Principles

With the Presidential campaign season in full swing, I feel obligated to comment on a subject I feel many of our national politicians lack- principle. A principle is a law or rule that has to be followed. A man (or woman) must have firm, unchanging principles which he believes at his very core. This is the problem I see with so many of our elected leaders whose opinions seem to ebb and flow with the public opinion. I’m not talking about any specific politician, though this could easily devolve into a partisan pissing contest, but more the politician in general. They seem to lack principle.

Perhaps my opinion is the effect of the 24 hour news cycle, of being constantly plugged in and bombarded with news from all angles- email, Facebook, twitter, cable. You can’t go far without finding someone’s opinion being blasted in your face, usually at a high volume. But underneath all of the bloviating, I rarely get the sense that someone is politicking for the good of the American People. More often, they are out to win, to make the other side look bad and to lord their superior opinions over their opponents. When did it get this way? When did calm discourse and working to find common ground become a relic of the past?

I long for someone with principles and the ability to move beyond party lines to accomplish what those principles stand for. I don’t necessarily have to agree with someone’s ideals to be able to find benefit in their point of view. Too often politics is a win at all cost, loser goes home with nothing game. It’s not a game. It’s our livelihoods. Our tax dollars. Our health care. Our economy. It’s not a set of talking points, and for once I’d like to see someone stand up there and take responsibilty without doling out the blame and pointing fingers. I’m just so tired of “politics as usual.”

Which brings me back to principles. Principles are the foundation on which all other things can be built. A politician with shifting principles, shifting loyalties will never be able to build something great when his foundation is constantly shifting based on the prevailing winds. Someone who stands firm in his beliefs, whatever they may be, will gain the hearts and minds of the people who are so desparate for something of substance.

Get To The Point (Again)

One of my most popular posts has been Get To The Point, a primer on how to be clear, concise and quick in a fast-paced business environment.  I talked about organizing your thoughts so you know what you’re talking about, concisely expressing your main points and getting to your conclusion quickly because no one likes to listen to someone prattle on.

I have a few more thoughts on Getting To The Point that I’d like to share with you.  I recently gave a speech in which I used Keynote slides to help illustrate my points.  I had about twenty-five slides and the speech lasted about ten minutes.  For most of you, this description is already bringing to mind some of your own experiences with Powerpoint in a business meeting.  Someone slaps a slide up on the screen full of text and bullet notes and then proceeds to read word for word what is written on the slide.  Within seconds, the audience zones out either by reading the slides instead of listening to the speaker, or by just tuning out completely.

GET TO THE POINT, PEOPLE!

This pretty much describes nearly every single staff meeting I’ve had in my professional career.  It describes about 75% of the courses I took in college.  I don’t know about you, but I can read.  Do I really need someone to put a slide up and then read to me word for word what is on the slide?

NO!

So why do we do it?  Why do you do it?  The biggest complaint I hear from meetings like that are about the presenter reading directly from the slide.  But when given the chance to present, the same exact people do the same exact thing- bulleted powerpoint slide, read from the screen.

THIS IS NOT HOW YOU DO IT.

Your slide should help emphasize what you are trying to say.  It should not give the presentation for you.  You should know what you are trying to say verbally to keep the audience focused on you and your message.  The powerpoint slide is there simply to help make your point or to show off something you want the audience to know.  That’s it.

For example, the speech I gave was about making smart decisions in the workplace.  I came up with a little acronym to help me outline my points.  Here is the slide I used:

Simple, right?  Doesn’t tell the audience what each point means, but it does sort of grab your attention and make you want to know what each letter stands for.  I could have used a slide like this:

But that is so wordythat the audience will focus on reading the text on the screen instead of listening to what I am saying.  I went on to outline each letter in bullet point and summed them up at the end, but I never dwelled on the slide and I certainly never read directly from the slide itself.

Here is another slide I used:

While this slide was up, I talked about Netflix’s recent decision making snafu’s, how they seemed to have no direction and how they only served to anger their customers who left the company in droves (800,000 lost subscribers) and tanked their stock price (from $300+ to $70 in only 15 weeks.

