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Tip of the Spear Ventures

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The Brain Behind the Boss: How Neuroscience Informs Leadership Styles

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The Point: As the leadership landscape continues to evolve, the age-old Command-and-Control style is increasingly being challenged. Neuroscience offers insights into why some leaders resort to this style and how they can harness their brain’s energy to lead more effectively. By understanding the neurological underpinnings of leadership tendencies, managers can transition from micromanagers to inspirational leaders revealing a better “Brain Behind the Boss” for all… Enjoy!

Key Takeaways from ‘The Brain Behind the Boss’

  • The human brain is wired for autonomy, making the command-and-control style of leadership counterproductive.
  • Command energy in leadership often stems from a leader’s own insecurities and lack of self-trust.
  • Effective leadership is about inspiring and guiding, not controlling.
  • Emotional energy is contagious; leaders must be aware of their own energy and its impact.
  • Introspection and self-awareness are crucial for leaders to transition from micromanagers to inspirational figures.
  • Cultivating a culture of self-responsibility is essential for modern leadership.

The Persistence of Command Energy

Despite the evolving understanding of leadership, the command-and-control style remains deeply ingrained in many organizational cultures. Rooted in the brain’s neurological structures, this style often clashes with the human desire for autonomy. The prevalence of command energy not only affects professional settings but also seeps into personal relationships, creating a cycle of control and resistance.

The Human Brain’s Quest for Autonomy

Modern neuroscience reveals that regions like the ventrolateral pre-frontal cortex and the insula drive our innate sense of self. This drive for autonomy is at odds with the command-and-control style, which often stems from a leader’s own insecurities.

The Realities of Command Energy in Relationships

From parenting to romantic relationships, the command energy can be observed. It’s a gravitational force that leaders often unknowingly exert, leading to energetic tugs-of-war in relationships.

Learning to Let Go: The Power of Dropping the Rope

True leadership transcends the mere act of control. Leaders who cling to command energy often find themselves in exhausting battles, trying to impose their will. By learning to “drop the rope” and relinquish the need for control, leaders can foster genuine collaboration and inspire teams to achieve shared visions.

The Illusion of Control in Leadership

Leaders who rely heavily on command energy often equate being right with being effective. However, true leadership is about inspiring and guiding, not controlling.

The Journey of Transformation

Leaders like Marc exemplify the transformative power of letting go. By shifting focus from controlling others to controlling oneself, leaders can inspire genuine followership.

Addressing the Underlying Causes

The reliance on command energy often stems from a leader’s internal insecurities and a lack of trust in themselves. This manifests externally as a need to control and micromanage teams. By recognizing and addressing these internal triggers, leaders can transition towards a more empowering and trust-based leadership style.

The Root of Command Energy: A Lack of Self-Trust

Leaders often resort to command energy due to a lack of trust in themselves. Recognizing this can be the first step towards cultivating a more empowering leadership style.

Cultivating a Culture of Self-Responsibility

Releasing command energy doesn’t mean fostering irresponsibility. Instead, it’s about creating a culture where individuals take ownership and responsibility for their actions.

The Intertwining of Personal and Professional Energies

Leadership is not confined to the professional realm; it’s a reflection of one’s emotional energy across all facets of life. Personal experiences and emotions can deeply influence a leader’s professional demeanor. By understanding and addressing personal emotional energies, leaders can bring about transformative change in their leadership style, benefiting both their personal and professional relationships.

The Ripple Effect of Emotional Energy

Emotional energy is contagious. Leaders must be aware of their own energy and how it influences their teams and organizations.

The Power of Self-Reflection

Leaders like Marti demonstrate the importance of introspection. By addressing personal emotional energies, leaders can bring about positive change in their professional lives.

