I just got back from this year’s Interbike. For those who are not in the industry, this is the largest bike industry trade show in the US. I wandered for 3 days among the 1100 booths trying to take in all the new products for 2011. Every day I would walk in and think how did I miss seeing this before? I quickly became aware of my tunnel vision and biases. One of my first stops was to the Italian pavilion. Here you could see many of the Italian Frames and clothing manufacturers. There were helmets, gloves, bikes, and accessories. I steered away from the China and Taiwan areas. Not because I do not think they make a quality product, but because their booths tended to be more for business than show. They were there to get the orders, to produce many of the things we will all be wearing next year. One pleasant surprise while speaking with those in the industry is the amount of growth in the bike market in the last few years. While the country has been in a recession, the bike industry has been gaining momentum. My mission while there was to make contacts, Look for material for the blog, and test the concept of my leadership training camps. I would say after 3 exhausting days, it was a great success. I look forward to sharing with you more once I have a chance to decompress.      
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The 2011 Tour de France was a first for Australia, and for that matter the people of the southern hemisphere, as Cadel Evans bought home the coveted Yellow Jersey. It was also a first for Great Britain and  Mark Cavendish who finally brought home the Green Jersey. To me there is nothing more exciting than the sprints. You see the riders giving it their all just to make it first across the finish line. There is a sense of excitement and anticipation of who will cross the finish line first. There is a fear that someone will crash and take down the pack. But, if you look closely, there is Strategy Execution in motion. In the video below, you will see how Cavendish is lead by two of his team mates who have positioned him for the win. As each does his part they fade away to let the race go on without them. However, without their contribution Cavendish would not have won the stage. http://www.youtube.com/watch?v=_At0CpFBKhQ Strategy Execution in an organization follows the same principle. Everyone must have the end in mind. They must know the goal. Each individual must know their contribution to the success of the team. Knowing this allows them to do their part to succeed, fade away when they are done, and still feel they have made the “Win” possible without ever stepping into the limelight. Do you have a clear strategy? Do your people know their part in that strategy? Do they execute with exactness?
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Last year my friend called me about 1 o’clock in the afternoon asking me if I wanted to go for a ride. I thought a short lunchtime ride would be just what I needed. When we got out on the road I found myself woefully unprepared for the distances and the climbing we were going to be doing. 4 hours later were almost home and had a few steep hills to climb before we could call it quits. It was at the bottom of the first hill I hit the wall. I had to call my wife to come and pick me up. We have all been there. We have all bonked. We head out unprepared for the ride ahead  and because we have not nourished ourselves enough we end up falling short on our energy stores. In business, our fuel is profit. More precisely it is our Return on our Investment, Assets, or Equity. So if we do not want our businesses to “Bonk”, we need to know how to maximize our return. There is a simple formula you can use to calculate the return in your business. Return = Margin x Velocity. If we know the desired return we have two variables we can work with, margin and velocity. If we increase the either or both, margin or velocity, we could get a larger return. Margin and velocity are interdependent in nature. The challenge is in achieving the right balance between the two. Let me take you back to the bike to demonstrate. Let’s say you want to keep an average speed of 20 MPH (Return) on a flat road. Once you have warmed up a little you will probably settle into a certain gear (Margin) and cadence (Velocity). You look over at one of your riding companions and you see their cadence is significantly slower than yours, yet you are both traveling at the same speed. It is obvious without even looking that your friend is pushing a much larger gear. As you look at this example, you may be asking yourself, “What is the right combination of Margin and Velocity”? The answer is, that depends. Just like in cycling you may find in some situations a higher velocity and lower margins are optimal. In other cases you may find yourself wanting to stick with higher margins and lower velocity. The correct answer is more varied than the gear and cadence combinations on your bike. So think about this. You are climbing up a hill and you are going for a personal best. You have a chance to push a larger gear with a cadence of 40 rpm or a smaller gear at 60 rpm. Which is the most effective way to climb the hill? The lower the cadence and the larger the gear the further you travel with each pedal stroke. It is also more likely you will expend more energy and get tired near the top. The faster the cadence and lower the gear, the less distance you will travel per stroke, but the more strokes you will take climbing the hill and the less energy it will take to get there. The person who makes it to the top first, is the person who judges their strengths and limitations best, and chooses the right combination. As you think about your business, ask yourself the following questions: What is our velocity? (How fast are we turning our products, closing sales, collecting debt, etc?) What are our margins? ((Total Sales – Cost of Goods Sold) / Total Sales) What could we do to increase velocity without decreasing margins? What would the velocity be if we slightly decrease margin? What is the optimal ratio of velocity to margin to give us the highest return? I hope next time you are out on a ride you maximize your return both on the bike and in your business.
