This economic forecast from Vistage research is worth the read and a gift to see the opportunity in the coming year.

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As the history of 2020 is written, it will be the year of COVID-19 and the biggest freefall of the U.S. economy since the Great Depression. How and when this story will end are uncertain.

As we enter 2021, America is in the midst of a highly uneven recovery. Some economists believe 2021 will result in the highest GNP growth in the last twenty years, at a time when nearly 15 million Americans can’t pay their rent. Here are economic trends to consider in the year ahead:

Sources: The Conference Board and Kiplinger

U.S. GDP is expected to grow 3.4% in 2021. The momentum of the recovery is widely believed to come down to two highly reported variables: the timing of a vaccine (which we will not cover here) and the likelihood of further stimulus.


Other 2021 trends
Part 1: Ecological trends facing business in 2021 and beyond
Part 2: Social trends facing business in 2021 and beyond
Part 3: Technology trends facing business in 2021 and beyond


Bidenomics, stimulus and the stock market

The Biden administration, diluted by the likelihood of a Republican-controlled Senate will have to confront the pandemic and a fragile economy.

Animal spirits—the emotions that govern our investment decisions—are still prevailing on Wall Street. On November 24, the Dow Jones Industrial average closed above 30,000 for the first time, on news of a vaccine and the naming of Janet Yellen as incoming Treasury Secretary. Yellen is a labor economist who is said to have the steady hand and temperament that can find common ground with Congress. Yellen said that “the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat.”

There is renewed effort for Democrats and Republicans to agree on a stimulus before President Elect Biden takes office. A bipartisan effort to extend relief has focused on more money for education, help for small business and extension of job benefits. The Republican proposal cut out relief for airlines, rental assistance and state/local governments who face a $400 billion shortfall.

Extension of the Paycheck Protection Program (PPP) seems likely. PPP appears to have achieved its objectives given the spike in wages after the legislation was passed in April.

economic trends 2021 hourly earnings

U.S. public markets remain one of the few bastions of safety throughout the world and have outperformed foreign markets. As of Thanksgiving, the S&P Index was up 13% for the year. Big stocks and big tech have driven the rally. Since their March lows, Apple is up 105%, Amazon 64% and Tesla 538%. Of late, small-cap stocks have spiked, with the Russell 2000 up 19% in November—its best month ever. While Vistage companies have performed well, the average “small company” in the U.S. took a 20% revenue hit.1

As consumer spending comprises roughly 70% of GDP, consumer spending is still the bellwether for U.S. economic activity. Experts have their eye on prices, as any protracted level of inflation would hurt the people who can afford it the least:

economic trends 2021 consumer price index

During the pandemic, the federal government flooded the system with so much cash that corporations couldn’t borrow it all, prompting Treasury Secretary Steve Mnuchin to ask Congress to reappropriate $455 billion in COVID relief. While the backstop of the U.S. government is comforting, it is also unsustainable. Biden takes over when public debt is 106% of GDP, the highest in history.2

Will Biden reverse U.S. protectionist trade policy? Biden’s rhetoric suggests a hard line in protecting U.S. interests with China. Yet, whether tariffs will remain the long-term trade policy of the United States is unclear. Ironically, a weaker dollar would boost U.S. manufacturing exports. Under Trump, the U.S. dollar has on average been 18% stronger than under Obama.3

Construction and housing

U.S. home sales reached a 14-year high in October amid low interest rates and fundamental shifts in housing preferences. This degree of housing growth is somewhat unprecedented in a period of high unemployment and soaring prices. With interest rates at their lowest since the government started measuring in 1971, buyers are splurging on single-family homes with more space. The S&P Homebuilders Select Industry Index is up 24% this year, as big builders such as Lennar and D.R. Horton can’t keep up with demand for new housing. In October, existing home sales were up 27% from the prior year. Prices are also higher, up 16% from the prior year, with the average home price at $313,000 (the highest on record).4

Evictions will spike after the first of the year when such protections expire. According to data from the U.S. Census Bureau, 15 million Americans are not confident they can make their next rental payment.5 Even couples making $200k can’t be evicted according to some rules.

The National Association of Architects projects 2021 nonresidential building to decline 5% in 2021 after an 8% contraction in 2020. Subsectors such as hotel (20%) and amusement parks (13%) took the biggest hit, with public safety up 16%. Expect Biden to shepherd a job-building infrastructure bill early in his presidency. Such legislation could also fund over $1 trillion in improvements.

Retail and ecommerce

The pace of digital transformation during the pandemic has been staggering. In Amazon’s quarter that ended in September, revenue sored 37% to $96 billion while its profit tripled.6 Yet Amazon is viewed as the e-retailer of choice for goods that are inexpensive and require quick delivery time.

Walmart’s Q3 results are an indicator of shifts in consumer behavior. In-store traffic dropped 14% while ecommerce sales were up 79%. The average in-store ticket was up 24% as customers visited less often and stocked up on staples.

economic trends 2021 ecommerce

The National Retail Federation expects holiday sales to be up around 4% this year. Retailers have been projecting a strong holiday season as a result of pent up demand and high savings rates. Many families hunkered down this year and skipped their vacations. Yet consumers are curtailing their spending again. JP Morgan Chase & Co’s tracker of 30 million credit card holders showed a decline of 4% in the week ending on November 13.

Home improvement stores have performed well, while apparel retailers are shuttering locations. Home Depot sales were up 24% in Q3 while Kohl’s was down 13%. After an 18-month period where companies had to redesign their supply chains as a result of tariffs, they had to adjust again as supply and demand were in turmoil.

Prescription drugs seem to be the next big battle ground for ecommerce. Amazon’s entry into the pharmacy business sent shockwaves as valuations for CVS and Walgreens plummeted. Today, national chains and big insurance companies control distribution. In March, online pharmacy sales spiked 21% but only represented 6% of the market.

Healthcare

The gravitational pull of COVID-19 has been the impetus to permeant changes in the U.S. healthcare system. In particular, the healthcare sector adopted technology changes that have altered service delivery.

For example, the rapid adoption of telehealth is bringing much needed care to rural communities. In April, 43% of Medicare visits were through telemedicine.7 Telehealth is expected to be a $185 billion business by 2025.