Summary

The command-and-control leadership style, while historically prevalent, is not sustainable in the modern era. Neuroscience offers insights into the human brain’s drive for autonomy and the origins of command energy. By understanding these underpinnings, leaders can transition from micromanagers to inspirational figures. The journey requires introspection, self-awareness, and a commitment to fostering a culture of self-responsibility. As leaders navigate this transformation, they’ll find that their leadership influence extends far beyond the confines of the office, impacting all areas of their lives.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

Sources:

  • DiGangi, Julia. “The Anxious Micromanager.” Harvard Business Review, Vol. 101, Issue 5, Sep/Oct 2023.
  • Rock, David, and Schwartz, Jeffrey. “The Neuroscience of Leadership.” MIT Sloan Management Journal, 2006.
  • Goleman, Daniel. “Leadership That Gets Results.” Harvard Business Review, 2000.
  • Brown, Brené. “The Call to Courage: Leading with Vulnerability.” Stanford Graduate School of Business, 2018.

Change Management Leadership – The Mirror Test

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The Point: We’ve all been there… Change is upon us and as a leader, it’s our job to successfully navigate change management leadership. At the Zeroing Agency — Tip of the Spear Ventures business transformation consultancy — we strategically partner with leaders and their organizations looking to navigate change management with as little disruption as possible. We’ve identified a key technique that leaders can execute for effectiveness. So, in this post on Change Management Leadership we discuss the Mirror Test for Change Management Leadership… Enjoy!

The Key to Business Transformation or Change Success?

Change management leadership is crucial to the success of any change initiative. Without strong change leaders, the entire process will fail and will not succeed. The leader needs to have a strong understanding of his or her team and be able to guide them through the transition. This understanding is the difference between a successful change and a failure. Employees and managers look to the supervisor for guidance and direction, so it is important for the manager to be a good coach for them.

Change Management Dashboard

Organizations must also have the ability to link evaluation of change initiatives to business metrics. These can include the amount, rate, or margin. This makes it easier to establish baselines and see how well each change initiative performs. It also allows the organization to demonstrate the incremental progress that employees are making. If the change is effective, it will be easy to implement and maintain. If a company does not have this capability, it will not be successful.

Leadership Vision + Change Alignment

The change leadership is an integral part of any project. A project manager should create a clear vision for the change, and make it as clear as possible that all stakeholders are responsible for it. If there is no clarity in the end goal, the change is unlikely to be a success. However, the leader should keep in mind the people who will be the most affected by the changes. A good leader should take time to understand the people who are impacted by the changes.

Change and People

The leader must understand the people involved in the change and get their buy-in. He must have a clear roadmap and know who to put in charge of each part. The change management leadership must understand how to equip the people to take on the roles they are assigned. The leader must be able to make them care about the change. If he or she is not able to motivate these individuals, the change will not be successful. If the leader has the support of the organization, it will become a success.

The Mirror Test of Change Management Leadership

The role of the change management leadership team is vital. The leader should act as a liaison between the change management team and employees. An effective leader must be able to convey the goals and objectives of the project clearly to employees. Keeping communication open is critical for the success of a change initiative. If there is no communication, employees may be confused and resistant to the changes. To keep employees engaged, the leader must communicate with them frequently.

The Mirror Test of Change Management Leadership is a technique that we’ve successfully used over the years. The technique involves the leader establishing a morning/evening cadence for check-in on the success of their change management leadership opportunity. This check-in is a self-ranking of their performance (0-10, 10 being benchmark or best practice). What are they checking in on exactly? The mirror test of change management leadership has as its goal a check-in on the key performance indicators (KPIs) or metrics that matter for the initiative. The 2x per day cadence acts twofold — One as an orientation in the morning and secondarily as an immediate summary/recap of behavioral performance in alignment with change initiative goals.

SUMMARY

The change management leadership must align with the vision of the change. The leader must be able to inspire others to adopt the new changes. He must be able to convey the changes in an easy and accessible manner. Moreover, he must ensure that his team members are supported in their efforts to implement the changes. The leader must be able to build trust with the people in the organization. The change management leadership must be able to convince others to adopt the changes in the company.