Again, I could have used a slide like this:

But then you aren’t listening to my point, you’re reading the words on the slide.  In fact, you may have read every word on the slide before you moved on, EVEN THOUGH I had just told you what would be on the slide in the previous paragraph.  The goal of ANY speech, whether it is a business presentation, a staff meeting or a toast at a wedding should be to communicate your message clearly and concisely while engaging your audience.  Not to overwhelm your audience with words on a slide.

After my speech, I received the following comments:

“Great visual aid, very well organized.”
“Good use of slides.  Thank you for not looking at the screen the whole time.”
“Your slides were simple and easy to understand and kept me engaged.”

People LIKE to be engaged by their speaker.  They want you to look at them, talk to them and make eye contact with them.  They don’t like having slides read to them.  The next time you have to put together a powerpoint presentation, make your slides simple and focus on the message you are trying to get across.  Your audience will thank you for it.

Get To The Point

Today I would like to discuss getting to the point.

Getting to the point is a crucial skill in the business world.  It is one we must deal with on a daily basis.  I remember at one point in my career being assigned a new manager.  You already know where this is going, don’t you?  I, playing the part of the impressionable young employee excitedly went to our first staff meeting to see what new and interesting things our manager would bring to the team.  I left two and a half hours later, exhausted, dejected, and completely out of sorts.  Why? Because this manager had no idea how to get to the point.  We are all busy.  No one has time for you to get to your point in a roundabout way.  You need to be able to express yourself in a clear, concise manner in order to be taken seriously in the professional world.  Without that skill, you will find your influence is diminished or you may find that people avoid speaking to you altogether.  Neither of these things will help you be a successful professional.

I am going to present you with three ways to get to the point and get on with your day.

Organize Your Thoughts

How often does something pop into our head and we rush off half-cocked trying to get someone’s attention?  Too often, I say.  Organizing your thoughts will help you figure our what you understand fully and what you require additional explanation for.  It will help you tease out the tough concepts and give you a chance to further deepen your knowledge before you present it to someone else.  Take the time to think about what questions someone will have for you and be able to answer those questions.  There is nothing more irritating than when someone presents half an idea and then does not have the simple basic understanding of the issue to answer questions or further expound on that idea.  Once you’ve organized your thoughts and thought up questions, walk away from it.  Then, a few minutes later, come back to it and review it again trying to come up with more questions or problems that may arise.  Being organized will help you come across as more credible and will give your opinions on the issue more weight.  Even if this means taking several minutes to jot down what you know about what you are going to report to someone, that time spent organizing your thoughts will lead to a more efficient use of your and your boss’s time.

 Be Concise

Get to the point in ten words or less.  What is the main point of what you are going to talk about?  This is the most important thing to get across to someone, and you should be able to summarize it in ten words or less.  If I were to summarize this post in ten words, I would say “get to the point, organize your thoughts, be concise, conclude.”  I’ll give you a second to count those, but I assure you, it is ten.  This doesn’t mean that all of your reports should be ten words or less, but you should be able to sum up the main point of what you are trying to say in ten words or less.  “The supplier is requesting an overall increase of six percent.”  “The contract expires within the lead time and must be extended.”  These are summaries of a broader explanation, but the main point is clear, and should always be clear to the person you are reporting to.  The best thing about being able to concisely state your point in ten words or less?  If someone needs more information, they can always ask for it.  But you’re not overwhelming them with pointless information they neither need, nor will remember.  And because you spent the time organizing your thoughts and thinking of potential questions, you will be prepared for when those additional questions do come up.

Have a Conclusion

This was my manager’s weak point.  She rambled on and on for as much as twenty minutes on a single point, throwing out random anecdotes and stores to try to help make her point clear.  But because she had not organized her thoughts and boiled the main point down to ten words or less, she ended up going on and on and only served to further confuse her audience.  Always be working towards a conclusion.  Often, ten words will be enough for your main point, but you will need to further explain the subject to your audience.  That is fine, but as Stephen Covey once opined, “Begin with the end in mind.”  While he was making the point about starting a project, it still applies to speaking before a group.  Once you get to this point, you have already organized your thoughts and boiled your main point down to ten words or less.  Now expound upon your main point, but know when to get out.  Be able to summarize your main points and any specific items that bear importance and then, shut it down.  For less complicated matters, you should be able to conclude in a couple of minutes.  Only the most intricate issues should go five minutes or more.  But regardless of how intrinsically complex your issue may be, have a point where you wrap your thoughts up in a neat little bow. Conclude.