Robotics are becoming part of the healthcare ecosystem, including automated healthcare assistants and even companion robots (recently introduced in the UK) to help contain an emerging mental health crisis. Today, sensors automatically track vital signs and software updates electronic medical records. Headed into 2021, robotic process automation (RPA) will be utilized for everything from managing claims to inventory of PPE.

AI and machine learning are rapidly altering the healthcare data universe. AI technologies such as those used by BlueDot are actively predicting the spread of COVID-19 and can be used for numerous other mitigation strategies such as tracking insect and animal movements, calculating healthcare capacity and developing vaccines. Thermal screening devices are being installed in offices to track temperatures, and customer apps are being used for contact tracing.

Mercer reports a modest 4.4% average projected increase in health plan costs next year. In a reversal of trends in 2019 and 2020, fewer employers will shift healthcare cost burden to employees.

economic trends 2021 healthplans

However, the underlying problems plaguing our healthcare system remain unresolved. Entering 2021, a Supreme Court decision on the constitutionality of the Affordable Care Act’s individual mandate is looming. There is a clear shift in the medical community from reactive care to results-based preventative care.

Automotive

The automotive market is expected to bounce back after a dismal 2020 when new car sales fell by 18%.8 Global automotive sales are expected to rise 15% next year, propelled by EV sales (expected to grow 36%). Consumers are gravitating away from public transportation and back to owning their own vehicles.

Manufacturers are delaying new model releases as a result of sluggish sales. According to Fox Automotive, SUVs and full-sized pickups took share from mid-size and compact cars in September. Nissan’s sales are in steep decline.

Tesla, with its small base, is the only auto manufacturer who grew sales in Q3. Its stock, up over 500% this year, has been the darling of Wall Street (I am smitten with my Tesla, which I don’t get to drive very often.) It will take Volkswagen, BMW, Fiat Chrysler, GM and Ford years to catch up to its autonomous driving technology. There is an expectation that Biden will propel EV technology, perhaps reintroducing EV tax incentives which have expired.

Technology

The pandemic gave rise to new opportunities for the technology sector, during a time of rapid digital transformation. The tech sector is the best performing on Wall Street, up 38% YTD with cloud-based technologies up 42%.9 Large tech stocks are trading with forward PE of over 30.

The recent announcement of Salesforces’ proposed acquisition of Slack is par for the course, as cloud-based providers gobble up applications in an effort to create end-to-end software solutions.

While technology trends have recently focused on cloud infrastructure, 2020 marked a collision of real-world applications and necessity, as companies installed touchless payment systems and retina reading displays. While companies such as Amazon and Microsoft are in a race for supremacy in cloud computing, companies in the shadow industries that support the cloud sector are among the ones growing the fastest and spawning VC investment.

Consumers are gravitating to wearables as real-time health metrics are of heighted importance. Apple even released its new series of smart watches that track blood oxygen levels. Gartner predicts wearable revenue to double in 2021. Don’t even bother trying to find a smart refrigerator.

Blockchain has reemerged during a period where alternative currencies are gaining steam, with its price reaching 18,000. With U.S. carriers rolling out networks, 5G is the great enabler that is unlocking the promise of other technologies.

While the technology sector has never been stronger, it faces new regulatory pressure from both the left and right. Some believe recent Congressional testimony by Facebook’s Mark Zuckerberg and Twitter’s Jack Dorsey only exposed the inherent advantages that large technology companies will create, having to navigate a more complex regulatory environment, and investing billions in AI and machine learning.

Financial services and banking

Perhaps more than any sector, banks had to absorb the shock of a black swan event in 2020 with zero interest rates, and the need to rethink brick and mortar as they consolidate branches and add drive-throughs.

Consumers are migrating away from the big bank model toward Fintech personalized solutions touting convenience and mobility. 66% of banking executives cite new AI, machine learning, blockchain and IoT technologies having a big impact on their businesses though 2025.10 A Harris poll revealed that 60% of consumers used mobile banking apps to manage their money during the pandemic.

At a time where consumers are saving and deposits are swelling, banks have limited opportunities to make money. The Fed has announced their intent to keep interest rates near zero, albeit in an environment where 10 year treasuries have inched higher. The number of mortgages 90 days in arrears has increased 5x during the pandemic, fueling fears of another mortgage bubble.

Global markets

Global GDP is expected to fall 5% in 2020. Europe has been the region with the largest contraction (8.8%). Europe is facing another slowdown in the wake of new lockdowns and a dramatic drop in the service sector, which represents three quarters of GNP.11 The eurozone purchasing managers index fell 10% in November, marketing lower manufacturing activity there.

Eurozone countries already crippled by various austerity measures are unable to generate monetary and fiscal stimulus on par with the United States. Further, countries such as Italy must pay bond yields in excess of 3% to raise money for stimulus.

economic trends 2021 GDP

East Asian countries with large industrial sectors, such as China and South Korea, have fared better during the pandemic. However, there was already pressure from western countries to move production to other regions. Apple recently announced plans to move much of its iPhone production from China to Vietnam, where industrial production is projected to grow 6% next year.12 China’s economy is expected to grow a somewhat modest 5% in 2021, with industrial production projected to grow 6%.

Countries such as Brazil and Japan had slumped during the pandemic, and deflation is of concern there. Japan’s national debt is the highest in the world (250% of GDP).

Central and South America are struggling amid political uncertainty. Q1 industrial production is expected to decline in Cuba (20%), Venezuela (50%), Argentina (2%), and Colombia (3%). Venezuela inflation is still hovering around 2,000% percent.

The Middle East faces the duel impact of COVID and a slumming oil sector, with the region declining around 5% in 2020. Wealthy Gulf states have been willing to provide stimulus but are taking on heavy debt loads. Those same states will seek to stabilize their economies by releasing oil revenues into their economies.13

References

1The Pandemic’s Alternate Realities – Bloomberg Businessweek, September 28
2The Pragmatist – The Economist, October 3rd
3The Not-So-Mighty Dollar by Cristina Lindblad – Bloomberg Businessweek, November 2
4U.S. Home Sales Rose to 14-Year High in October by Nicole Friedman – WSJ, November 19
5The Kiplinger Letter Vol 97 # 47
6Walmart’s Sales Gains Slow as Pandemic Drags On by Sarah Nassauer – WSJ, November 17
7Technology Trends in Healthcare in 2021 – ModDev
8The global automotive sector to see double digit growth in 2021 – The Economist, October 2020
9CSI Market
10Digital Banking and Financial Services Trends for 2021 and Beyond – The CMO Survey, Content Stack
11U.S. Economic Activity Picks Up on Postelection Lift By Paul Hannon, November 23
12Trading Economics
13Global Economic Outlook – The Conference Board, November 2021

Download the pdf from Vistage Research on the future of work in America.