Sam Palazzolo

The War for Talent – Pandemic Focus

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The Point: There is a “War for Talent” right now as we come through (hopefully!) the pandemic. Call it a result of the “great resignation” or whatever you’d like, there is a shortage of qualified applicants for each job opening. Nowhere is the war for talent with a pandemic focus greater than at the leadership level! So we started asking ourselves here at Tip of the Spear, “What exactly is this war for talent, and more importantly what can the C-suite do to offset this war during the pandemic?” So, in this post we’ll explore the war for talent with a pandemic focus and provide several tips, techniques, and tricks for success… Enjoy!

The Zeroing Agency at Tip of the Spear Ventures Corporate Culture and Ethics to solve the War for Talent - Pandemic Focus

Happy Holidays… You’re Fired!

Joshua (name changed to protect the innocent) was a Chief Revenue Officer (CRO) for an SMB company. He was a true “success” story if ever there was one, having rose through the corporate ladder over his 20-year career starting as an entry-level business development representative and ultimately sitting in the sales c-suite chair. And just like that, it was over! A private equity firm came in and bought the company from a baby boomer leader 6-months prior. While they “talked” of keeping him in the CRO Chair, the “walk” was parting ways with him during the holidays (“Happy Holidays… You’re Fired!”)

The War for Talent during the Pandemic – Where’s Your Corporate Culture and Ethics?

The relationship between corporate culture and ethics is complicated, but there are many ways to improve it. While it is true that ethical companies have a higher level of satisfaction with their work, there are also some ways to make the culture more effective. First, signal an ethical environment within the organization. Doing so conveys the message that voicing your values is a viable option and will increase employee morale. Second, you can create a better working environment for your staff by making your workplace more pleasant.

Whether or not your company is committed to ethical behaviors is important, but your espoused culture is often different from the real one. For example, aggressive sales personnel may be rewarded, while conservative sales personnel are not. This could result in problems with revenue classifications. Moreover, the pressure of the real culture could have prompted Texas Instruments to correct these problems. Considering this, the relationship between corporate culture and ethics is a complex one.

What’s the Bond between Corporate Culture and Ethics?

To create a healthy bond between ethics and corporate culture, you should start by identifying your company’s core values. Then, write an organizational mission statement or code of ethics. Remember to reference your company’s culture in this statement, as well. Even if your business is already established, you might still need to create a mission statement for the new company. Ultimately, you need to change your corporate culture to help the employees work better together.

When it comes to a firm’s value, ethics are a crucial factor. If the culture is not ethical, it will detract from the value of a company. A strong corporate culture encourages employees to perform at their highest levels, but an unethical culture discourages employee morale and creativity. A company’s value will be decreased by 1.4% if it does not promote ethical behavior. The importance of ethics cannot be overstated.

Show Me a Compensation Plan, I’ll Show You Behavior/Performance

A company’s culture influences employee behavior, compliance, and integrity. Developing an ethical corporate culture is essential for a company’s success. But it doesn’t necessarily have to be a big deal. While a strong company culture can benefit the bottom line, ethics are a critical component of a company’s culture. The more ethical the workplace, the better the company will be. In addition to fostering a positive workplace environment, an ethical company culture will also promote a more productive and innovative work environment.

In addition to its importance in society, corporate culture affects the company’s performance. A healthy company culture emphasizes the values of people. It is an essential part of a company’s culture. It also affects the company’s reputation. Having an ethical culture is essential for the success of an organization. The best way to do that is to encourage employees to do what is right. It will improve morale and productivity.

The War for Talent – How to Improve Inherent Corporate Culture and Ethics

There are many ways to improve corporate culture and ethics. The top executives should be held accountable for their actions, while managers and lower-level employees should be held accountable for their actions. They should also be evaluated for their moral values, and rewarded for doing the right thing. The key is to ensure that all employees are rewarded for doing the right thing. However, this is not easy. But if everyone works hard and is ethical, it will be much easier to increase the company’s profits.

