Business Banking E-Newsletter - May 2013

How to Improve Your Critical Thinking Skills

As an entrepreneur, you make decisions every day that affect the success of your products, the loyalty of your employees, and the overall health of your business. To make the best decisions possible, you need to think critically and quickly to pick out any flaws in your processes that might harm your business.

When you think through a problem, your thought process is naturally colored by biases, such as your point of view and your assumptions about the situation. Each of those biases affects your reasoning. If you let your biases drive your thought process and overlook blind spots in your logic, you’ll unwittingly make decisions filled with holes.

"Critical thinking is a way to intervene in your thought process," says Linda Elder, an educational psychologist and president of the Foundation for Critical Thinking based in Tomales, Calif. "It's a way to routinely and consistently seek problems in your thinking."

Try these three strategies to help you think through a problem effectively.

1. Identify your purpose.
Every time you face a decision, there is a purpose attached to that choice, or a goal that the decision will help you achieve. For example, if you are expanding into a new market, your purpose might be to choose the one with the greatest growth opportunity.

Once you identify your purpose, it should inform every step of your decision process. First make sure that you're clear about what it is, articulate it for yourself and your team and make suse you use it as a starting point, not an end point. “With critical thinking, it is essential to go beyond the basic skills like gathering information," Elder says.

2. Examine your biases.
When you face a problem, it's common to view it from only your perspective and to overlook how your clients, customers, or co-workers might see it. Considering the situation from only one point of view, however, can lead to products that flop or unnecessary spending. The goal of critical thinking is to bring those biases to light so they don’t obstruct your decisions.

To do that, articulate your own viewpoint. Ask yourself, what do I believe about this situation? What is important to me? Next, look for any assumptions you might be making about others' thoughts or behaviors. "Irrational thought is often unconscious," Elder says. "When we articulate our thoughts, we have a better chance to detect distorted thinking."

3. Consider the implications of your options.
Every choice has consequences, and you can improve your decision-making by anticipating what those might be. To do that, approach the problem from many different viewpoints. Imagine yourself as each of the stakeholders, and consider how they might feel and act in response to each option. 

If you do make a choice that backfires by upsetting clients or hurting sales, take a deeper look at which implications you failed to think through, and why. "Common reasons are that people were intellectually lazy and didn't want to consider a given viewpoint," Elder says. Knowing what you missed and wh, will help you avoid that issue in the future.


Leader or Manager, What Does Your Small Business Need?

The debate continues, is leadership and management the same thing? Colleges across the country offer degrees in Management, each with required courses in leadership, so doesn’t that imply that to manage you need to know how to lead? And what are you, a leader or a manager, because we can’t be both right?

You may not be sure there is a compelling reason for a clear distinction but what you do know is that your business has different needs at different times. Here is a simple distinction: Leadership is managing change. Management is leading stability.

Where is your business right now? If stability is the answer then shame on you. When your firm stops growing you stop being an entrepreneur and your company’s future gets shaky at best. If you find yourself “managing” a stable company in a stable market look for an exit strategy – sell to someone looking for change because the market is changing every day and change is where opportunity lives.

So – if change describes your environment then your firm is desperate for leadership; here are a few quick reminders that will help you lead effectively.

Employees crave clear direction. They may grumble and act like they disagree sometimes, but direction is comfortable. Many of your employees are following because they choose to – leadership is uncomfortable for them, but ambiguity is just as uncomfortable.

Don’t sugar coat.  Be clear, particularly with today’s young work force, tell them what they can do to improve and then be sure to recognize them when they do it. Everyone knows there is something they can do better, telling a young employee how to develop is a gift – but be sure to recognize improvement.

Trust.  Delegate responsibility, give very clear expectations and then trust that your employees will get it done. Nothing motivates like ownership. But when the task gets done reward them, publicly. Watch what the rest of your employees do the next time you delegate to them.

Be a leader – provide clear instructions and don’t sugar coat.


Are You Insured for Growth?

Congratulations, your business is growing. But before you start celebrating, are you sure your insurance still protects everything you worked so hard to achieve?

It’s not exactly news that small business owners spend a great deal of time focused on how to grow their business. But as the economy thaws and your circumstances change for the better, don’t let growth catch you unprepared. Protect your hard work and persistence by reviewing your insurance policies to make sure they keep up with current business needs.

As Pedro Hernandez at Small Business Computing notes, it’s common sense to review and update your insurance policies when you get married or buy a house. The same holds true in your business life. Insurance coverage that doesn’t keep pace with your business needs can hand you a serious financial setback or, in the event of disaster, it can drive you out of business altogether.

The good news is that it doesn’t take a lot of effort to keep your policies current with your needs – just a thoughtful talk with your insurance agent. Here are some small business insurance tips on what to discuss.

Insure against hackers. You might think your business is too small to attract the attention of hackers, but you’d be wrong. “Small businesses suffer cyber losses and hacking losses at a rate that’s just as big as for big businesses,” said John O’ Connor, a vice president at Travelers’ Small Commercial division. Check your current Business Owner Policy (BOP) and make sure it covers business data loss. If your business gets hacked and you lose customer data, the resulting lawsuits and fines can be very expensive. Ask about policies that cover remediation and customer notification services.

