in 30 Days!” course! In daily 5-minute or less learning lessons, you’ll be on your way to becoming the best leader possible. For a limited time, you can access the course for FREE by CLICKING HERE

Professional Service Firm Leadership + Business Development

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The Point: Business Development is the lifeblood of any organization. If nothing happens in business until you sell something, then no sale is made until you develop some business! But at a professional service firm, what role does leadership play in Business Development? In this post, we’ll explore professional service firm leadership and their role in Business Development… Enjoy!

Why are You in Business?

“We’re in business to make money” a Professional Service Firm Leader exclaimed during our initial acquisition interview. The question that prompted this answer was a nice, slow, softball right down the middle of the plate for him, namely “Tell us about your business?” A simple question… An even simpler answer!

Most businesses, especially professional service firms are in business to make money. While there may be those nonprofits that are in business to assist customers to “Never Stop Exploring” or some other tagline, the vast majority are in the business of business to make money and return/create value for their owners. Along those lines, the topic of Business Development should be considered the “lifeblood” of any professional services firm (or any organization that sells anything for that matter!)

During the acquisition due diligence phase, we’ve seen the effect of poor Business Development during the most recent pandemic. Businesses that we looked at acquiring at my Private Equity firm shared financial information reflecting decreases in revenue of 20% to 50%, and we’ve heard horror stories of those that have fallen significantly worse! A business’ health and sustainability can be directly measured by the revenue they produce. If revenues drop faster than expenses or are off-pace, this poor health indicator could eventually lead to the death of the organization (i.e., a road to bankruptcy or sale – Cutting expenses can only go so far and typically are not a way to grow a business).

So, the simple question that started off our acquisition interview has a complex underpinning to it, especially when you consider the role of the professional service firm’s leadership!

Leadership’s Role in Business Development

Leadership’s role in driving Business Development at a professional services firm (Accounting, Architecture, Law, etc.) can be seen as a fairly simple initiative — Creating a Sales Strategic Plan, implementing a Business Development Model, and proper Prospect Identification are key aspects that we look to identify in those acquisition interviews. These topics will form the basis of this four (4) part series.

It’s important to keep in mind that Business Development starts with leadership at the professional services firm (Firm leaders, practice leaders, and niche leaders). In conducting acquisition interviews, I’ve seen it play out at far too many firms where leadership rejects the premise and therefore communicates the boomerang-expectation that business development is something that only “rainmakers” can be successful doing. In other words, someone other than themselves. These firm leaders accept the idea that most partners are not capable of Business Development and should therefore focus their efforts/energies on their subject matter expertise (SME) – Accounting, architecture, law, etc. However, in following their SME path of getting the work out the door and letting the rainmakers drive new clients and organic growth, there is a dichotomy that presents itself. Viewing the firms’ revenue in this way results in a sort of bilateral view — rainmakers bring in new clients and the rest of the partners’ service clients. Carrying this further, since firm leadership has no expectation of Business Development from most partners, there is no training or coaching and especially no need for accountability. So, Is there any wonder that so many professional service firms struggle with achieving significant growth year over year?

We Have a Plan…

 “Yes, of course we have a Business Development plan… It’s just different from the one you may have been told exists” a Professional Service Firm Leader shared with us during our acquisition interview. Upon further review, I found that the plan that existed on paper was rarely, if ever, followed. This inconsistency led to poor results in Business Development, and overall firm financial figures being reported. I’m often puzzled why leaders believe that we will not “see” something as being off or different when they give us this contrarian perspective. Afterall, it’s not that these firms are large enough to hide these individuals or their erratic performance.

Sales Strategic Planning

If the adage, “Nothing happens until you sell something” holds true (and why shouldn’t it, even at a professional services firm?), then what are the major actions leadership needs to take in order to drive significant growth year over year and build a successful business development structure? From a high-level perspective, the following three (3) actions should be incorporated in a Sales Strategic Planning document annually:

Expectations

Professional Service Firm leaders need to clearly communicate that it is every partner’s responsibility to be successful at Business Development and drive top-line revenue for growth. Business Development goals need to be established for every partner — goals that are stretch goals and that take into account each partner’s strengths and weaknesses. The issue here is not to give every partner the same revenue goal, but to give every partner a revenue goal for them to hit individually. These individual goals should roll-up into the stated goal for the overall firm.

