I learned many years ago about the practice of projects and why this is important.  I’ve often talked about the importance of roles and how roles come from someone holding a set of concerns.  Another part of any role is the separation of standard practices from projects.

As you plan your week you hold certain practices that you do every day, every half-day, every hour or every 15 minutes.  Planning is one of them, or perhaps I should say planning needs to be one of your ongoing practices.  Practices are actions we give a name to.  Planning would be one of those practices. Selling is a named practice, as are accounting, marketing and many others.  We name them to make them easy to identify and to help in being rigorous to embody the actions required for a successful outcome.

Practices can be adopted for low cost and efficiency.  Other times practices must to be invented so they fit your situation and your enterprise.  Budgeting is a practice that has similar fundamental elements and the actions that make up the practice often are different between companies.  You can print financial statements but you need to design and execute the practice called budgeting.  Once you establish a standard practice the key is to hold it.  You don’t drop it or forget it or find ways to excuse your lack of discipline.  Holding your standard practices is everything.  If you are missing an outcome look for the missing or dropped practices.

How do you invent and design or adopt new standard practices?  You specify a project.  Do you know your standard practices and can you list them by name and frequency?  Do you also know your current projects and can you list them by name and completion date?  If your answer to these questions was no, you cannot fulfill your role.

I’m going to assume for this writing that you can see why holding practices is essential.  The result of not holding practices is people drift through life and business and they are dangerous – but what about projects and why are these important?  One answer is that not all practices work and when they don’t work you need to change them.  How you change a practice is to specify a project.  If you have a set practice for eating and exercising and you are not producing the results you committed to, then you need to change your practices.  Since you’re not sure what to do you specify a project with a start date and finish date, which could end when you say, “here are the new practices I’ll hold for the next 6 months”.  As part of that project you meet with other people who are successful in the practice for eating and exercising.  You speak with experts in the field and may need to search for new equipment, facilities or markets.  All of those actions would be in the project plan.

Things don’t change on their own.  If you want or need to change something it takes a project.  We invent projects for the sake of changing things.  Projects are also costly.  You need to move through the actions with velocity and finish them.  Do not put yourself or your enterprise into the “never ending” project list.  You will find you are using all available resources and not producing the new situation – like being on a treadmill forever.  A rule of thumb is to have only 3 main projects in play at any one time.  When you finish one add another.  There is no winner for loading up with the most projects.

Projects have roles – 4 of them that cover the concerns of projects.

• Holder; keeps the project relevant to the company mission and holds the outcome and purposes are worth the investment
• Specifiers; could be several people who say what a “win” is for this project.  The win could be financial, market share, competitive advantage,etc.
• Designers; they put together the plan.  What are the interim situations and sequence of actions required for success
• Fulfiller; usually called the project manager.  This person manages the actions and commitments to keep everything moving with the appropriate velocity.

If any of these roles are missing the project will fail.

I see people make projects plans that are overly complex.  The best plans are simple that everyone has access to and can follow.  Make the plan public where appropriate so everyone involved can help monitor it.  Before you ever start have a kick-off meeting with anyone involved or who is impacted by the project so everyone knows what he or she are committing to.  Depending on the complexity of your business you may need a sophisticated software program.  In many other cases a word document might just do fine.  At minimum you need to say who is doing the action, what they are doing, when the action will be complete and who needs to know it is complete.  Always put the action in the appropriate sequence.

Projects are dynamic so be prepared to change the interim situations and actions in order to produce the ultimate outcome or end purpose.  We meet as frequently as required to shift action in order to produce the outcome we committed to.  It’s also a time to assess if the project is still relevant.  If not, drop it.

Make a start today.  Separate standard practices you hold and projects you are committed to.  Check that each project has a plan and the roles are clear.  Then move with great velocity – 90 days or less on every project.

Financial statements are very powerful and necessary to assess financial health.  I’ve taught workshops on using financial statements effectively.  Mostly business owners attend but every now and then somebody who is not a business owner attends and they ask the question – should I be here?  I don’t own my own business so I’m not sure this is for me.

My response – this is absolutely for you.  You are your own enterprise and need to know about your Income Statement, Balance Sheet and Cash flow – don’t you?  Always there is this moment of pause while they realize what I’ve just said to them and the importance of it.  Are you not working to produce an income statement for the enterprise called “YOU” that allows you to save and invest in order to produce a strong Balance Sheet?  Of course you are – - even if you don’t know this.

Let’s talk about the purpose of the Income Statement.  The purpose of the Income Statement is to produce a strong Balance Sheet.  There is some moment in your life where you will be living off your Balance Sheet.  If it does not seem critical to you today, it will in your future.  Your Balance Sheet will be the source of your future income so it makes sense to make it as strong as possible – right?  The other purpose of the Income Statement is to allow you to make assessments about current situations in your business and to anticipate future situations.  The Income Statement is a collection of assertions about financial transactions arranged in such a way to reveal the results of the underlying policies, principals and philosophies.  The way to a strong Balance Sheet is first a strong Income Statement.

