5 things NASCAR can teach us about business
Dan Coughlin is all about improving business performance in practical ways. As a consultant, speaker and author with clients such as Toyota, Abbott, Marriott, Shell, Coca-Cola and McDonald's, Dan has invested over 3,000 hours on-site observing and helping executives improve performance throughout their organizations.
As the author of ACCELERATE: 20 Practical Lessons to Boost Business Momentum, and Corporate Catalysts: How to Make Your Company More Successful, Whatever Your Title, Income, or Authority, Dan has been able to bring his expertise to a global market and expand the successful application of his teachings.
With his new book, The Management 500: A High-Octane Formula for Business Success, Dan dives into the thrilling world of auto racing and shows us how the same skills needed to run a race at break-neck speed are essential to any manager wanting to build a sustainable business.
Dan, how are the rules of business performance different today than 5 years ago?
Vince, five years ago businesses overdosed on success. Like a drug addiction, executives focused on generating bigger and faster and riskier growth than at almost any time in the past fifty years. They acted as though they could not fail. Now that that theory has been proven wrong, the parameters for business have changed.
Today there are five business rules:
- Be very careful with where you invest your corporate dollars. Avoid wasting even a dime, and take a no frills approach to running your business.
- Remember that innovation and marketing are still crucial to business success. Focus on creating value for customers and letting them know about the value you’ve created.
- Be careful not to cut into the bone while you are trimming away the business fat. Reducing value to customers to save dollars is a poor long-term decision.
- Decide on your core business and make it as effective as you can.
- Avoid wild goose chases in adding on unrelated businesses to your core business.
We all want better performance…but where do we start?
Regardless of the size of your organization or the industry you operate within, there are four keys to keep in mind:
• Identify the roles you need in your organization to create, market, sell, and deliver the desired value for your targeted customers.
• Within each role, identify the four or five critical tasks the individual has to perform to be successful within that role.
• Work with, or have someone work with, each individual to continually hone his or her ability to execute each of the critical tasks for that role. The most effective approach is to create practice situations where the individual receives feedback after attempting the task from a person who is a skilled observer, effective teacher, and topic area expert. Create simulations of the actual task, allow the employee to experience the simulation, and give feedback in the form of both questions and specific input on what he or she did that was effective and not effective.
• Clarify a compelling purpose that all of the individuals will rally around. This compelling purpose is what pulls individual role players into an effective team.
Tell us about your new book. Why racing?
Racing provided for me a perfect analogy of what I wanted. I wanted a real-life case study where people had to go very fast, perform at very high levels, and sustain their performance levels for very long periods of time. This is exactly what great business managers do. I wanted a non-business example from which I could draw practical insights that business managers could use in their day-to-day work.
What are the 5 things NASCAR can teach us about business?
First, a commitment to excellence is crucial for success. Organizations like Roush Fenway Racing, Richard Childress Racing, Joe Gibbs Racing, and Rick Hendrick Motorsports all make incredible investments of time, talent, energy, and money to perform at incredibly high levels every week. They prepare with precision week after week to shave off a few seconds in a given race. What can you do in your business to improve value to your customers by even .5% this week? If you do that week after week, you will win more than you did in the past.
Second, NASCAR does a great job at branding. They are the masters at intersecting fans, corporate sponsors, and members of racing teams in ways that generate win-win-win situations. I walked up and down pit road two hours before a Sprint Cup Series Race and I watched fans crowd into a pit stop area to get their pictures taken with the crew team of their drivers. In the background there were logos of dozens of corporate sponsors. In your business, how can create more value for your customers that will get them to come back to your over and over?
Third, you have to persevere through the hard times. Dale Earnhardt, Sr. worked very hard for almost no money for eleven years before he got a major sponsor. He then became NASCAR Rookie-of-the-Year and won the Winston Cup seven times. You just can’t give up.
Fourth, every style of leadership can be effective, except one. Jeff Gordon, Dale Earnhardt, Sr., and Richard Petty had very different personality styles and approaches to driving, but they won at least four NASCAR championships. In business, every style of leadership can be effective except the chameleon. A chameleon is a lizard that changes its color to match its surroundings. When a manager changes his or her opinion depending on who is in the room, the members of the group stop trusting the person and stop listening to his or her input.
Fifth, take advantage of strategic moments. In a race, there are three critical strategic moments: pit stops, caution flags, and turns in the track. How a driver handles those situations often determines winning or losing a race. In business, dramatic changes in the marketplace create strategic moments. How a manager handles those moments oftentimes will determine whether or not he or she generates strong business results.
How can we implement these lessons and measure them?
The measure of your performance, and in particular the execution of these lessons, shows up in both the business results of revenue and growth and in the way that the critical tasks were accomplished for each role. Companies who state their goal is to generate 20% profitable growth each year are setting off on a dangerous path if they constantly adjust their values and purpose to simply hit that mark. What ends up happening is explosive growth for a short number of years and then a collapse.
What did you learn from racing about innovation?
Innovation is the lifeblood of racing. Enzo Ferrari, perhaps the most famous of all racecar executives, wrote in his autobiography, “I am mainly interested in promoting new developments. I should like to put something new into my cars every morning – an inclination that terrifies my staff. Were my wishes in this respect to be indulged, there would be no production of standard models at all, but only a succession of prototypes.”
This attitude of constantly improving performance is at the heart of every great organization. Regardless of the recession, executives have to focus the attention of their organizations on constantly improving the value that they can deliver to customers. This is what keeps companies vibrant and successful through the economic cycles.
Did you find individuals in racing who had brilliant acumen or stood above the crowd or are the lessons about performance systemic to the auto racing industry?
The lessons about performance from auto racing have great applications in every industry. For example, one lesson is that no driver ever wins a race by himself or herself. A victory in NASCAR is always the result of a group effort. The same is true in business. No executive ever, ever achieves a major business accomplishment by himself or herself.
Another lesson is that racecar drivers are not wild and crazy people. They are in incredibly good shape and take every detail of a race seriously.
It’s not about brilliance. It’s about sustained, focused development over a number of years that produces great drivers. Jeff Gordon won his first NASCAR Winston Cup at a very young age. However, he had been driving cars in competitive races since he was a small boy. No one just jumps in a car and starts winning NASCAR races. The same is true for business managers. Be willing to put in the focused effort to hone your craft as a manager.
Are there risks to going too fast?
Of course. The risk many people took in 2004-2007 was to go as fast as they could in running their businesses and hope that the bottom never fell out. Well, the economy hit the wall, crashed, and burned.
The goal isn’t to go as fast as you possibly can. The goal is to win. In business, that means to build an organization that creates and delivers value to customers in a sustainable way. Don’t worry about what’s outside of your control: how fast others are growing or how badly the economy is doing. Instead focus your attention on creating and delivering value for customers. Focus on developing employees who have mastered the critical tasks for their individual roles. Cross train employees so they can master critical tasks for multiple roles. Stay focused. And then you will win over and over and over.
To contact Dan Coughlin visit his website at www.thecoughlincompany.com.
To get a free chapter of his new book, The Management 500, Click Here:
This post was originally published on Smartplanet.com