Training and Coaching

Just like any sports team, there is a range of ability from the superstar to the team members who just make-up the team. To carry-on with the sports analogy, the coaches must understand the span of abilities that exist amongst the individual team members and as well as the responsibility to ensure that every member of the team improves their abilities each day (This is what practice is for!) It’s no different with a Professional Service Firm. Firm leadership must ensure that there is a strong training and coaching model in place to provide continuous improvement to the entire partner group as it relates to their Business Development abilities.

Accountability

For the above two steps (Expectations + Training and Coaching) to achieve the overall goal of driving revenue and successful Business Development, there needs to be an effective accountability model in place. Every partner has to be held accountable for their individual performance against the goals established for them. Accountability needs to be focused on helping each partner achieve greater levels of performance, versus laying blame for not achieving their goals. Accountability needs to be established with a carrot and stick methodology… There is motivation and training tools that act as the carrot, not as a Billy club acting as the stick in the event goals are not achieved. Accountability is a key ingredient necessary to drive every partner’s success in Business Development. Lastly, Professional Service Firm leadership should be held accountable for creating and implementing a successful Business Development model throughout the firm.

Leave the Networking to Leadership

“It’s the expectation that every leader in our Professional Services Firm network to increase our client base” I was told during an acquisition interview by our prospective organization’s Managing Director. If it was clear to him, it apparently wasn’t too clear to everyone else at the leadership level or beyond (Sales year over year were down a whopping 50%!)

A Business Development Model

Let’s look at the three major stages of an effective Business Development model:

Building a Network

Business Development starts with each Professional Service Firm Leader building their own network of contacts that are in a position to create an opportunity for the firm. This is the single most challenging piece of the Business Development strategy, and one that generates the most fear and concern for most partners. The bottom line is that most partners are just not comfortable going into an industry conference or local business association meeting and making contacts that matter. Professional Service Firm Leaders need to understand this and build training and coaching programs that will help each partner learn and become comfortable with building their network. There is no one approach to successful networking, and each partner needs to develop a process that works for them.

Creating Opportunities

The value of a personal network is in the potential opportunities for new clients. A major mistake that many partners make is thinking any contact is a good contact. This strategy is based on “hopes” and “wishes,” not on strategic decisions. Unless the contact is a decision maker at a potential client, or the contact is a key influencer with access to target clients, the contact has limited value in terms of the potential for opportunities to be created. Turning a contact into a valuable contact is a critical process that includes training, mentoring and a defined plan of action. Most critical in this process is the contact must be able to build trust in the partner.

Closing the Sale

All the best networking and opportunity creating activities results in little/nothing if the sales closed percentage is low or not where it should be according to the goals established for the partner/firm. So, what percentage will you set? Too low and you can modify higher. These adjustments are important because you have to start with something stated. It’s only based on the autopsy of either business won or lost that you can identify not only the proper percentage to target, but what activities you should train/monitor for successful Business Development.

Of Course We’re Driven to Acquire New Clients

“Of course we’re driven to acquire new clients. At this Professional Services Firm each of the partners take growth very seriously!” a leader at the firm shared with us during our acquisition interview. But where exactly were the firm’s leaders focused on acquiring new clients? After a few additional questions, it became obvious that they were looking at very low-hanging fruit clientele (i.e., those that were extremely easy to acquire!)

Who are Your Prospects?

There are three types of prospective clients to be taken into consideration for your Sales Strategic Plan as part of your Business Development efforts for the Professional Service Firm, Price-driven, Relationship-driven, and Value-driven. Let’s review each in more detail.

