Memorial Day, 2012

With few words and a handful of photographs from a recent family vacation, on Memorial Day in 2009 I published the first of what would become a series of posts on our nation’s legal holidays. My thought was that some reflection on the why of our holidays was a good thing. 

I've since ended the series, but I return to Memorial Day, Independence Day and Veterans Day because their why is too important.  Legal holidays become required holidays. Required becomes entitled. Entitled doesn’t ask why.

Memorial Day honors the men and women who gave “the last full measure of devotion” in service to our country. So before firing up the grill or saving money on a mattress, remember why the day used to be called Decoration Day.

You don’t need to go a ceremony or a cemetery to be grateful for what they did for you. You can stop for a moment and think about the families gathered at our 131 National Cemeteries and countless private graves across the land to remember their loved ones, men and women who made this day, and each day after it possible for you and your family.

With gratitude and in tribute to all who serve our country and risk everything for us: the National Anthem performed by the Colorado Children’s Chorale at opening ceremony for the 2008 Democratic Party National Convention here in Denver. (Note the Color Guard--these gentlemen are Navajo Code Talkers. It was cool to meet them.)

My Attorney Told Me Not To Do It!

I couldn’t resist the title. This guest post from Tad Lyle, a Denver-area business and financial planning advisor and President of Planning Resources, Inc., reminds us all that we can’t recommend (or reject) a business transition idea until the owner’s goals are clearly defined.  Begin with the end in mind.

It may not be uncommon for business owners to call one of their advisors to complain, that their lawyer (or CPA or financial advisor) told them that they should not even think of transferring their business to their child and key employees, but they want to do it anyway.

If you’ve made this type of call, I hope your advisor answered with the same definitive "maybe" that fictional owner, Fred Venturer, received.

Case Study

When Fred Venturer called his accountant to complain about his attorney’s warning not to consider a transfer to his child and key employees, the accountant immediately initiated the business exit planning process.

As an advisor skilled in exit planning, Fred’s accountant did not limit the scope of that process to probing Fred’s choice of successors. Rather, she started asking Fred the first questions every owner must answer when thinking about departure:

•"When do you want to leave?"

 •“How much income or money will you want or need when you leave?"

 •"What do you want to do for your key employees and for your other children?"

The accountant quickly involved Fred’s other advisors (attorney, and financial planner) to brainstorm the many questions and strategies that required Fred’s input. This Exit Planning Advisor Team asked Fred a number of questions beginning with an examination of the financial resources available to Fred.

As the Advisor Team immediately pointed out, it is one thing to design a business exit via a transfer to a management team; it is quite another to ensure the owner’s financial objectives are met in the process. The Advisor Team had to know how Fred defined his financial objectives to determine the size of the gap between his existing financial resources (both personal and business) and the amount of cash he could expect from a transfer of his business to his desired successors. Only then could Fred’s Advisor Team answer Fred’s original question (Can you help me to transfer my company to the successors I choose?) with a firm "yes" or "no."

Fred is not the only owner who has asked (and wanted an answer to) an exit question that can be answered only after the three basic exit planning questions are resolved. (Again, those questions are: When do you want to leave? How much money do you need when you exit your company? and To whom do you want to transfer your company?)

There is a natural tendency for owners (and may be for some advisors who lack experience in exit planning) to focus on the desired outcome and on the route they believe will facilitate that outcome before they know exactly where the owner wants to go. The philosopher Seneca wisely warns, "When a man does not know which harbor he is heading for, no wind is the right wind."

In Fred’s case, he wanted to transfer his business to his management team that included one of his children. Rather than immediately pursue that particular exit path, it was critical for Fred to step back to see if that type of transfer would satisfy his other exit goals and objectives. Would a transfer to his management team allow him to leave on his timetable? Would such a transfer yield the amount of cash he needed to attain his financial objectives?

If not, were there other paths that would allow him to leave at or before his chosen departure date, with more money, or perhaps, greater benefit of his family or other families? These fundamental questions (and other more specific questions) require Fred’s careful consideration (and yours) before charging down any particular path.

Beginning an orderly consideration of your exit objectives today can help to save you time, money and grief. Better still, it can help change the "maybe" answer to the question "Can you help me leave my company to the successor I choose?" to a "Yes."

Who Owns Your Business-Related Social Media?

There is a time bomb in your company that you had better defuse. This is true whether you are employee or employer, because when it blows, both sides will be out lots of time and money, including plenty in attorney’s fees. Not that we attorneys don’t want your money; it’s just that some of us would rather get a little to prevent a problem, instead of a lot to clean it up.

The bomb is your failure to be clear about, or even consider, ownership of the business connections represented by social media platforms such as Facebook, Twitter and LinkedIn. A couple of ongoing lawsuits, which I discuss in my presentations on the legal issues in social media, are examples of the trouble that you can avoid with a little attention.

In both cases, former employees (one was even the former owner) thought the social media networks (one on Twitter, the other on LinkedIn) built while at their old jobs belonged to them personally. The former employers thought differently. It wasn’t the tweets, posts, pictures, etc. that mattered; rather the issue was ownership of the network, the extensive base of active business connections—fans, followers, friends, whatever—represented by the accounts.