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When I was about 22 I worked for REI. It was one of the best jobs I had ever had. I could not believe I was getting paid to study the latest in outdoor gear and to educate people on how the latest technology would help them with their outdoor experience. One of the books I read while there was called “The Bicycle Wheel” by Jobst Brandt. I was amazed at the complexity and the importance of the wheel. I learned there was a science to the way a wheel is laced and that each lacing pattern had its positives and negatives. Over the years I have built several wheelsets and enjoy the process of lacing, truing and tensioning a wheel. Now I help organizations build their strategic plans. I would like to draw a few parallels if I could between a great wheelset and an effective strategic plan. In my opinion, a quality wheelset is one of the most important investments you can make in your bicycle. The quality of the hub and bearing can literally shave minutes off your time. A great wheelset delivers when you need it to, and it keeps you from getting fatigued over long rides. The wheel is the last thing you want to break, while riding your bike. Strategy Execution is one of the most important things you can do in your business. It is the thing that drives your business forward and delivers the performance you need when you need it. Having a great strategy and having your staff executing it, will keep them from wasting energy doing things that do not matter to the business. It also gives you the competitive advantage you need to “win the race”. Just like the bearings of the wheel, when a our strategy is built around meeting our stakeholder’s needs and utilizes the strengths of our business, we are able to decrease  resistance. Simply put our business runs more smoothly and success comes more easily. A well designed plan is also evenly shared by all the people in your organization. In order for a wheel to be strong the spokes need to be tensioned equally. If one set of spokes is too tight and those around it too loose, our wheel is vulnerable. Hitting a bump in the road in just the wrong way can cause a wheel to “taco” under the pressure. When our strategic plan is based too much on one person, or the majority of goals and action plans are given to one or two people to accomplish, we lose the strength and support of the rest of the people in the organization and run the risk of catastrophic failure. A good strategic plan is focused and delegated equally to your leadership so that no one person is carrying too much of the load. Each person knows what they need to do, and is reporting in on a regular basis. This keeps our business rolling forward with as little resistance as possible.
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Welcome to cycleofbusiness.com. Since Lance Armstrong began to dominate the Tour de France more and more Americans have taken up the sport of cycling. Each day we see more and more cyclists out on the roads. We weekend warriors will never be as good as Lance Armstrong, Greg Lemond, Miguel Indurain, or many other greats in the field of cycling. We will probably never ride in the classics like the Tour de France, the Vuelta A Espana, or the Giro d’Italia. We may only spin around the block with our friends and consider the local centuries as our claim to fame. But for some reason cycling has gotten under our skin and we are driven to get out every year to test our legs and to see what we are made of. Business, in some cases, is something we do to support our cycling habit. I recently saw that more money was spent on cycling worldwide than any other sport. Maybe that is because it is not uncommon to spend $5000 or more on bikes, clothing, gear and of course upgrades. A few years ago, while on a bike ride, I became more and more aware of the parallels between cycling and business. In this blog I will articulate some of these relationships in an effort to help us better understand both. I welcome your thoughts and comments in this process.
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