What you watch and manage on the Income Statement are revenues, gross margins and net income.  Gross margins reflect how powerful and valued your offers are in the marketplace.  In a commodity market where offers are priced and bid the gross margins are usually low.  In a market where your offers are highly valued you price it accordingly and higher margins reflect this higher value.  Always what you’re managing on an Income Statement is the net income.  It’s not revenues and it’s not gross margin other than how the margins contribute to net income.  Can you see that you’re always working to maximize your net income?

The Balance Sheet is an assessment about capacity to produce future income.  It’s arranged into assets and liabilities.  An asset is only an asset if you use it in such a way that it increases your capacity to generate effective action.  When I encounter business owners they normally will discuss their Income Statement and have little to say about the Balance Sheet.  I always begin by looking over the Balance Sheet.  It tells me a story about the strength and sustainability of the enterprise.  A weak Balance Sheet will eventually destroy the enterprise.  A strong Balance Sheet can sustain an enterprise for a long time through difficult situations.

One of the great tools to use with a Balance Sheet is ratio analysis.  The important ratios to use with a Balance Sheet include working capital, liquidity, net worth, return on assets and return on investment.  By using ratios you can assess the relative strength of your Balance Sheet against competitors or the industry standards.  For instance the working capital ratio is also know as the current ratio.  It addresses whether a business has enough current assets to meet the payment schedule of its current debts.  The formula is divide current assets by current liabilities.  A quick rule is that a ratio of 2:1 is generally accepted as a sign of strength.  However, this depends on the nature of the business and the current strategies.  If you’re not using ratio analysis in your business and life I strongly suggest you adopt it as a practice.  Choose the ones most powerful for your current and future situation.

Liabilities on the Balance Sheet are obligations or duties you take on to ensure an asset remains available, maintains its capacity or increases its capacity.  What comes first the asset or the liability?  The answer is the liability since any asset always requires investment first.  Are you taking care of your assets by willingly being responsible for the appropriate liabilities?

The third financial statement is the Cash Flows Statement.  It shows changes in cash positions over an accounting period and together with the other two financial statements helps to give a very clear picture of the financial health of an enterprise.  Profits are not the same as cash and the lack of positive cash flow will prohibit any enterprise from succeeding. There are three main categories on this Cash Flow Statement which shows where cash is coming from and where it is going to; operations, investment, financing.  While it’s good to know about and use this formal statement, I also like a direct cash flow.  This is a simple statement of cash in and cash out projected forward.  This helps you to anticipate cash shortages or surpluses and to then develop a plan of action.

I recommend you put together a pro-forma set of financial statements.  Pro-forma means to predict what is going to happen and not what has already happened.  What does your Income Statement look like for 2013?  Do you have sufficient revenues, gross margin and net income.  Will you strengthen your Balance Sheet by the end of 2013 so the enterprise can sustain difficult times?  Finally is the Cash Flow sufficient to sustain the business through the year?

A final word on positive cash flow and profit.  Never talk yourself into accepting that losses or negative cash flow is OK.  Always manage your business and your life to produce positive cash flow and positive profits.  In today’s global marketplace you can structure your business to make money every month by building a flexible organization.  The alternative is far too risky.

It’s very important to complete things.  So much of what we do seems to go on and on and on.  Not only is this very high cost, it’s also very frustrating.  As human beings we need to finish things and to both acknowledge and be acknowledged for finishing it.

I read a number of books written by Robert Grudin, an associate professor of English at the University of Oregon and also had the opportunity to hear him speak.  He talked about doing things with your hands.  Paint or do woodwork or garden.  There are any number of things you can do that take you away from your computer.  Yes this is the age of knowledge but that does not mean abandon creating things with your hands.  It can also be a lot of fun.  I always loved cutting our lawn.  It was something I could begin and finish and at the end it was something I really enjoyed looking at.

Let’s extend this to the workplace.  It’s essential to complete things.  Another time I’ll say more about projects but for now you should know that projects are extraordinarily powerful.  They are so powerful that I made sure my management team was fully loaded with projects.  That’s where I got into trouble.  These projects seemed to never end, and our margins went down and cost up.  You see projects are very costly with no guarantee of success.  I was confused for a bit until I realized what was happening.  I had produced the never-ending projects and they needed to be completed or stopped.  The good news was that we were able to quickly shift to assess what needed to be done to complete these projects.  From then on our focus was on starting AND completing them.