The way top management conducts itself is also important for a company’s morale. Senior management should be an example of ethical behavior. They should be an example to all employees. If they aren’t, it will be difficult to promote a good corporate culture. A good culture will inspire confidence and trust in employees. This will help the company avoid ethical problems. This is important because the wrong culture will only make you look bad.

Lastly, there is the connection between corporate culture and ethics. Some organizations have a very good and ethical culture. Others are very un-ethical. While many people don’t want to be a criminal, they will not do anything that would violate the law. This is why corporate culture and ethics are so important. They are linked and can influence each other’s behavior. By making sure that everyone understands the importance of these issues, they will be more likely to do the right thing and be successful.

SUMMARY

In this post, we’ve explored the “War for Talent” taking place right now as we come through (hopefully!) the pandemic. Call it a result of the “great resignation” or whatever you’d like, there is a shortage of qualified applicants for each job opening. Nowhere is the war for talent with a pandemic focus greater than at the leadership level! We’ve explored how the key to successfully offsetting this war is corporate culture and ethics, powered by a comprehensive compensation plan. While this might not have saved Joshua’s CRO position at the aforementioned SMB organization, it should be a lesson the SMB organization pays attention to as they drive forward (Joshua should also ask these important corporate culture and ethics questions during his interviews for future employment!)

Sam Palazzolo, Managing Director

How to Build Capability to Power Business Transformation | Part 3

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The Point: A program that encourages productive behavior and skills in employees can be a powerful tool for boosting the organization’s productivity. It is also an important element of any successful business transformation. So why do so many leaders get it wrong? In this series, we’re going to explore building employee capabilities, or skills for business transformation… Enjoy!

Business Transformation_Zeroing Agency

Capabilities and Transformation

There are typically four steps to building capability that support a successful business transformation. First, employees are taught new skills. Second, teams apply those skills to their abilities and behavior change. Third, the organization then begins to improve its effectiveness. Fourth and finally, the company achieves its financial goals and other goals/objectives.

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Business Transformation Common Sense Isn’t So Common

This four-step process would make business transformation seem like common sense when it comes to implementing a capability-building program. However, it’s not a common practice, as we have already noted in our previous posts. Why? Companies don’t prioritize capability-building because the learning outcomes are too simple or distracting, or the key C-suite member isn’t interested. This results in lost opportunities that leave the outcome of business transformation programs up to chance.

Business Transformation Ineffectiveness

However, business transformation programs that focus on skill building are often ineffective. A Tip of the Spear Ventures survey of 120 business executives found that nearly 80 percent of respondents believed capability building was very or extremely important for the long-term success of their businesses. This is an increase of 59 percent from before the COVID-19 pandemic. Only one-third of the respondents believed that capability-building programs are successful in reaching their business goals and maximizing their impact on the economy.

A Business Transformation Case Study | Take 1

An international manufacturing corporation’s business transformation experience shows how a strong capability-building program can drive transformation. The company was in the bottom quartile of its OHI score. Within four years, the company’s OHI score had more than doubled and placed it in the second quarter.

The company’s issues of accountability and business unit communications — which were the main causes of its problems — changed the ground-level impact. Roughly 5,000 new ideas were generated by employees who are now engaged, many of which had a positive impact on the bottom line.

These ideas for improvement were a great asset to the company and helped more people achieve their goals. The company’s former Chief Transformation Officer (CTO) stated, “We can’t view everything from up here.” In other words, sometimes great ideas come from deep within the departments of a company. Leadership can help frontline employees develop their capabilities and give them the opportunity to champion an idea and be recognized for their efforts.

A Business Transformation Case Study | Take 2

Another case showed the importance of capability-building in business transformation. A module of capability-building program on effective meetings saved 2 to 3 percent of time in their employees’ schedules. This may not seem like much on an isolated incident episode, but it adds up over a year in the company that has over one thousand employees.