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The COVID-19 pandemic brought a radical change to the business world: Corporate offices emptied out, and at-home offices emerged. Daily, stressful commutes during long morning and evening rush hours dissolved, and worker productivity increased as people used that found time for better work and improved well-being.

Prior to the pandemic, the business world was already moving in the direction of remote work. Many IT, SaaS and marketing companies, for example, were ahead in the talent acquisition game, recruiting the brightest people from all corners of the country to leverage their “distributed workforces.”

The events of 2020 forced businesses that had not yet deployed remote work to quickly adapt to the new work model. The need to pivot on a dime resulted in an incredible experiment in work culture that produced several positive outcomes, including higher productivity rates from employees, improved work-life balanceimproved retention rates, and lower carbon footprints.

The fear that employees would not be as productive working from home has proved to be erroneous, as leaders have witnessed their employees working effectively from home for the majority of 2020. Improved productivity may be attributed to fewer distractions from office settings, more rest and gained energy due to no daily commutes, and flexibility for employees to complete their work during hours that are best suited to their schedules.

The future of work is here today. While 42% of small and midsize businesses (SMBs) have started returning people to the office, many are waiting until 2021 (17%) or are uncertain about the timeline for return (11%).

The return to the workplace is slow with many SMBs embracing a hybrid work model; 29% are making the return voluntary and another 29% are planning a phased return. For those companies that are able to make remote working a permanent option, they are expecting a remote work model to save on large expenditures such as high rents and utility fees. Thanks to the number of innovative online collaboration and project management platforms, many businesses have been able to move forward despite the obstacles they have faced during our global crisis.

To explore the new direction of work, Vistage partnered with Optimize Inc. to look at this year’s trends in remote work, the adoption of collaboration technologychanges in corporate office settings, and shifts in company cultureDownload The Future of Work in America for insights into how small and midsize businesses are remaking what it means to work, collaborate, and move business forward in a changing world.

Download Report Now

Have a goal to read good books? Here are 12 from #Vistage #CEOs and Chairs to start you off!

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The key to great leadership is excellent communication. So, it is little wonder that the best leadership books are concise, engaging and easy to follow. From irreverent sendups of common failures to painstaking dissections of the human condition, the following leadership books offer actionable insights to help helm a company, or a leadership team, to success. Vistage CEO members and executive coaches have recommended many of these titles to their peers for deeper insights, strategies and inspiration to tote along the challenging and rewarding leadership journey.

Vistage Members: Join the Lead & Read Network, your space for connecting with fellow business leaders who are passionate about personal growth through reading, discovering new books, and participating in engaging conversations about the authors that have influenced their leadership journeys.

Dare to Lead: Brave Work. Tough Conversations. Whole Hearts by Brené Brown

Brené Brown has made a career of transforming vulnerability into strength for personal and professional success. “Dare to Lead” builds on that groundbreaking work with fresh, new insights and provides a roadmap for affecting change in organizations and in leadership styles. Vistage member Jesi Wang says, “I’m a huge Brené Brown fan,” and predicts others will be, too.

The First 90 Days: Updated and Expanded: Proven Strategies for Getting Up to Speed Faster and Smarter by Michael Watkins

The advice in this international bestseller is so sage, Vistage member Amir Shami said he read it twice. With a keen-eyed sense of workplace dynamics, Watkins provides strategies sharpened from his experience advising senior leaders in many types of organizations. He has seen firsthand the dangerous pitfalls inherent in leadership transitions as well as the proven framework for triumph.

The Infinite Game by Simon Sinek

In this riveting reflection of the game of life, Sinek provides a new language for business leaders to understand their role in their organizations and their organizations’ role in the world. Too many leaders think of business as a “finite game,” one with clear winners and losers. An “infinite game,” as defined by Sinek, is one in which the objective is to stay in the game while staying true to an organization’s just cause. Sinek provides a compelling argument against taking a short-sighted view of business, while providing a roadmap for courageous leaders to build organizations that endure.

Vistage Members: Watch for Simon Sinek’s discussion with Vistage CEO Sam Reese on the infinite mindset in January 2020! More information coming soon.

Traction: Get a Grip on Your Business by Gino Wickman

A recognized leader in building successful leadership teams, Gino Wickman lays out the six key components of growing and strengthening businesses. “Traction” provides the toolbox leadership teams can use to eliminate frustration and friction and create a company-wide culture of engagement in which all team members are dedicated to a company’s mission and success.

Radical Candor: Fully Revised & Updated Edition: Be a Kick-Ass Boss Without Losing Your Humanity by Kim Scott

“Radical Candor” has been a New York Times and Wall Street Journal bestseller for several years running. In this updated edition, Scott further hones her cultural touchstone concepts of honest feedback and professional development. Outlining specific steps, Scott encourages managers to challenge directly while communicating empathetically.

Positive Intelligence: Why Only 20% of Teams and Individuals Achieve Their True Potential and How You Can Achieve Yours by Shirzad Chamine

With an enthusiasm that leaps off the page, Chamine’s New York Times bestseller espouses a groundbreaking set of exercises to help executives workout their “brain muscles,” increase their “positive intelligence” (PQ) score and access untapped mental resources.

The Gift of Struggle: Life-Changing Lessons About Leading by Bobby Herrera

“The best leaders are always learning,” Bobby Herrera writes. And from “The Gift of Struggle,” leaders can learn quite a bit. Revealing how he came to see his own difficult upbringing as a gift, Herrera provides the framework for putting life’s lessons into action. A gifted storyteller, Herrera’s work is as uplifting as it is thought-provoking. Each chapter ends with “Questions to Guide Your Journey,” challenging the reader to adjust their behavior to achieve desired outcomes for themselves, their company and the people they lead.