Price-driven

This type of prospect is only interested in the price, and from their perspective the lowest price. If that is the type of prospect you want to pursue, your win percent will in all likelihood be low (probably below 30%). Professional Service Firm Leadership caught in identifying Price-driven prospects typically believe that they can secure clients from other Professional Service Firms on price alone (“If we lower the price of our services, we’ll increase our client base). These same leaders tend to believe that once secured, they will be able to sell future services at a significantly higher rate so the overall profit on the client will be acceptable. This rarely happens, as these clients tend to find other low-price firms to do business with.

Relationship-driven

The Relationship-driven prospect is one who has a direct relationship with a part of your network or was referred by someone who has a good and trusted relationship with the prospect (i.e., they have a relationship with someone/somewhere which is why they’re doing business with your Professional Service Firm). Price may still be a driver for them, but the relationship often trumps price as long as the price is within a reasonable range.

Value-driven

The Value-driven prospect is one where the client agrees to do business with your firm due to the value they derive. Typically referred to as the “gold” standard, they never use price as a factor in selecting the Professional Service Firm, as long as they can see the connection between what your price is and the value that you deliver.

The best client-prospect is the one that is both relationship-driven and value-driven. As the firm or practice leader, you have to create a winning Business Development model that will drive growth every year, with each partner improving their Business Development success every year. For your firm to achieve significant annual growth, the best path is to implement a Business Development model that capitalizes on every partner’s strengths (and limits their weaknesses), sets clear expectations, and holds each partner accountable for results — the results being the actual new clients acquired.

SUMMARY

Professional Service Firms struggle to achieve significant growth year over year. Business development in its simplest structure consists of (a) building your network; (b) creating opportunities: and (c) closing the sale. So why is it so difficult for so many professional service firms to consistently drive substantial annual growth? Serving the firm in a role that’s larger than compliance and client service to one where all partners have a responsibility to sell is the purpose of this four (4) part series.

Sam Palazzolo

#Leadership #BloodSweatSpears

#acquisitions #acquisitionentrepreneurship #businessgrowthstrategy #businessmergersacquisitions #buyabusiness #buyingabusiness #buyside #entrepreneur #entrepreneurship #entrepreneurshipthroughacquisition #exitstrategies #mergers #mergerandacquisition #mergersacquisitionsdivestitures #privateequity #growingbusinesses #growthstrategies #mergers #mergersandacquisitions #newbusinessopportunities #searchfund #sellabusiness #CapitalAssetManagement #sellyourbusiness #smallbusiness #InvestmentBanking #PrivateEquity #PE

Selling a Small Business – 5 Tips for Baby Boomers Approaching Retirement

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The Point: As a small business owner, you pour your blood, sweat, and tears into your business! The day-in/day-out challenges associated with leading a business as it’s owner are supposed to be offset by the “golden” years of selling it and retiring. As the largest demographic in our society, the Baby Boomers, approach their exit it appears as though the golden years are turning to rust before our very eyes! So, in this post we’ll explore selling a small business with 5 tips for Baby Boomers approaching retirement… Enjoy! (NOTE: While the focus of this article is on Baby Boomers, it can be applied to any small business owner looking to successfully exit!)

The Baby Boomers

Baby Boomers born between 1946 and 1964 represent an estimated 73 million people in our society (The second-largest age group after their children, the Millennials, born from 1982 to 2000). Baby Boomers represent 41% of small business owners or franchise owners (Second to Gen X’ers born between 1965 and 1980 at 44%).

This demographic rapidly approaching retirement age (generally thought of as age 62 – the age at which a person is expected or required to cease work and is usually the age at which they may be entitled to receive superannuation or other government benefits, like a state pension). As they achieve this milestone, few appear to be financially ready/able to successfully retire. The top two reasons being that (1) they were the first generation expected to establish for themselves self-retirement tools/savings as opposed to government provisions and (2) the economic recession from 2008 reducing significant savings (if any were established).