And speaking of conclusions, that brings me to mine.  Getting to the point is a critical business skill.  We’re just too busy for you to take your time examining all of the different viewpoints of an issue.  Today’s business environment requires quick, decisive action and in order to facilitate such action, you have to be able to get to the point.  Remember to organize your thoughts, boil your main point down to ten words or less and have a conclusion in mind.  Once you have mastered these three skills, you will be well on your way to being able to successfully, skillfully, and concisely get to the point.

Revenue and Margins

Today I will be discussing some of the financial aspects of running a business.  Specifically, reading the annual financial documents released by a public company.  I will use my own employer, Spirit AeroSystems, since I am familiar with their financial statements and they are a good example of an Aerospace company with a strong financial position.  Do not worry, I am not releasing any sensitive financial data about the company.  All of this information can be found at Spirit’s website or on any of the many financial/investing websites that populate the internet.  I pulled mine from Google Finance.

I’m sure you have all seen this kind of document before.  The question is, do you know how to read it?

The answer most people will give is, probably not.  Believe it or not, these complicated-looking financial documents are actually quite easy to read when you know what you are looking for.  The first thing you will want to do is go to the company web page on whatever financial website you are using.  Like I said before, I use Google Finance.  From there, search for the company you want to learn about, in this case SPR (for Spirit AeroSystems).

On the left side of the page, click the link that says “Financials” which will bring up the quarterly financial statements.  Quarterly results are important, but for today’s lesson, we are going to look at the annual report.  Click “Annual Data” to bring up the report for the previous financial year.  For Spirit, this is 2010 data, which was released on Feb 10th, 2011.  This report compiles all of the quarterly data for the 12 months ending on 12/31/2010.

Where do you go from here?  There are several important pieces of information you want to gleam from this page of financial documents, but the main purpose of the Income Statement is to tell you how profitable a business is.

First, what is Spirit’s Net Revenue?  Net revenue is very important to knowing how a company is doing.  It is essentially the money the company is bringing in each year through sales.  Note the “Top Line” revenue.  In 2010, it was $4.172 billion.  In 2009, it was $4.078 billion.  2008 showed $3.771 billion and 2007 showed $3.860 billion.  Without looking at any other data, what does this tell us about the company?  First, it tells us that the company has grown it’s annual revenue by 7% since 2007 and other than 2008 being a down year for the company (like many companies in 2008), the company has grown every year since 2007.  This is good.  Whether you work for the company, like I do, or you are interested in investing in it, seeing net revenue growth is good.  The average growth for an S&P 500 company over the last ten years has been 3.5% (taking into consideration considerable losses in 2008, 2002 and 2001).

The next thing you will want to look at is Net Income, or “Bottom Line Net Margin.”  This number tells you how much money the company profited after taking out its expenses.  In this case, in 2010, Spirit’s Net Income was $218.9 million.  In plain language, that means that out of $4 billion in sales, the company netted almost $219 million in profit.  That money can then be used to invest further into the business, pay dividends to stock owners, pay off debt, or a whole host of other uses.  Again, seeing a company with strong Net Income is good, and Spirit has averaged $243 million in Net Income over the last four years.

That’s it.  Those two lines on an income statement are the base from which all the rest of your calculations come from.  But they are also the easiest to see and understand.  Net Revenue: How much money did the company bring in?  Net Income: after expenses, how much money did the company make?  These two simple lines require no calculations whatsoever, but can tell you a great deal about the profitability of a company.  There is one more item on an Income Statement that I want to discuss that can be helpful to a potential investor, but it requires you to break out your calculator.  If you are brave enough, continue on.

The last thing I want you to look at is the Gross Margin of a company.  Gross Margin is determined by figuring how much money the company made off of its goods sold.  You take the Net Revenue, subtract the Cost of Goods Sold and divide that by the Net Revenue again.