Turning the Flywheel: A Monograph to Accompany Good to Great
 by Jim Collins

Building off the success of his number-one bestseller “Good to Great,” Collins offers more takeaways about the importance of slowly gaining momentum – turning the flywheel – to reach a business breakthrough. Short on pages (only 44) but long on wisdom, Collins details how to build a flywheel by understanding the specific drivers of a business’s success. An invaluable accompaniment to “Good to Great,” and the ultimate how-to manual for any executive.

Leadership: In Turbulent Times by Doris Kearns Goodwin

After delving deep into the lives of Abraham Lincoln, Theodore Roosevelt, Franklin Roosevelt and Lyndon Johnson, historian Doris Kearns Goodwin emerges with a nuanced understanding of how great leaders overcome the challenges of their times. The result is boardroom wisdom forged in battle. An inspiring read for leaders during our own turbulent times.

Thinking in Bets: Making Smarter Decisions When You Don’t Have all the Facts by Annie Duke

A World Series of Poker gold bracelet winner and a National Science Foundation fellow in cognitive psychology, Annie Duke understands the difference between strategy and luck. Her illuminating book reveals that much of what we think we know about business strategy is – she’s willing to bet – wrong. With precise advice, Duke provides a plan for improving the way leaders collect and evaluate data to steer entrepreneurs toward well-informed results.

Scaling Up: How a Few Companies Make It … and Why the Rest Don’t by Verne Harnish

“Scaling Up” delivers actionable techniques so meaningful, it should be on every CEO’s nightstand. Vistage member Shannon Black, who has used Harnish’s tools to inform her own scaling efforts, describes the book as a “treasure trove,” saying, “I’ve never read a business book that is so lacking in filler.” Every page of the book is packed with high-value, exceedingly useable insights for running and growing a successful business.

Start with Story: The Entrepreneur’s Guide to Using Story to Grow Your Business By Lyn Graft

Rising above the noise doesn’t require a louder voice, just a more authentic one. Drawing from his own story and the stories he has elicited from entrepreneurs and business leaders in disparate industries, Graft provides precise, relatable advice to guide leaders toward finding and telling their stories. “Start with Story” underscores the power of emotional connections to inspire investors and draw customers.

If you don’t have solid KPIs (or know what that is) I’m not sure you know how you are getting the results you get. Vistage has some suggestions for that.

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Truth can be found in the numbers, as they say.

For CEOs leading their companies out of the pandemic, the truth can be found in key performance indicators (KPIs) — the metrics that track the pulse of a business.

What we now refer to as KPIs have origins in the Total Quality Movement of the 1950s, and the Balanced Scorecard, a methodology developed at Harvard Business School in the ‘90s. Yet this methodology, which has been studied and prodded throughout 70 years of management science, is commonly misunderstood and poorly executed by businesses today.Free PDF Guide Journey to the Summit: The CEO’s 7 Laws of Leadership

During this time of uncertainty, there has been a movement toward speed, agility and access to predictive analytics. Business leaders have a heightened awareness of the critical nature of data and real-time reporting. Information is the ally of the informed CEO and executive leadership team.

Here are nine keys for gathering and reporting useful KPIs at your business:

1. Start by building a system of measurement.

Every week on the Vistage Networks forums, CEO members ask questions like, “We are a manufacturing company; what are good KPIs?”

Focusing on numbers without a process to evaluate them will yield unproductive metrics. Before determining applicable measures, leaders must identify success drivers in a strategic plan. Then, departments can zero in on the vital few. Good scorecards or dashboards only have 12 to 16 measures.

A management team must then consider the limitations of their systems. Many private companies do not have ERP (enterprise resource planning) systems that provide integration. Accumulating KPIs may require manual exports from multiple systems.

ACTION ITEM: Conduct an assessment of your systems so you can identify potential limitations. Then, seek out KPIs that you can gather seamlessly. You are better off with a measure that’s 80% accurate but fully automated versus one that is perfect but requires human manipulation.

2. Develop multiple scorecards.

Once a system of measurement is created, working groups can develop scorecards that are applicable within their area of control.

Given the complex nature of our business ecosystem, organizations typically require a corporate-level scorecard, divisional or departmental scorecards, and success measurements for individual employees. Measures applicable to a senior manager may be different from an entry level employee.

ACTION ITEM: Once you’ve established high level business goals, delegate the development of scorecards to working groups with specific delivery dates. Managers seeking numbers will tend to procrastinate on developing a full scorecard. Developing measures is iterative.

3. Find external indicators of demand

In February and March of 2020 when the pandemic hit, CEOs scrambled to figure out what their revenues would be. Best-in-class companies project their revenues months in advance. These companies create demand indices, often by linking to outside sources such as ITR Economics and websites like the Federal Reserve Bank of St. Louis and the Bureau of Labor Statistics.

ACTION ITEM: Look for specified economic variables that you can correlate to demand in your sector and tie your KPIs to these variables.

4. Develop predictive KPIs.

Management teams should attempt to solve problems before they begin. In many businesses, there tends be a disproportionate number of lagging KPIs. In addition to external indicators of demand, companies can create internal predictive measures.

Predictive indicators measure activities that drive future results. For example, companies should have an engine to measure pipeline. Today’s customer relationship management (CRM) systems easily capture pipeline value in a way that can be benchmarked from month to month.

ACTION ITEM: Demand that your sales and marketing team have methods for measuring pipeline. In ecommerce or other marketing-centric businesses, this may take on the form of conversion or other success metrics.

5. Make your corporate scorecard a push and not a pull.

CEOs often tell me they have “a lot of data.” Relying on managers to pull reports can be a fatal flaw. Once your management team agrees on a pertinent set of measures, scorecards should be pushed out in a regular cadence.

ACTION ITEM: Create automation so that data is automatically distributed to the people who need it most.

6. Enable frequency.

Various measures are conducive to daily, weekly, monthly or quarterly measurement. You might only measure customer satisfaction once or twice a year. Look for indicators you can measure weekly or monthly, such as the number of sales calls.

ACTION ITEM: When your department heads develop their scorecards, have them determine the appropriate frequency for KPI reporting.

7. Schedule formal debrief sessions.

Managers should meet to review scorecard numbers on a regular basis. By socializing key learnings from a scorecard, your company can build accountability and action into its culture. Inspire curiosity on root causes, so you can learn based on what the data is telling you. The value of scorecarding is driving behavior.