Baby Boomer Small Business Owners

Statistics reflect that almost 40% of Baby Boomer small business owners feel they don’t have the financial confidence to retire before they’re 65, let alone three years earlier at 62! What’s more, a recent study suggests a full 72% don’t even have an exit strategy. Exit strategies for small business owners typically consist of the following (in popularity order):

  1. Liquidation
  2. Liquidation Over Time
  3. Keep Your Business in the Family (i.e., Succession Planning)
  4. Sell Your Business to Managers and/or Employees (i.e., Employee Stock Ownership Planning – ESOP)
  5. Sell the Business in the Open Market (i.e., Mergers)
  6. Sell to Another Business (i.e., Acquisitions)
  7. The IPO (Initial Public Offering)

Tips for Baby Boomers Selling Their Small Business for Retirement

As an active acquirer of small businesses (You can view my firms Acquisition Criteria here: https://tipofthespearventures.com/acquisitions/), I’ve compiled the following five (5) strategies or tips for successfully selling the Baby Boomer owned small business. (Note: As a somewhat conservative investor, I caution against the “all-your-eggs-in-one-basket” mentality when it comes to selling your business ahead of retirement).

Tip #1 – Diversify Your Money

One of the biggest strategies I see small business owners do is hinge their entire retirement on the sale of their business. A better strategy consists of acting well before the sale. It is important that small business owners take money out of the business from a personal standpoint and invest those funds no less than three years prior to an anticipated sale. Typically, most businesses will provide the most recent years financial statements as part of the financial packet to prospective buyers. Statements that reflect anomalies are scrutinized, leading to a sale multiple (3-5x) that will be less than or undesirable.

Tip #2 – Financial Statement Cleaning

Along those lines, the organization’s financial statements are the foundation reviewed during acquisition due diligence when selling any business. Updating the core documents like profit and loss statements can make a big difference to anyone exploring the enterprise.

Updated balance sheets and tax returns for at least the last three fiscal years is crucial in projecting the best financial position possible. The goal being to make sure everything ties together, making sense to potential acquirers and being easy to understand.

Tip #3 – Removing Yourself from the Business

Do you have staffing that’s able to run the business after your exit? As an active Owner Investor (as opposed to Owner Operator) I typically look for organizations that have depth of staff that will allow the organization under new leadership to continue on without current ownership running the entity day-in/day-out. Easing the transition here means hiring employees that will stay as the face of your business when the ownership changes. This strategy allows small business owners to potentially increase the value of their business and the likelihood it will sell.

Tip #4 – Operational Documentation

Having an Operational Guide is important for every business to successfully operate/run. These Operational Guides are critical details for manufacturing, distribution and sales. This guide that is written down and documented makes it easier for the new buyer to pick-up where the old owner left off and drive the organization forward. They also make it easier/less stressful for those employees remaining with the business.

Tip #5 – Identify Legal Barriers

Identifying if the sale of your business is an Asset (when a buyer is interested in purchasing the operating assets of a business instead of stock shares) or Stock (shareholders of the target company receive shares in the acquiring company as payment, rather than cash) sale will ease the exit process. Removing any of the legal hurdles can make the road to a sale less difficult for acquisition. For example, one that we keep coming up against is the transfer of the lease (Landlords using the sale of the business as an opportunity to renegotiate leases and up the rent can be viewed as undesirable to potential buyers).

SUMMARY

In this post, we’ve explored selling a small business with 5 tips for Baby Boomers approaching retirement along with 5 tips. All of these strategies are desirable for potential acquirers. As such, Baby Boomers looking to sell their business should look to complete them to position their business as they look to exit into their golden years of retirement.

Sam Palazzolo

#Leadership #BloodSweatSpears

#acquisitions #acquisitionentrepreneurship #businessgrowthstrategy #businessmergersacquisitions #buyabusiness #buyingabusiness #buyside #entrepreneur #entrepreneurship #entrepreneurshipthroughacquisition #exitstrategies #mergers #mergerandacquisition #mergersacquisitionsdivestitures #privateequity #growingbusinesses #growthstrategies #mergers #mergersandacquisitions #newbusinessopportunities #searchfund #sellabusiness #CapitalAssetManagement #sellyourbusiness #smallbusiness #InvestmentBanking #PrivateEquity #PE

Mergers & Acquisitions: Slowing Down to Speed Up! Part 2

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The Point: When it comes to Mergers & Acquisitions, speeding up isn’t the answer. In fact, I typically see that if those that lead M&A would simply slow down, they actually achieve their objectives more quickly! So how then do Mergers & Acquisitions leaders and their teams slow down for success? In this two-part post (You can read Part 1 by CLICKING HERE), we’ll explore exactly how slowing down to speed up can be achieved in Mergers & Acquisitions… Enjoy!