The company’s capability-building efforts made it more agile than its peers. One example was when a group of capability-building workshop participants sat down and predicted what black-swan events could adversely impact the plant in the next year. One of the results was a category 5 hurricane. This is not an everyday or even annual occurrence. The company had to prepare for this contingency by purchasing extra equipment and creating special procedures. As a result, the plant was back online in weeks after an actual hurricane struck. The sixfold increase in shares after implementing the transformation and the capability-building that supported it was also associated with a shorter time span of four years.

Business Transformation Research

Research points to the power and effectiveness of capability building, despite some anecdotal evidence. Recent Tip of the Spear Ventures research showed that employees who engage in capability building during organizational transformations have an effect on organizational health. Exposing at least 10% of their employees to these programs was twice as likely for success as organizations that did not. The average improvement rate was nine percentile points, versus zero improvement. The organizations that had more than 30 percent of their workforce participate in formal capacity-building programs increased by an average 12 percentile places.

These economic benefits are real. Our analysis revealed that companies that included more than 30% of their workforce in capability-building programs enjoyed total shareholder returns of 43 percent higher than the benchmarks after 18 months. The benefits are not only for employers, but also flow back to employees. It turns out employees actually love learning new skills!

SUMMARY

It is difficult to implement and sustain business transformations. Many thousands, sometimes hundreds, of thousands of employees need to be involved and aligned regardless of their location, language or culture. Organizations can develop the mindsets and behaviors necessary to drive a change and reach their full potential through capability-building programs that are effective.

Sam Palazzolo

30 Days to ETA | Day #23 – ETA Industry / Business ID

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If you’ve been reading along in this 30 Days to ETA series, you know that in the Day #22 post I discussed how as Acquisition Entrepreneurs there is one mistake that I see time and again made by Entrepreneurs Through Acquisition (ETA), that being not having enough opportunities in the Mergers & Acquisitions pipeline. So, in yesterday’s 30 Days to ETA post, we explored ETA Deal Flow | Brokers (You can read the previous post by CLICKING HERE). I believe that if you fill your Mergers & Acquisitions pipeline with qualified companies to explore acquiring, life will become easier for you. But how will you know which businesses are right and which businesses are wrong to begin the filtering process on? So, in today’s 30 Days to ETA post, we’re going to explore ETA Industry / Business ID… Enjoy!

30 Days to ETA - ETA Industry / Business ID

ETA Industry / Business ID

Business — and therefore life — would be boring if we were all the same, right? I mean, I know that the “like” attracts “like,” or we enjoy things in life that are similar to what we like or enjoy. But isn’t diversity the key to success? How many times have you heard “Don’t put all your eggs in one basket” told to you by your parents probably? While on the one hand, I’m glad we’re not all the same. On the other hand, I’d like there to be greater similarity. I know, a catch-22, right? We all have different likes and dislikes, different preferences and tastes. It takes all of us to make the world go around.

Similarly, Acquisition Entrepreneurs come in all different shapes and sizes. Some of us who pursue Entrepreneurship Through Acquisition (ETA) have a little bit of money while others have a lot. Frugality rules some while “spend it if you have it” are the rules for others. Some may want an instant return on their investment while others don’t really care about getting a return. And what about those that are looking to sell their business? Some look at the potential long-term capital gain from selling their business, while others just want to concede to their competition.

So who are the sellers? What type of person or company sells their business? Well, there are a couple of different categories into which sellers fall, and by going through the following exercise with me you’ll identify your potential seller persona. Once you understand who your seller is, then you can design, shape, and create your ETA strategy to appeal to that particular type of business seller.

I believe that if you fill your Mergers & Acquisitions pipeline with qualified companies to explore acquiring, life will become easier for you.

Sam Palazzolo, Managing Director @ Tip of the Spear Ventures

The Low-Risk Sellers

The first major category of sellers consists of two very different types of business owners who both desire low-risk Mergers & Acquisitions.

1. The Financial Seller

First, we have the individuals who trade businesses like they trade stock. These owners will crunch numbers to estimate their return on investment in every type of detailed scenario. Oftentimes, these sellers are looking to hold the business for less than 5 years. Thus, they’ll want to know all of the ins and outs of their business so as to put it in the best light when it comes time to sell the business. They are NOT taking any risk that they won’t make a return on their investment within a very short time period.