ACTION ITEM: Formally review scorecards as a team on a weekly or monthly basis.

8. Publish in public view.

By building a culture of transparency, you bring your employees along for the ride. This doesn’t mean you need to share sensitive financial information. While there is a trend toward more open-book management, not every business owner is comfortable with it. If you don’t share financial information, find shareable measures that will give employees a sense of the pulse of your business.

ACTION ITEM: Create a system to share information with mid-management (and/or all employees) through intranets, monitors or reports.

9. Test and train.

Before deploying measurements, test them in the real world to see if they are applicable and easy to measure. Once measurements are vetted, lower level managers can be trained on their importance so they can be leveraged in decision making.

ACTION ITEM: See KPIs Best Practices for Measurement guide for additional tips on developing a set of meaningful KPIs for your business.

Once you have established your organization’s KPIs, you have the blueprint for appropriate business activities and allocation of talent and resources. KPIs measure the short-term steps that lead to long-term performance in all aspects of your business, from finance to marketing and operations.

The truth is in the numbers — once you have clear KPIs, you will have a sharp and unobscured view of the state of your business and where it is headed.

Vistage CEO Sam Reese shares simple ideas to increase your workplace resilience.

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Almost nothing is easy right now. These times demand resilience. To be resilient in today’s workplace is to persevere toward a goal, even if progress is hard to see. Over the past few months, I have heard from Vistage CEO members who did not let setbacks deter them, and kept moving forward in the face of enormous challenges. At a time when resilience is required more than ever before, leaders are taking these six steps to incorporate the trait into their company culture and their leadership:

1. Develop a culture of ongoing learning, development and mentoring.

Having mentors on the team who believe that it is still possible to win, even if they’re behind, inspires the team to continue to move forward in the face of tremendous challenges. People with this quality keep others energized, pick up colleagues when they are down and fuel those around them. Resilient people inspire others to do the same.

2. Be transparent as a leader.

Resilience can be even more difficult to foster in the era of a virtual workforce. When leaders are transparent about what the company is facing, the team is able to face the challenge together and work through solutions. Inspiring leaders share stories about their company’s history and customers that showcase their values and operating principles, and demonstrate that there are no shortcuts or life rafts on the path to success. They also communicate how each team member is a valuable part of the company’s story, and how their work contributes to the company’s purpose.

3. Encourage employees to find balance between their work and personal lives.

The pace many employees work at today is unsustainable and will lead to burnout. Part of resilience is the ability to set boundaries when it comes to workload and timelines. The reason Vistage employees send an email at the end of the day to their managers is twofold: to allow employees to reflect on everything they accomplished that day and to sign off at the end of the day. It may seem counterintuitive, but when leaders encourage their teams to unplug during these difficult times, it recharges the team so they can stay focused on the goal.

4. Refine the interview and hiring process.

Successful leaders seek out resilient employees from the outset by asking interview questions that will shed light on whether the prospect is a problem-solver or plays the victim when things turn south. If a prospect plays the blame game or considers their losses strictly “bad luck,” they most likely don’t have the resilience the company needs.

5. Create cross-functional teams.

Cross-functional teams bring people together from different areas of the company and build trust among employees. These offer an opportunity to employees from all levels to practice leadership. People leave with hope, perspective and renewed energy to think about possibilities at all levels. Cross-functional teams also give company leadership unique insight into the challenges frontline employees are facing, and help employees understand that leaders are standing alongside their team.

6. Challenge thinking with fresh perspectives.

World-class leaders seek diverse perspectives on important decisions from trusted peers. They actively work to combat insular thinking and confirmation bias. They find other CEOs and business leaders who’ve tackled similar issues but in different industries. These peers understand the nuances and challenges of the role but bring fresh perspectives, unhampered by institutional knowledge. CEOs can share the real-time learnings that come from leading a company through a pandemic.

Fostering a resilient workforce is an invaluable investment. Resilience is something everyone has to have right now just to be productive. When a company builds resilience into its culture, it shows employees their leadership is committed and fearless. Effective leaders persevere toward goals, are transparent and allow employees to make room for personal growth, promoting a culture of resilience to face these unprecedented times.

This article was originally published on Small Biz Daily.

Take a look at this Vistage article written by Michael Malone – If I could Frankenstein the ultimate CEO

When I conduct leadership seminars, I start by asking the participants who they think best personifies leadership. Most of the answers are predictable with familiar names of well-known celebrities. Presidents, generals and CEOs usually top the list. But the ultimate question is: Who would you like to be like?

It’s getting close to that time of year – the holidays — and of course the seasonal kick-off starts with that spooky-scary-magical day … Halloween. So let’s indulge in a little magic of our own. Imagine yourself in your own laboratory, because you — Dr. Frankenstein — are going to create the ultimate best version of yourself, using the best parts of other successful leaders to create the ultimate leader.

A FrankenLeader.

I think the perfect CEO would have the following qualities:

Charisma. It is easier to follow a leader you like and admire, even if you don’t agree with everything they think or do. I like Abraham Lincoln and Ronald Reagan in this category. Both men had the ability to lead by leveraging their charisma. They assembled teams of friends and enemies, best in class for the betterment of the country and the world.

Intelligence. The top of the leaderboard here has Einstein and Edison. There’s also a couple of guys named Steve Jobs and Bill Gates. The key to their success as leaders was a direct result of not only their raw intelligence, but the ability to see the future, and use their intelligence for another quality – innovation. From these leaders came many of the greatest inventions in history.

Decisiveness. I had the privilege of serving with General James Mattis, our previous Secretary of Defense. While he is likewise extremely intelligent and well read, his success was also largely due to his ability to be decisive. Not all his subordinates agreed with his decisions – but I guarantee he made decisions with enough information to select a clear course of action, without the paralysis of analysis.

Courage. I was alive in the 1950s, 60s and 70s when the Civil Rights Movement was born. While the language and currency of racism has changed over the decades, the fallout is the same; it brought out (and continues to elicit) the worst in human behavior and treatment of others. Dr. Martin Luther King had to have huge amounts of courage to lead and energize the Civil Rights movement. He talked the talk. He walked the walk. That took real courage.