In Part 1 of this post on “Mergers & Acquisitions: Slowing Down to Speed Up!” we explored how slowing down to speed up can be achieved in Mergers & Acquisitions. Specifically, we reviewed the effect of COVID-19 on M&A, a six (6) stage Mergers & Acquisitions Strategy, and how slowing down to speed up can result in M&A success. Here in Part 2, we will continue the discussion on potential challenges and how to navigate them.

Pricing Flexibility and Fairness

As mentioned in Part 1, a key issue when negotiating an M&A deal is the agreed to pricing mechanism or structure of the deal and related adjustments to be made. Know this: There is almost always a difference between what the Seller believes is the appropriate price and what they Buyer believes they should have to pay for a business. This valuation gap should contain contingency planning on how to deal with differences in lock box (fixed price plus an interest component), working capital, capex, and net debt adjustments and Seller Discretionary Earning – SDE or earnout.

The Breakup Clause or MAC

As a Buyer of businesses, we typically like to include clauses that allow for a clean “breakup” if need be. There’s considerable time and investment made, and nothing is worse than an ugly breakup! Including a Material Adverse Change (MAC) condition whereby “walk-away” privileges are preserved.

Keep in mind that a MAC should be used as a Buyer’s protection tool in the event significant differentiation presents itself in asset deterioration versus stated condition for example. A MAC should not be utilized as a “cool down” or buyer’s remorse prevention tool.

Targeted Due Diligence

The main issues identified for the business should be included in a targeted due diligence approach. This approach could be further supported by identifying and putting into place Representations and a Warranty & Insurance policy. These policies are used in Mergers and Acquisitions to protect against losses arising due to the Seller’s breach of certain representations made in the acquisition agreement.

With so much to consider when it comes to a Mergers and Acquisitions due diligence initiative, where should you start? In other words, if you don’t have a target to aim for, you’ll never know if you hit or miss it! Consider this due diligence moment as one similar to a VC exploring a Series B round investment. Here then is a list of 8 items to target as a part of your due diligence:

  1. Corporate Records and Charter Documents
  2. Business Plan and Financials
  3. Intellectual Property
  4. Security Issuances and Agreements Concerning Securities
  5. Material Agreements
  6. Information Regarding Disputes and Potential Litigation
  7. Information Regarding Employees and Employee Benefits
  8. Equity Grants

Competitive Analysis

A competitive analysis is a strategy where you identify major competitors and research their products, sales, and marketing strategies. By doing this, you can create solid business strategies that improve upon competitor’s market position. We recommend conducting a Competitive Analysis as part of your due diligence, primarily because you’ll need to identify the current role the organization plays within the existing business climate, as well as where potential lies.

In conducting a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), we recommend a deep-dive on competitors. You’ll need to identify who you’re really competing with so you can compare data accurately (An apple vs apple comparison, even if it’s two different varieties of apple is better than an apple vs orange comparison). Specifically, you’ll want to identify:

  1. Who are your direct competitors (Those competitors you that offer a product or service that could pass as a similar substitute for yours, and that operate in your same geographic area).
  2. Who are your indirect competitors (Those that provide products/services that are not the same as yours, but could satisfy the same customer need or solve the same problem).

Competitor analysis is something that you’ll also want to revise throughout the years of ownership. Why? The market can and will shift anytime, and if you’re not constantly surveying the competitive landscape, you won’t be aware of changes until it’s too late.

SUMMARY

In this post, Mergers & Acquisitions: Slowing Down to Speed Up! Part 2, we explored how slowing down to speed up can be achieved in Mergers & Acquisitions. Specifically, we reviewed Pricing Flexibility and Fairness, The Breakup Clause or MAC, Targeted Due Diligence, and Competitive Analysis.