Not all Financial Sellers are number crunchers or business traders, though. Some Financial Sellers come in the form of family members or employees who sell the company. They may want to go “5 and out” so that they won’t be taking risks and gambling with their investments. They’ll look to earn a sizable living by continuing the legacy of the company you buy. Most will hope to sell it for profit when they’re ready to retire.

2. The Strategic Seller

Now, the Strategic Seller is just a slight bit different. This individual is not looking to flip a business, per se. Rather, they’re looking to sell their business to enhance their life. They may want to add a cog to his business wheel that will work in harmony with other current lifestyle events.

But not all Strategic Seller want to divulge of harmonious pieces to their existing business. Some may be your competitors in some other form or fashion, looking to take over your customer base or market niche right out from under you. They want harmony in the sales process, but beware their underlying intentions.

The High-Risk Sellers

The second category of business sellers breaks into three different high-risk takers. These are the gamblers of the business selling world!

1. Angel Investors

Angel Investors typically work with start-up companies that show promise but have no proven track-record. Therefore, they take the most risk. These investors come in, buy part or all of the company, and help drive its success. Whenever they purchase or buy-in to a business, they usually don’t take all of the assets or buy all of the stock. However, they’ll take a majority of the interest equity in the company. This seller may look for similar high-risk, high-reward payouts from the sale of their business.

2. Venture Capitalists

Venture Capitalists are not going to sell companies at ground level. Think multi-millionaires who buy a company or take ownership of a company that has a proven track record of success but needs connections that only the venture capitalist can provide. The Venture Capitalists hope that their high-level affiliations will drive the company to exponential success, making them even more money. When it comes time to sell, they want the earth, moon, and sky!

3. Private Equity Firms

Private Equity firms are a bit different from the other business sellers because they typically only purchase the best of the best companies. Consequently, they pay the most and typically deal with the largest companies worth over $100 Million. These firms are looking to buy the next Google or Amazon. When it comes time to sell while less aggressive than Venture Capitalists, will still want a healthy return on their investment.

Business ID (Identification)

So we’ve categorized the types of low-risk and high-risk sellers looking to sell their business. Besides identifying the type of risk-taker you want to buy your particular company from, you have to look at the rest of the Business ID (Identification) demographics. What I mean is the local, regional, national, or global size of the business that often determines which types of business sellers will be attracted to your Mergers & Acquistions ETA pitch.

Those companies that operate in a small, localized area will normally seek “mom-and-pop” purchasers. These seller’s goal is to go out and get a return on their investment within about three to five years. They’re really not interested in spending a long time getting a company off the ground, so they seek an established business they can then sell for hundreds of thousands or a few million dollars. Then, they expect to recoup their investment in a short amount of time.

Regional sellers will typically sell companies that operate in larger areas that have mastered the art of scalability. These sellers will purchase companies with multiple storefronts in multiple cities or states. Because of the bigger investment and the larger marketplace, regional sellers expect to wait about five to ten years before they see a return on their initial investment.

National and/or international sellers will purchase the publicly traded or globally based companies. These sellers/investors look for companies that are the “best of the best.” Expecting to be paid more than local and regional sellers, they want everything the company has to offer and then some. With such a large investments taking place and hanging in the balance, these sellers will insist on solid profits from the very beginning. So they’ll look at selling companies that show reliable trends and steady customers.

SUMMARY

In today’s 30 Days to ETA post, we explored the concept of ETA Industry / Business ID (Identification). This post should help you identify the types of business sellers most likely to sell their business based on risk and location. If you can determine the specific seller for your future ETA company, you have an idea of which location to search for the company during the ETA search phase. If you’re ready to buy, identifying your seller persona — or at least knowing who they could be — will help clarify where and how to reach a seller that will agree to your desired acquisition price.

Sam Palazzolo