Gross Margins = (Net Revenue – Cost of Goods Sold)/Net Revenue

Easy as that.  The purpose of looking at Gross Margins is far more interesting.  Gross Margins give you a look into how well the company is run in comparison to its peers.  How much money did the company make off of the revenue it brought in?  How efficient is management at managing their cash flow?  For every dollar that came in, how much did the company spend to make that dollar?  Is this company well-run when compared against other companies in the same industry?  Gross Margin allows you to make an apples to apples comparison.  It is easy to say that Boeing had higher net income than Spirit, but they also have sixteen times the sales ($64 billion to Spirit’s $4 billion).  Comparing these companies in terms of their Margin is a better way to see just how the two companies stack up.

In 2010, Spirit recognized Gross Margins of 13.5%.  Not especially great, but just below average when compared against their results for the last four years.  Boeing, on the other hand, reported a margin of 19.4%.  Embraer showed 2010 Gross Margins of 17.2$%.  So by looking at these figures, you can see that Spirit could use improvement in the efficient use of their cash.  As a (relatively) new company, having cash on hand is important because it means the company can invest that cash into new programs, more employees, expanding, and many other things that are important to a company that is trying to grow.

I hope this post helped you understand what to look for on an Income Statement a little better.  I would like to write a disclaimer, any mistakes made in my calculations were inadvertent and are mine alone.  I pulled this information from the public listings for these companies on Google Finance, and from the S&P 500 page on the same site.  I welcome any comments or corrections.

Mentoring and Making A Difference

Today’s post is all about mentoring.  I have learned in my professional career and personal life that it is important to have mentors and to be a mentor to others.  A professional mentor is someone who acts as a guiding light in your professional life, offering career advice and helping you through career decisions and navigating the ever more complicated business world.  A personal mentor does the same for your personal life.  Often the two are one and the same.  I have been blessed throughout my life with a host of great mentors, some of whom I would like to discuss today.  I have also been lucky enough to have mentored some truly talented people and they have in turn enriched my personal and professional life.

The first professional mentor I ever had was my fraternity father, David.  David and I knew each other in high school, but we did not become friends until we joined the same fraternity in college.  David was a year older than me, and was chosen to be my “fraternity father.”  During my time in Sigma Phi Epsilon, I saw a great many “father/son” pairings, but none of them developed quite the same bond as David and I.  David and I worked great together.  He would often challenge my young mind, and would question my decisions when they needed questioning.  I cannot say I was a perfect 20-year-old, but I can say that I was blessed by David’s guidance.

The greatest lesson he ever taught me was to ask myself, “would the boy you were be proud of the man you are?”  In other words, would an idealistic young Aaron be proud to know that he grows up into the adult Aaron I am today?  Think about how idealistic we are as children.  We believe our parents know everything.  We believe that there is good in everyone.  We believe that, no matter what, things will work out in the end.  As adults, we know that this is not always the truth, but we should still strive to make the world a place our ten-year-old selves would be proud to live in.  Those words still live with me today.  When a I am faced with a difficult decision, these are often the first words that pop into my head.  “Would the boy I was be proud of the man I am today?”  I can honestly say that yes, a ten-year-old Aaron would be proud of the man a thirty-year-old Aaron has become.  This is the same lesson I will teach my son someday.  When it comes time for him to make difficult decisions, he should act with his conscience, no matter what.  If everyone lived this way, I believe the world would be a far better place.

David and I grew to become best friends.  He asked me to be godfather to both of his sons and he stood by me during my wedding.  He is a lifelong friend.  I truly believe that one of us will carry the others casket at our funeral.  We still talk, less frequently, but always with the same fervent passion that has always permeated our discussions.  Whether the subject is politics, work or our family, David has always been a sounding board for me and I in return to him.  It is not just a friendship, it is a mutual mentoring relationship.

More recently, I found a mentor through work in my immediate manager, Marty.  When I was asked to move into my current position at Spirit, I found out just how difficult a job transition can be.  I was asked to take over the leadership of a team that had been in turmoil, with more than half of the team having transferred out of the group, left the company or been fired in the previous six months.  The group was aimless and needed a strong leader.  The company believed that I was that leader, and asked me to step in.  I did so, despite having no experience in purchasing airplane parts in my previous experience with the company.  Until then, all of my experience had been in non-production roles, purchasing capital equipment or MRO parts (maintenance, repair and operations, for the machinery that does the work in the factory).  The two sides of the company, as I came to learn, are worlds apart.  MRO, while challenging, casts a much wider net over what goes on at Spirit.  It touches all aspects of the business except for what goes on in the Production side.  Despite my experience in buying machinery, contracting services or buying spare parts, I was in for a radical learning curve.