Sam Palazzolo

Is Happiness a Requirement for Success?

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Are you happy? Ask yourself right here/right now are you truly happy? It seems the world right now is not a very happy place. With a health pandemic raging on, long overdue protests taking place, and a world economy on the verge of collapsing the news headlines don’t share a lot to be happy about. It’s an unrealistic expectation for people to be happy all the time, even without the current happenings. So, it got us thinking here at the Tip of the Spear Ventures, is happiness a requirement for success? In this post we’ll explore the benefits of happiness and share two reasons why it’s not good to be happy all the time (Trust me… Research shows it’s not all it’s cracked up to be)… Enjoy!

Is Happiness a Requirement for Success?

Happiness Meet Ditch

Yesterday I had a Zoom meeting with a colleague (I’m sure you did too!) The meeting started off just like every other meeting I’ve ever participated in, but quickly took a hard left-turn straight into the ditch! After we initially exchanged pleasantries (“Good morning (Name)”… “Good morning Sam”) we breached the “How are things going?” moment. This is where the turn came in! My colleague expressed “I’m bitter, burned out, and besieged!” How do you respond to that? Truth be told, I’ve asked that question a thousand times, pre-pandemic/pre-protest and typically get the standard “I’m good, how are you?” response. But not this time! Was my colleague trying me on? Didn’t they really owe me the standard response so that we could get down to business? Why was I facing this derailing moment?

Positive Psychology and the Study of Happiness

Positive psychology is a field born roughly 25 years ago. Positive psychology is often mistaken of perpetuating a myth regarding happiness, inasmuch a good life is all about being happy. There have been a number of good works on the topic of happiness, including Shawn Achor’s “The Happiness Advantage,” Matthieu Ricard’s “Happiness: A Guide to Developing Life’s Most Important Skill,” and The Dalai Lama’s “The Art of Happiness: A Handbook for Living” (Even I’ve written on the topic in a post titled “The Leadership Challenge: Pollyannaish!”) But perhaps this happiness-focus is not exactly what it should be?

According to Martin Seligman, perhaps the most-often cited expert in the field of positive psychology, the study is meant to approach optimal human functioning at large, including the topic of happiness. Furthermore, it turns out that happiness might not be the best state to operate in for success (As a matter of fact, it isn’t!)

Success does not Require Happiness

In order to function optimally in our lives, we do not need to operate in a perpetual state of happiness all the time. So why would we not want to operate in such a state of bliss? Here are two (2) reasons:

Why are You Here? – Meaning and Happiness

The question is as old as time: “Why are you here?” or “What is your purpose?” Defining your meaning is difficult, after all it’s at the top of Maslow’s ‘Hierarchy of Needs’ for a reason. With this in mind, answering those questions is going to take some thought… Some real deep thought! The experiences, actions, and relationships that make your life worth living typically fall into the two camps of “hedonic” and “eudaimonic.” Hedonic life moments are all about pleasure (Seeing beauty, eating chocolate, and/or loving another). Eudaimonic life moments, on the other hand, are all about personal meaning and purpose (Upholding your personal values, finding ethical meaning expressed in what you do, and/or standing up for someone that can no longer stand). Most of the time, what is most meaningful isn’t the most pleasurable and vice versa.

Negativity Makes Life Better!

While happiness might be a preferred state, research shows that negative feelings can in fact be good for us! Anxiety and fear can protect us (think “fight or flight”), guilt can motivate us to make amends, and anger can help us increase focus on a problem at hand. While there’s a difference between feeling an emotion and acting out as a result of it, most are able to experience the negative emotion in life’s ups and downs with a goal of creating a healthy and manageable lifestyle.

SUMMARY

So, happiness as it turns out is not the sole requirement for success. While living a good life isn’t just about being happy, it also entails incorporating authenticity, pleasure, pain, happiness, sadness, love and conflict. If we were only happy all the time, we’d overlook opportunities to provide improvement to ourselves, those we lead, and the communities in which we serve.

Sam Palazzolo