One of the management practices I recommend is doing a weekly “tune” with your senior customers.  I always begin the tune with a dialogue about what was accomplished from the prior week.  I do this for two reasons.  One is to keep attention on working together to bring things to completion, finish them.  The second reason is to celebrate and acknowledge the completion.  People like to know that something they completed was noticed and that a good job was done.  It’s great to pause and declare completion – much like finishing my lawn.

I’ve also watched people short-cut completion.  You know the old “rebound” effect when you end a relationship.  Sometimes you grab at the first thing and never really took the time and space to allow yourself to complete the old relationship.  When I sold our first company it took many months for me to be complete.  I had great coaches around me who helped me to generate the conversations and thinking to allow myself to be finished with that achievement.  It was a really wonderful period.

So look for yourself.  What do you currently have in process incomplete that is draining your capacity.  Is it still appropriate?  What can you do to accelerate completing it and what help do you need to do that?  Work towards completion, acknowledgement and celebration for the end.  Then start something else.

One of the interesting things about completion is that it is also the start of the next thing.  Completing something is part of a strategy to the next thing in the sequence.  How you win is to produce a steady stream of new offers and practices. By finishing something you increase capacity for the next action.  And the cycle continues complete – begin – complete – begin.

So sit back today and ask yourself:

What projects do I own that are still open and not complete?

 Are these projects still relevant?

 How can I accelerate completing them and what help do I need?

What does “completion” mean for me?

 When I’m complete what new project will begin and what are the purposes for this project?

I have lost count of how many times I’ve been told, “we used to do that”.  In my work with business owners I encounter the situation where they used to hold some practice and have dropped it.  When asked why they usually don’t have an answer.

What is it that prevents holding a practice that is working well?  My doctor has often told me that people will take his advice, hold his suggested practices for awhile and then decide to drop them – without speaking to him.  Once they begin to feel a little better they stop taking on the practices.  They stop taking the medicine or exercising and find they are feeling sick once again.  Is there something in our human structure that leads us to this destructive behavior?

A practice or practices are named action such as selling, marketing, accounting used to take care of concerns, produce satisfactory situations, acquire new capacities to act or to execute a strategy.  One of the first things to do is to notice what practices you currently hold.  Give them a name and list them.  Take an inventory of them.  Make an assessment if they are working or not.  How would you know?  Next choose if you need to modify, quit or add new practices.  Make sure someone owns the practice and it does not have to be you. All practices still need an owner, someone to drive the action.

Twice in the last month companies I work with reported that they had breakdowns in a project they were doing.  During our review of the breakdowns I asked if they had a “kickoff” meeting to specify the project, all the players, the commitments and resources required, the performers and interim assessments to be made.  You can guess what they said – “we used to do that”.  So there it was.  I asked why they stopped doing it, and the answer “I don’t know”.  I thought maybe it was not working well or effective, but they answered that it was working very well.

Now you can suffer and agonize with wondering why you stopped, what happened and diagnose how this could not possibly be your fault.  Or you can simply commit to the practice once again.  If you have the same concerns, and you are experiencing breakdowns connected to the missing practice just put it back in place.  Remember – velocity matters.

One of the best ways to specify your practices is to put them in time.  This valuable advice came from Stan Leopard (www.stanleopard.com).  Answer the question what is it you need to do daily?  What do you need to do weekly?  What do you need to do monthly, quarterly, annually?  You must eat every day for nourishment.  This is a daily practice.  Once you declare that you can then examine what you eat, the frequency inside the day, the amount you eat, the types of food and more.  You begin to set the standards you hold for eating.  This is no different than any other daily practice you hold.  Do you have daily meetings?  What do you call them and what is the purpose?  Are the meetings effective – how would you know?

I started a new daily practice 3 weeks ago.  Every day I start the day by writing in a journal first what I’m grateful for and then what I want to accomplish that day.  I limit it to 3 things.  I missed writing the other day.  I had all sorts of reasons (excuses) but mostly that I was traveling.  What I did was start over the next morning.  Part of my morning practice is to avoid starting with emails and hold the space for reflection and exercise – mental and physical health essential for my ambition.  How do you start the day?

What daily practices do you hold?  What are your intentions and purposes for these practices?  Get together with other ambitious people and share your practices.  What are they doing?  Adopt them, adapt them for yourself and USE them.  Don’t forget them or just drop them unless they need to be dropped.  There is another set of practices I call “folklore”.  These are the ones that have been in existence for a long time, they still exist and have become purposeless.  They use valuable capacity and have lost their meaning a long time ago.  First notice them and second quit them.

So make a start today.  List your daily practices.  Give them a name and purposes.  Make an assessment about their effectiveness.  Then move to longer time horizons and eventually you will have your inventory of practices.  Dust off those practices you used to have and only drop them by intention and not because your forgot them.