Noah's former company demanded he pay $2.50 for each of his 17,000 Twitter followers.

Since the employees had a hard time understanding how their “personal” accounts could be company property, litigation ensued. Now legal fees are piling up, and valuable time that could be spent on the real work of running a business is instead being spent applying old legal principles to the new and constantly evolving world of social media. Neither case has yet reached any definite conclusions, and even if they do, they will be limited by their facts and the laws in their states.

What is clear is that, under some circumstances, a Twitter or LinkedIn account that might appear to be personal may actually belong to the employer. That means a “personal” Facebook profile or Pinterest board, you name it, could likewise be company property. I’m not saying that result is right or wrong. I am saying that having the employee and employer agree upon ownership beforehand is infinitely better than going to court to determine it later.

Truly personal social media isn’t the concern, though companies should have policies on when such personal activities can take place while at work or using company property. Many business people (me included), however, promote their companies through their “personal” social media. Some companies, likewise, instruct their employees in coordinating “personal” social media for business purposes. In the same vein, subordinate employees often maintain the “personal” accounts of some high-profile employees.

If any of those situations sounds even vaguely familiar, or if you just want to be certain, it’s time to invest some thought and energy (and a little bit of legal fees) in the development of a policy that distinguishes the rights of the employee from those of the employer.

That process should solve at least part of the issue. Even when ownership of the account is clear, the actual use of the account could still create problems. In a future post I will tackle another potentially explosive issue: non-compete and non-solicitation agreements in a highly connected digital world.

The Persistence of Vision. Colorado Experience 2012.

Leaving your day-to-day work and normal surroundings, even if only for two days 70 miles to the North, can be eye opening. Lessons learned, even important ones like the vitality of vision in successful communities, however, fade without persistent attention. Vision, and leaders who live the vision, were my takeaways from the Colorado Experience 2012. That, and how cool it would be to have a slide in my office.

 

My Leadership Denver classmate Paula Henry takes the Otter plunge.

This second installment of the Colorado Experience program of the Denver Metro Chamber Leadership Foundation brought about 125 business and civic leaders from Denver to Fort Collins. Cooperation was the word that best expressed my thinking about last year’s inaugural Colorado Experience to Colorado Springs. This year’s word is vision, and I want to share with you three successful visions shared with this year’s group. Then, I’ll consider what happens to vision when persistence wanes.

Invest in systems to run the company and then invest in people to run the systems. Otterbox is a successful Colorado company with strong visions of how a company succeeds. Success, however, was not a straight-line result from their vision. Persistence and multiple trips “back to the garage” were required. Equally compelling: a successful company must not only be engaged in its community, it must inspire others to do so. Thank you, Otter owners Curt and Nancy Richardson.

Let your life speak. It’s not just a Quaker adage; it’s as much a part of the brew as the hops at New Belgium Brewing. Leaders honor the company’s triple bottom line of people, planet and profits that makes New Belgium sustainable; employees understand the vision is more than lip service. Recognize that challenges are inevitable, so celebrate accomplishments. After all, if it is not fun, it is not sustainable. Thank you, New Belgium CEO Kim Jordan.

Make the skills to succeed available to the not-yet-successful. This is my take on the 150-year-old vision behind our Land-Grant colleges, including Colorado State University, a focus of much of this year’s Experience, as well as my undergraduate alma mater Texas A&M, and many other schools. Imagine the audacity of investing (during the Civil War!) in a system of higher education to be available based on merit, not social class. Our collective investment in those schools fueled the growth of innovation and entrepreneurship that created our nation’s economic success and strengthened our democracy in the process. Eighty years later, the GI Bill renewed that investment, this time directly in the young people who had served in our country’s military. Thank you, CSU President Tony Frank.

The world’s greatest system of public education enabled America to become a nation blessed by opportunity, productivity, and prosperity, but the vision of making the skills we need available at affordable prices is being forgotten. I read in the Wall Street Journal that 30 years ago we led the world in educating young adults; today we are 15th. President Frank described the shift in educational costs, and the allocation of those costs, over the same period. We once had a system in which two-thirds of the reasonable cost of a public college degree was an investment by the state in its future. We now have a system in which the individual student bears 70% of a more expensive education, often using loans that may not be repayable.

If we want to revert to a system in which the skills to succeed (and not be a burden to society) are generally available only to those who already have means, then it seems we should at least have a conversation about it. Perhaps the vision that replaces the Land-Grant idea requires a complete rethinking of what we mean by “education” and how it is delivered. I know I don’t have the answers, but I know we won’t solve the problem without leadership.

Denver Metro Chamber of Commerce CEO Kelly Brough shows her leadership style.

Which brings me to one of my favorite moments of the Experience (along with the Otter slide and the New Belgium beer), when Kelly Brough, CEO of the Denver Metro Chamber of Commerce, asked our group to remind ourselves of the qualities leaders need when tackling tough issues. Collaboration means we resist positional battles and focus on shared goals. Passion brings the energy and courage required when facing certain risk. Of course, leaders need vision and the commitment to live the vision, even through inevitable setbacks. That is our Colorado experience.

Here is a slideshow of more slide shots and other photos from the Colorado Experience.