Humility and Heart. The above qualities are important, but your success as a leader pales if you lead without humility. Your accomplishments are just words and numbers on paper if you do them without heart. The world has a hero in Mother Theresa. She served a higher purpose. She accomplished great things at the expense of great personal hardship and sacrifice. And always with love.

While I’m waiting for the lightning to strike so I can breathe life into my FrankenLeader, I think I will just strive to be the best I can be with those five qualities in mind.

After all, I’m only human.

About the Author: Michael Malone

Michael Malone has spent more than 41 years in the Marine Corps and the Marine Corps Reserve. He has been a CEO and senior executive in several technology companies, and has been a Vistage Chair since 2005.

Small business confidence doubles from April low [WSJ/Vistage Sept 2020]

Anne Petrik

The Wall Street Journal/Vistage Small Business CEO Confidence Index rose for the fifth consecutive month, reaching 89.5 in September 2020, doubling the low of 44.7 recorded in April. The monthly gain of 11.3 points in the overall Index also signifies a gain in momentum after slowing in August. While all factors that comprise the Index improved from last month, the largest change was the decrease in pessimism about the U.S. economy; 83% of small businesses reported that the economy recently worsened compared to 88% last month.

Also significant is the 15-point gain in the proportion of small businesses that believe the economic conditions will be better in the coming year, growing to 56% after stalling at 41% in July and August.

As Dr. Richard Curtin, a researcher from University of Michigan who analyzed the data notes, “While the gains forecast a rise in third quarter GDP, the data also reflects the realization among many small businesses that substantial hardships remain, with survival dependent on additional aid and a vaccine that ends the coronavirus.”

Recovery progresses slowly

Data show that small business CEOs indicate that the timeline of recovery is improving slowly. Dr. Curtin cautions that, “Resilience comes from facing adversity, and after the longest expansion in history, this lesson was long overdue.” Just over half (56%) of small businesses reported that economic recovery would begin in six months to more than a year; last month that figure was substantially higher at 71%. Forty-five percent of small businesses reported that it would take at least six months to a year for their business to recover, down from 53% in August. According to the September survey, less than a quarter (23%) of small businesses expect revenue declines of 25% or more due to the pandemic, down from 28% in August.

Plans to return to the workplace vary

As different parts of the country have different restrictions in their reopening plans and industries have diverse requirements from workers, this has caused a great deal of variation in the proportion of small businesses that have returned to the office. Nearly two-thirds (64%) of small businesses have had all employees come back full or part-time. Just 6% of small businesses surveyed have gone fully remote.

For the 10% who reported plans to come back to the workplace in the future, the majority are waiting until 2021. Only time will tell if those plans stay intact as cooler weather and holiday gatherings bring people together inside.

Workforce expansion planned for next 3 months

With revenue expectations improving to levels recorded in March, workforce expansion is also on the rise. The proportion of small businesses that plan to increase their workforce has increased 11 percentage points in the past month, and 47% indicate that expansion will occur in the next 3 months. Even more significant is that just 8% of small businesses plan to reduce staff, a 4x reduction from 32% in April. With a broad range of applicants stemming from high unemployment, rigor in the selection process will be more important now than ever.

The September WSJ/Vistage Small Business CEO survey was conducted September 8 – 15, 2020 and gathered 679 responses from CEOs and leaders of small businesses with revenues between $1 million and $20 million. Our October survey, in the field October 5 – 12, 2020 will continue to measure expectations of small businesses through the recovery.

Download the September report for the complete analysis

Time management guide for executives who don’t have enough time

Vistage Staff

What is time management?

Time management is perhaps the executive’s most important tool. C-level executives are besieged by texts, calls, emails, meetings, charities, the news, board members, employees, other executives, their own health, personal obligations, and managing the company, among many other things.

But what, exactly, is the definition of time management? Time management is a process of planning and organizing projects, as well as the activities you and your team must do to complete those projects. Executives adept at time management always have an overview of their work and personal lives, allowing them to do more by working smarter.

Importance of time management for high-level executives

To leave time unmanaged is akin to being managed by your time. As Peter Drucker once said, “One cannot rent, hire, buy, or otherwise obtain more time.”

By managing time, executives will see immediate benefits. An executive who manages their time can prioritize what needs to get done to keep from feeling overwhelmed.

Time management ensures that executives don’t get stuck in the details—it may take an executive less time to create a spreadsheet, but their time is better spent on high-level tasks. And time management can help executives better control company time—once executives have a grip on their own time, they can see where their teams are needlessly slow.

Example of time management in business

While working at Bethlehem Steel Company, Frederick Winslow Taylor invented a process that nearly quadrupled the speed of cutting steel. A mechanical engineer by trade, Taylor became rich by patenting the new process. Even so, Taylor squabbled with other managers and was forced out of the company in 1901, freeing him to spread the word of his passion: measuring and managing time. 

On his own, Taylor convinced shovel workers to use more efficient movements and shovels. His ideas were novel and helped the workers make more money—pay depended on their production. Quickly, his ideas spread across shovel-using workers—as well as managers and researchers—and became the standard.

While Taylor’s ideas have been updated, he created a time management definition that, in spirit, has stood the test of time: Logic, analysis, and rationality should be used to determine where time is best spent.

Benefits of time management

1. Prioritize work life and personal life

An executive can use time management to take on more important projects. If an executive is working on five big projects, for example, time management can give them an overview of where the parts of each project will fit into their schedule, allowing them to prioritize and arrange their work.

2. Keep from getting overwhelmed

To be a good time manager is to be organized, a skill that will keep executives from becoming overwhelmed. If an executive is working on those same five big projects, they’ll stand a better chance at success and confidence if they know when and how to work on each project. Time management can be the difference between knowing what needs to be done next and merely guessing.

3. Avoid getting stuck in the weeds

Executives who find themselves working on too many administrative tasks or spending too much time in meetings must become better time managers. The problem with getting stuck in the weeds is losing track of time, which is a lone main non-renewable resource. Effective time management allows executives to be rich in time.

4. Delegate to grow your team

An effective executive is able to delegate tasks and projects. A good team, one able to handle more complex projects, is often the difference between success and failure. There are few better ways to create a successful team than to trust employees with important tasks. Executives with too much on their plate can delegate tasks to their team and instantly gain more time.