Production buying is one of the fastest-paced jobs in the company, especially on the programs I was assigned to.  We currently build thirty-two Boeing 737 airplanes, two 747’s and seven 777’s each month.  Think about that for a second.  On the 737 program alone we build more than one airplane every single day, each with thousands of parts that must be in stock ready to go.  One missed part can throw the production line off, and can throw our entire schedule into chaos.  Not to sound cliche, but in this job, failure is not an option.  What I did not realize at the time was just how challenging this adjustment would be.

Marty was my manager, but he too was new to his position as manager having just been promoted at the same time I was moved into his group.  I quickly learned that he would be a valuable source of knowledge and found myself in his office every morning with a list of questions to help me through my day.  Marty’s patience in teaching me proved to be the difference-maker in my job and with his guidance, I soon found myself navigating the difficult waters of airplane production.  Within six months of taking the position, I had reached a comfort level from which all my successes have emerged.  My team ended up saving the company a great deal of money last year through a simple inventory analysis that would prove to be the standard going forward.  I owe the ease of my transition to Marty, without whom I would have had a far more difficult time being successful.

As I mentioned before, I too have been lucky enough to mentor several young people in my career and personal life.  One of these is my close friend, Chris.  Chris and I met each other in his first year of college, after he joined Sigma Phi Epsilon.  I had graduated by then, but still remained close to many of the undergrads.  I could tell Chris was a special individual.  His outgoing personality endeared him to many and his savvy business sense showed me that he would be very successful someday.  I found myself stopping by the fraternity to sit and talk with him and we would discuss the chapter, school and his goals.  The mentor/mentee relationship developed further when Chris came to work for Bank of America, where I was working as a Personal Banker at the time.  We would often sit and bounce business ideas off of each other and I helped him develop his sales pitch to potential customers.  Chris took my lessons and excelled.  He was often, if not always, the banking center’s top referral generator.  He saw things in customers that others missed, and developed deep, lasting relationships with his customers that always turned into revenue generating opportunities.  Even after he left BofA to work at another bank, we still talked by phone and email often.  He is now a very successful banker at Commerce Bank in Wichita, and we still talk on a weekly basis.

The last mentoring opportunity I want to discuss today came in 2010 when I became a volunteer at the Tulsa Boys Home.  I was placed with a boy named John* (name changed because he is still underage) who had lived a particularly difficult life.  He had been moved from home to home and was a ward of the State of Oklahoma.  Other than that, John was a typical teenager who played basketball, listened to music and talked about girls.  I met with John once a week and we often played basketball for hours (he whooped me, the kid was 15 and played basketball every single day) or lifted weights.  I imparted some of my weight-lifting knowledge to him and he grew to trust in me and confide in me.  John was, and still is, an incredibly intelligent and gifted young man.  He was well spoken and surprisingly well adjusted considering the difficult background he grew up with.  He actually convinced the people in charge of the TBH to reconsider their policies on mp3 players for the boys.  Until then, they had been forbidden but John put together a presentation on how personal mp3 players could be beneficial to the boys and how the restrictions could be amended to allow them to be used by the boys at the top of their class.  In doing so, he encouraged other boys to work harder so they, too, could have their own mp3 players.  John told me his goal was to someday join the military and become a JAG officer, and I hooked him up with some friends who are military JAG.  After about six months, John was moved to a new home away from Tulsa.  We still keep in touch occasionally, and I look forward to the day we can see each other again.  John was, and is, a very special young man with a bright future ahead of him.

I have been truly blessed to have had some amazing mentors who taught me a great deal throughout the years.  That said, I am often surprised at how much I learn from the young men that I mentor.  The mentor/mentee relationship often turns into a reciprocal relationship with me learning just as much from my mentees as I am teaching them.

If you are a mentor, congratulations.  You have my utmost respect, because this is a truly valuable service you can provide to the people you interact with.  If you are not mentoring someone, find someone to mentor.  You can help make someone a better person and in doing so, can help yourself become a better person.  If you are in need of a mentor, go out and find one.  Don’t wait for someone to offer to mentor you, or for the relationship to develop naturally.  Go out and get it, you will be glad that you did.