Protect your inventory. O’Conner urges small business owners to think about damage to their inventory. Is it properly stored and protected? Ask about insurance that covers you in case a supplier goes out of business or a third-party warehouse damages your inventory.

Consider contingency planning. Protection and risk mitigation go hand-in-hand, as any good insurance agent will tell you. Good planning – such as redundant and contingent suppliers – can keep your business up and running even if you lose a major supplier.

Vet and train all employees. Some insurance companies offer services for employee background checks, which can reduce the risk of a bad hire. Also, you can avoid or reduce employee injuries by properly and persistently training your employees.

Update your BOP. If you don’t have a Business Owners Policy, get one. And if your company is expanding, you really need to make sure the BOP covers your current needs, enough to cover new equipment or a growing headcount. It doesn’t have to be extensive, said O’Conner. At a minimum, you should look for “a package policy that includes property coverage, includes business interruption and repays your profits.”

Protecting your business as it grows is just common sense. And it gives you peace of mind as you plan to take your empire to the next level.


8 Ways to Conquer Your Leadership Blind Spots

You don't know this, but there are some serious blind spots in your leadership skills. These 8 tips will help you see them clearly, and conquer them for good.

To be a successful leader or entrepreneur, we need to become intimate not only with our strengths but also with our blind spots, those aspects of our personality that can derail us. John C. Maxwell defines a blind spot as "an area in the lives of people in which they continually do not see themselves or their situation realistically."

All of us have blind spots. A Hay Group study shows that the senior leaders in an organization are more likely to overrate themselves and to develop blind spots that can hinder their effectiveness as leaders. Another study by Development Dimensions International Inc. found that 89 percent of front-line leaders have at least one blind spot in their leadership skills.

When we're in a leadership position, our blind spots can cause a great deal of damage, not only to our career but to the people who depend on us. How can you avoid this potential pitfall for yourself and your business? These eight tips can help.

1. Raise your awareness of the top blind spots. The top three blind spots are: under-communicating strategic direction and priorities, poorly communicating expectations, and waiting for poor performance to improve. 

Leaders are often surprised when stakeholders complain that there isn't enough communication about the business' vision and strategy. There is a communication gap between what leaders think is enough and what stakeholders need. Communication also extends to one-on-one leadership conversations. Leaders often fail to see the harm that is done to the organization when they consistently avoid having the difficult conversation with a non-performer, hoping the issue will resolve itself.

2. Don't hire in your own image. In the Top Ten Mistakes that Entrepreneurs Make, Guy Kawasaki includes one of the most pervasive blind spots that leaders often have: Hiring people who are like them instead of hiring individuals who have complementary skills. Hiring people who are similar, results in organizational weaknesses. As Kawasaki puts it, "You need to balance off all the talents in a company."  

3. Establish a peer coaching arrangement. Every leader can benefit from peer coaching with leaders in other organizations. As a business owner, consider peer coaching with a non-competing business that's the same size. In Five Ways To Find Out What You're Doing Wrong, Les McKeown says, "Most organizational blind spots are size-related, not industry-specific. In other words, your blind spots will have more in common with other businesses of a similar size and age than they will with other businesses in the same industry."

4. Examine your past history. To gain insight into behaviors that may not serve you well, think back on your past successes and failures as a leader. This kind of introspective inventory can yield some powerful insights. What do you need to stop doing? What do you need to do more of? What do you need to start doing?

5. Understand your habits. Blind spots are not necessarily weaknesses—they can also be habits or instinctive reactions to situations. For example, do your workload and stress cause you to interrupt people in meetings in order to speed up things? Most managers are 18-second listeners. If this describes you, work on developing more patience. It will enhance your interpersonal skills and improve your leadership effectiveness. 

6. Place a high priority on relational skills. In Winning With People: Discover The People Principles That Work For You Every Time, John C. Maxwell states a simple, but powerful truth: People can usually trace their successes and failures to relationships in their lives. Every time something good or something difficult has happened to you, you can most likely point it back to some relationship you had.

Studies show that only 15 percent of a person's success is determined by job knowledge and technical skills, and 85 percent is determined by an individual's attitude and ability to relate to other people. As Maxwell observes, many leaders have big relational blind spots. For example, some individuals may come across as arrogant, stomping on people in their quest to achieve results. They may not be aware of the need to curb their arrogance until it's too late. Others may not show much warmth and fail to pick up on the emotional clues that others give them. Make it a priority to develop healthy interpersonal skills.

7. Consider the downside of your strengths. It's a known fact that our gifts, taken to the extreme, can be liabilities. For example, one of your strengths might be that you are prudent in your decision-making. But what you view as caution, taken to the extreme, might result in fear of risk taking. In the long run, this can work against you. You may pride yourself in being a visionary, but taken to the extreme, you may bounce off in too many directions, frustrating others on the team by switching gears too often. List all your strengths, and reflect on how they manifest themselves in your leadership style. If you need help in this area, work with a mentor or coach. Consider asking your constituents for feedback. We rise as a leader when we have the courage to ask, "How are my actions affecting performance?"

8. Take an assessment to identify your blind spots. The Reiss Motivation Profile is a comprehensive, psychological assessment of what motivates us. It identifies 16 basic desires that will give you insight on why you do what you do and will help you identify your blind spots. For example, the desire for independence can end up being a blind spot when a leader refuses to admit that he can't do it all by himself. A quick, online assessment can be accessed at