We’re excited to share an excerpt from our new book “Sharpen: A Guidebook for Business Ownership and Adventures in Leadership”
Prudence Is Sexy
Prudence is what makes someone a great commodities trader—the capacity to face reality squarely in the eye without allowing emotion or ego to get in the way. It’s what is needed by every quarterback or battlefield general.
Prudence is not a sexy word. The face people make when asked about prudence is the same one they make after eating a large piece of grapefruit—sour. Maybe that’s because most people connect the idea of “prudence” with being a “prude.” In high school, a prude was not someone you’d want to hang out with. “Yeah, you are really proper and modest . . . let’s hang out!”
And yet, that connection couldn’t be further from the truth. Being prudent may not be trendy or written about—but when you see a leader who is prudent, you respect them a lot more.
According to Merriam-Webster, prudence is the ability to govern and discipline oneself by the use of reason, shrewdness in the management of affairs, the skill of good judgment in the use of resources, and cautionary as to danger or risk.
Based on that definition, would you like to be a prudent leader?
Fools show their annoyance at once, but the prudent overlook an insult.
The wisdom of the prudent is to give thought to their ways, but the folly of fools is deception.
The simple believe anything, but the prudent give thought to their steps.
Prudence is a fountain of life to those who have it, but folly brings punishment to fools.
The prudent see danger and take refuge, but the simple keep going and pay the penalty.
A prudent person overlooks insults, listens, has emotional intelligence, gives thought to their ways and steps, sees danger, and takes refuge when necessary. Fools are annoyed, quick to talk, show their ignorance, believe anything, disregard risk, and pay the penalty.
Personally, I’d rather be prudent. What about you?
Leaders Take Big Swings
Some companies need tweaking. Improve customer service, decrease cost of goods, add a key player, and they experience growth and prosper.
But what happens when you what got you here won’t get you there? When you see a shift in the market that gives you enough pause that you know you need to take a big swing?
As an owner or CEO, it’s likely you’ll have to make one big decision in the next two years that will change the course of your company for the next decade.
I (Dan) led an e-learning company for ten years. For the first four, we were a custom shop. Everything was personalized, branded, and storied for you, the client. Around that same time, we took a big swing: that we would become an off-the-shelf (generic content) provider first, then add custom when needed.
The problem was that we were creating the same course over and over again. It cost a fortune, and we could only sell enterprise level clients due to the need for big budgets. The courses took forever to sell, and the account management was expensive due to heavy hand-holding. Our revenue was stagnant, and we were bumping into the same challenges again and again. Adding people or process wouldn’t fix the issues.
So, we decided to take a big swing. Changing our model would put us in a position to grow with larger target markets, multiple price points, and leverage our internal intellectual property.
It was against everything we had created up to that point. Process, people, messaging, philosophy—all had to change. It was an idea we chewed on for six months. What if we missed? What if people weren’t on board? How would it affect our current customer base? Revenue? Cash flow?
After the first year, we saw an increase in purchases with our current clients (more bang for their buck and serving multiple departments), we created a reseller strategy, which allowed others to sell our products and increased our sales without investing in new sales talent, and we increased our offering from 50 courses to 250.
The decision paid off and set us up for the next five years of growth.
What about you? How do you know you need to take a big swing?
It’s usually starts in your gut. You can just see the market changing. But you’ve always done it this way, and it starts to become your biggest worry.
Your current path might become the elephant in the room at your executive meetings. Everyone knows it’s there, but no one wants to be the one to bring it up because of politics, change, and how much hard work it will take. It’s easier to sit in the foxhole and hope no one throws in a grenade.
Trust your team and put it on the table. Allow the conversation to challenge your bias and thesis. Be able to argue all sides. Then, make your decision—keep tweaking or take the big swing.
Once you decide, you’ll need to hold on to the idea and recast the vision. For many leaders, this is where it goes off the rails. It’s not a shiny object anymore, so they move on to new things and people. Taking your eye off the ball will ruin the company. If it took 2–3 years to get your business off the ground, it will take at least that long to change the direction.
You might only take one or two big swings in your company over a decade, but they are what will take you into the future with confidence.
So check your gut. What do you need to swing at? Then run it through the Discernment Filter.
But wait . . . what does this have to do with prudence? Wasn’t that about minimizing risk, looking before you leap, and going slow? Yes, prudence is all of those things, but as the leader of your company, you need to have a wider lens than that.
Prudence can be seeing the market and sensing danger. Prudence can be contrarian because it’s not doing what everyone else would do. Prudence is not putting your head in the sand and hoping it all turns out well. It’s a deliberate, honest, calculating, and risk-management mindset in all facets of your business. And it’s just flat-out sexy.
Mental Model: 10-10-10 and 10-100-1000
Do you remember that scene in The Matrix where Morpheus and Neo meet for the first time? They are in a dark room sitting on Victorian furniture, and Morpheus tells Neo what the matrix is and that he is a slave in it. Then he gives Neo a fork-in-the-road decision to make. “This is your last chance. After this, there is no turning back. You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, and you stay in Wonderland, and I show you how deep the rabbit hole goes. (long dramatic pause) Remember, all I’m offering is the truth, nothing more.” (Eerie music playing . . .)
Have you ever been in this situation? Red pill, blue pill, decide right now. Uncertain future. You know enough to be dangerous, but there is unknown risk. Or, you know the risk, but you can’t measure if it’s a good decision or bad one. Been there?
This could be signing a large contract with a new vendor, buying a new building, or taking on a new partner. It could be staring sin in the face. Heads I go up to the hotel room with her/him, tails I turn and run away. No matter the situation, there is a great mental model that can help you quickly get out of your emotional state of “now” and instead look toward the future.
In Suze Welch’s book 10-10-10, she outlines how, when faced with a challenge, you can ask yourself questions using these three 10s to help process and understand consequences.
“The name of the process is just a totem meant to directionally suggest time frames along the lines of: in the heat of the moment, somewhat later, and when all is said and done.”
The first 10 is now, so it could be 10 minutes or 10 hours. The second 10 is later, so perhaps 10 days or 10 months. The third 10 is long term, so perhaps 10 years.
By looking at the situation in different time frames, you get an immediate perspective change, and you engage your logical mind and step out of the here-and-now emotional state.
I think there is also a “values multiplier” you can add to the timeframe. You may only be making this decision once. That is dangerous because you can get really creative justifying that decision. Multiply by 10 each time to see if the decision is in line with your why, your values, and your mission.
Meaning, would you make that same decision 10 times? 100 times? 1000 times?
Decisions we make carry consequences—both good and bad. By thinking about potential outcomes, time, and values, you can quickly decipher if you want to move forward with those consequences.
September 22, 2019