Time management infographic

7 time management tips to create more time

 Here are seven ways executives can improve their lives immediately by using the best time management techniques.

1) Set boundaries by saying “no”

Marcey Rader, founder of executive coaching firm Work Well. Play More!, recalls an executive she coached who said “yes” to almost everything.

“She had all this FOMO [fear of missing out] and she came to me because she never had time,” Rader said.

 Rader gave the executive a challenge: Say “no” to everything for 30 days. If the executive really wanted to say “yes” to something, she could wait until after the challenge.

“Since then, she has written a book,” Rader said. “She got into the practice of saying ‘no’ and then realized that her business still actually existed. She opened herself up. She was free to do the things that she really loved, so she wrote a book. I see that often.”

Executives often have a hard time saying “no” or setting time boundaries. They get sucked into multiple meetings, events, or tasks they don’t have the time for. Instead, Rader said that executives must practice setting boundaries, ahead of when they may be asked for their time.

A time boundary could be a canned response, such as an email template, or it could be setting a limit of the number of boards or charities they’ll serve on. The point is to avoid the moment where an executive is asked for their time, caught unawares, and agrees to an action simply due to social pressure.

“People are put on the spot and want to be helpful,” Rader said. “I find that creating those boundaries ahead of time—whether it’s where you contribute your money, where you contribute your time, or what your company is going to contribute to—makes it easier to say ‘no.’”

2) Plan your next day before you leave

Executives are brilliant high-level thinkers and planners, but what about the tactical effort of each day? One way to better manage time is to list what needs to get done the next day—meetings, tasks, deadlines, and anything else that’s important—the day before.

It may take some work to break down long-term goals into day-to-day tasks, but the practice will pay dividends. A study published in Psychological Science found that people who converted their year-long goals and deadlines into day-to-day actions were better at working on what matters.

3) Set goals

Goals are at the heart of time management. By managing time, executives will have the ability to prioritize the goals important to themselves, their family, their employees, and their company.

The best long-term goals are those that cause an executive to stretch but not break, those that allow creative executives to have a sense of direction while doing their best work. As psychologist Mihaly Csikszentmihalyi has found in his research on flow states, humans feel happiest in the moments when they’re stretched to the limits of their voluntary efforts to accomplish a goal.

The best way to set goals is to find what matters and turn those ideas into SMART goals. These are goals that are specific, measurable, achievable, relevant, and time-bound. In management coach Charlie Gilkey’s book “Start Finishing“, he suggests starting each goal with a verb. If your goal is to write a book, for example, don’t simply write “book” as your goal—write it as “write a book.” It’s a simple tweak, but action has the power to make ideas real.

Goals are inherently action-based and need high-level planning, which makes them perfect to work toward after executives have delegated low-impact work to others.

4) Delegate low-impact work

In his book “The Leader of the Future”, Peter Drucker wrote that, “Effective leaders delegate, but they do not delegate the one thing that will set the standards. They do it.”

Put another way: Do the work that matters, the work you do best, and delegate the low-impact work that can done by competent members of your team.

Gilkey wrote in his book “Start Finishing” that if one can list the steps of a task, they can delegate that task. By delegating, executives will have more time for high-level thinking, planning and management.

Rader said that executives often have tasks that they can do faster than someone to whom they’d delegate the task. But they should delegate those tasks anyway, she said, as it will save their own time.

In Rader’s business, she created a video and manual for how her employees can best distribute her books to companies that buy them. The video and manual were time consuming to create, far more than simply sending the books herself, but she sends books two or three times each month. By delegating the task, she’ll likely save hours over many months.

“A lot of times, people just think in the moment,” Rader said. “But a month from now, you could have recorded the video or written down the process, and somebody could be doing it for you.”

5) Prioritize with the Pareto Principle (the 80/20 Rule)

Once an executive has set their goals and delegated tasks, they’ll know what’s important to get done. But how can they prioritize what they do?

The Pareto Principle observes that for many events, about 80 percent of the results comes from 20 percent of the effort. This principle isn’t a law, but it contains a huge nugget of truth: most things in life have an uneven distribution. The most effective executives find where they can make the most impact, where they can find their 20 percent of input that creates 80 percent of output.

A big part of reviewing what needs to be delegated, what tasks should be prioritized, and how you manage your time should be thinking about where your effort is best spent. Each executive will have to review their own skills to see where they’re most effective, which may take some trial and error. But the power of Pareto, when paired with effective time management, gives executives the power to do more with less.

6) Stop multitasking

For most, multitasking simply doesn’t work. Arthur Markman, a professor in the department of psychology at the University of Texas at Austin, told LiveScience that maybe 10 percent of the population is adept at multitasking. For the rest, multitasking is taxing on the brain, overloading its working memory, and badly hurts productivity.

Research has found that multitasking creates more mistakes and multitaskers retain less information. Psychologist David Meyer said that even seemingly small task switches—how often do most executives check their phone throughout the day?—can cost someone as much as 40 percent of their productive time.

But for many, multitasking has become habitual. To fight the seductive pull of habit, Rader suggests practicing single-tasking, just as one might practice playing instrument, doing an exercise, or speaking a new language. Practice won’t make perfect right away, but with practice will come incremental improvement.

To better focus on single tasks, Rader suggests creating theme days. For example, Monday can be a day for high-level thinking, Tuesday for marketing, Wednesday for administrative tasks, and so forth. “It doesn’t mean you don’t also do those tasks throughout the week,” she said. “But you’re batching them together to better focus on them on individual days.”

7) Schedule time between meetings

“Never let anyone own your schedule,” said Lou Gerstner, the former CEO of IBM, and this is especially important if you want to make good use of your time between meetings.

Every executive will have free time, even if it’s only 15 minutes. Make use of this time on your schedule by scheduling it rather than leaving it empty. If an executive has an hour between meetings, that may be a great time to schedule exercise or lunch. If an executive only has 15 minutes, that may be a great time to sit in solitude, away from the buzz of business.

Busy executives are in demand—people will seize the dead time on their calendars, if given the chance. Instead, executives should schedule their dead zones, downtime, and moments to feel rejuvenated and refreshed. Executives who schedule their downtime give themselves the space to be humans in addition to executives.

Time Management Toolkit

For executives who want to quickly improve their time management skills, download Vistage’s free Time Management Toolkit for Busy CEOs. In this toolkit, executives will find what the research says about how CEOs spend their time, what the experts say about the best time management practices, and what leaders need to manage their time, stay healthy and feel supported amid tough moments.

time management toolkit

5 innovation lessons from top-performing companies

Never stop improving. High-performing companies are relentlessly focused on improving their performance through innovation, whether that’s aimed at accelerating processes, tightening workflows or clarifying communications. How do they succeed? By creating a culture that encourages exploration and experimentation, facilitates open communication with customers and employees, and drives innovation from both the top-down and bottom-up. At a higher level, the company’s senior team recognizes innovation as a key source of competitive advantage.

Seek out radical innovation on a smaller scale. What makes an innovation “radical” has nothing to do with size and everything to do with impact. Radical innovation is about breaking through perceived limitations to fundamentally change the game. For example, introducing a new product or capability, along with a new message to market, can serve as radical innovation on a smaller scale. Driving disruption can lead to tremendous rewards, but it requires tough decision-making and strong leadership on the part of the CEO.

If something breaks, use innovative thinking to fix it. All companies have to cope with the reality that, at some point, some part of their business is going to break or go wrong. What separates the high-performing companies from the pack is how they react to that challenge. They assess the situation quickly. They pivot rapidly to an innovative solution. They rally teams around the goals of that solution. By contrast, low-performing companies are quick to assign blame. They wait for others to fix the problem. They use outdated solutions to address new challenges.

Picture your worst-case scenario. What would you do if Amazon announced a solution that targeted your customers and made your go-to-market model irrelevant? More likely, what would you do if a competitor acquired a smaller player and boxed you in? What if they launched a new product or hired a superstar from your best region? Prepare for these worst-case scenarios by working through them in advance with your team. Set up a one-day offsite exercise where you proactively address these scenarios and brainstorm innovative solutions.

Leverage the relentless pace of change. Respect the fact that there is no status quo anymore, and that everything changes all the time. As a CEO, the question you must ask yourself is: Do I recognize, anticipate and leverage the current pace of change, or do I wait for a crisis to hit that will force me to innovate under pressure? In either case, innovation is required for survival and growth. Better to choose the former.

Above is an excerpt. For the full Vistage report click the link below.

5 leadership lessons from FDR that inspire reinvention during times of change

When the U.S. stock market crashed on October 29, 1929, shock waves collapsed markets worldwide. Three years later, 15 million Americans were out of work — one out of every three people. Capital investment dropped from $10 billion in 1929 to $1 billion in 1932. Farm income plummeted 60 percent. Worldwide gross domestic product (GDP) fell by 15 percent.

The following spring, Franklin Delano Roosevelt (FDR) was sworn in as the 32nd president of the United States. He took urgent and bold action to save American from ruin. “The country needs — and, unless I mistake its temper — the country demands bold, persistent experimentation,” he told the American people. “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”

More than 80 years later, the lessons of FDR’s leadership are still relevant for business leaders — especially those leading a company through difficult times. These five leadership lessons from FDR’s presidential campaign, early days in office and tenure as president have stood the test of time.

Leadership lesson 1: Provide an inspiring vision that gets people excited.

During his run for office, FDR campaigned on a “New Deal” for America. While he was short on specifics, his energy, charisma and message of hope resonated. “Happy Days Are Here Again” played at all FDR events. Campaign Manager Jim Farley observed that Roosevelt’s “ability to discuss political issues in short, simple sentences made a powerful impression. There was a touch of destiny about the man.”

Americans thought so too, and elected FDR in a landslide.

Leadership lesson 2: Lead with optimism, no matter how dire the situation may be.

The day before FDR’s inauguration, banks in 32 of the country’s 48 states had closed. Deposits evaporated. Money was useless anyway — there was nothing to buy.

On Saturday, March 4, 1933, gloomy skies matched the nation’s mood at FDR’s inauguration. Yet he radiated optimism. In his address, FDR proclaimed he would speak with “candor,” lead with “vigor,” and act “boldly.” He assured Americans of his “firm belief that the only thing we have to fear is fear itself.” As he spoke, sunshine emerged.

Leadership lesson 3: Work collaboratively with your colleagues to develop a plan for change.

While thousands attended inaugural celebrations, FDR invited his cabinet to the White House where Justice Benjamin Cardozo swore them in as a group — a first. Roosevelt had assembled his team in February, a bipartisan mix of conservatives and liberals, including the first female Secretary of Labor. FDR joked the Saturday swearing-in meant they would “receive an extra day’s pay.” It signaled his presidency would start with action, not ceremony.

That night, FDR stayed up past 1 a.m. with longtime aide Louis Howe, discussing the plan that would become known as the “Hundred Days,” a bold experiment in governing that set the bar for new leaders. Henceforth, the first hundred days for executives in all types of institutions would become the symbolic benchmark for measuring their early successes.

Leadership lesson 4: Take bold action and demonstrate courage.

FDR’s approach was informed by three elder statesmen: Antioch College professor Arthur Morgan inspired FDR to think big. Harvard President A. Lawrence Lowell encouraged FDR to take and hold the initiative with Congress. Retired Supreme Court Justice Oliver Wendell Holmes told FDR, “You are in a war, Mr. President, and in a war there is only one rule, ‘Form your battalion and fight!’”

On Sunday, March 5, 1933, FDR met with Congressional leaders to enlist their support, and then issued a proclamation closing the country’s banks. The next day he met with U.S. governors to explain his decision. He received a standing ovation.

That Thursday, Congress convened in a 100-day special session. In just seven hours, legislation safeguarding banks and depositors was introduced, passed and signed. FDR’s first days in office set the tone for his presidency and were characterized by speed, confidence and a willingness to try new things. “There are many ways of going forward,” he noted, “but only one way of standing still.”

Leadership lesson 5: Make decisions that benefit the greater good.

During the Hundred Days, FDR introduced — and Congress established — dozens of agencies that stimulated farm programs, initiated conservation programs, outlawed child labor and lifted wages. Timing helped. With war looming, American industry awoke — providing new jobs and what Roosevelt called the “great arsenal of democracy.”

FDR created opportunities to get Americans working and feeling good about themselves. Though crippled by polio and unable to walk since age 39, FDR exhibited the courage, vision and willpower to get America back on her feet.