Category: Small Businesses

“You have our money, but our employees weren’t paid. This is a nightmare!” Tweeted one Patriot Software direct deposit customer following the Silicon Valley Bank collapse.

And it was a nightmare. Not just for our customers but also for our 185 remote employees. We were just as confused and angry.

By now, we know the narrative of the SVB’s sudden collapse on Friday, March 10, 2023. Touted less than a month before as one of the best banks in America, SVB collapsed in a less than 48-hour span and was taken over by the FDIC in the middle of the workday.

But you may not have read about the sheer magnitude of work that went into navigating the second-biggest bank failure in U.S. history.

I’m the CEO of a payroll software company that used Silicon Valley Bank to process our customers’ direct deposits. No juicy breaking news—just a raw, behind-the-scenes account of what Patriot Software’s remote team, our customers, and their employees went through.

Friday, March 10

As a payroll company, you never want to have a late payroll. Imagine waking up to alerts that nobody had been paid … scary, right? That’s exactly what happened on Friday.

1. Tell Me This Isn’t Real

“Our employees reported their direct deposits weren’t in their bank accounts at 7:00 a.m. (ET). We immediately began communicating with our SVB contact to find out what the holdup was,” Jackie White, Head of Risk and Treasury at Patriot Software, recounted.

Initially, our SVB contact told us that employees didn’t get paid because the system was overwhelmed. Mike Streb, Patriot Product Manager, added some much-needed comic relief that morning when he quipped, “I have been overwhelmed since 2012, but I still get things done.”

2. The Panic Begins

As we now know, the SVB system wasn’t overwhelmed. It was crumbling at a breakneck pace. We received an email at 11:56 a.m. with one single line from our SVB point of contact with a link to the announcement that regulators had shut down SVB. Yep, that’s when and how we learned that SVB didn’t just have some delays in their processes … but that regulators had shut the bank down. An email. No calls. No explanation for our thousands of customers. That was it, one email. Unbelievable!

“We were on a Zoom call when we saw the email come through. On a shared screen, we all read the FDIC memo together. After a minute of silence, it sank in that one of the worst-case scenarios had happened: the bank was shut down,” Patriot’s Chief Product Officer, Kyle Dreger, shared. “I think we all took a few moments to let that new reality sink in, but it wasn’t long before you could feel a clear unspoken understanding that, while we had a million questions, we were going to find a way to get employees paid.”

At this point, word had spread about the SVB collapse—customers were inundating us with phone calls, emails, and chats. We braced for impact—8,100 (out of 57,000) Patriot companies nationwide had run payroll with direct deposit for March 10. They were understandably angry about the SVB collapse and wanted to know where their money was.

We had no immediate answers. This wasn’t a systems issue that we could plan for. This was a systemic banking issue that was beginning to reverberate across the American financial sector. How many banks get shut down in the middle of the day and taken over by the FDIC because of a bank run?

3. Shake It Off And Get To Work

To put it politely, I was ticked, really ticked. We’d been let down by our banking partners at SVB, which in turn caused Patriot to let down thousands of customers that rely on us to make sure their employees get paid on time.

There was no time to point fingers and complain. What good would that do at a time like this, anyway?

There was work to be done—a lot of work. We went into overdrive. We needed to:

• Come up with a plan
• Tell all Patriot employees what was happening
• Communicate with our customers
• Speak to outside specialists
• Replace SVB with new banking partners—immediately—with two (yes, two!) of the largest financial institutions in the nation

To coordinate all internal operations, Kyle Dreger set up and led an ongoing war room on Zoom with Patriot’s Executive Team and key managers.

Every Patriot employee had access to the war room—even Patriot’s President and Chief Legal Officer, Mike Wheeler, who was aboard a cruise ship to the Bahamas for his brother’s wedding and armed with limited service.

“How do we get access to over $100 million in dollars within SVB and get funds to people relying on their paychecks as fast as humanly possible?” asked Wheeler, trying to run legal and financial triage from his iPhone. “Call the lawyers, accountants, insurance, everyone; work together to get in front of the FDIC regulators—now!”

4. Communication Is Key

We prioritized finding real-time solutions and over-communicating what we knew to customers nationwide.

We communicated with over 2,000 business owners via call, email, and online chat. To reach tens of thousands of customers, we established a communications page, sent emails, wrote press releases, and posted on social media.

“We were swamped to the point where our phone lines were at capacity, giving customers the incorrect impression that we had shut off our phones. To keep up, we engaged co-workers company-wide to hop on phones to assist in taking calls from frantic customers,” shared Julie Solon, Customer Care Manager. “The entire team remained calm, cool, and collected, working very hard to keep up with the constant updates to pass along to our customers. I am very proud of the team for all their efforts to keep customers informed, all while working remotely. We needed to take a few mental health breaks during the event.”

Saturday, March 11, and Sunday, March 12

I went into the weekend with a pit in my stomach. As a business owner, I can tell you: The number one rule of owning a business is always pay your employees. Not only had I not been able to do that on Friday, but the SVB collapse also prevented our customers’ 46,500 employees from getting paid.

We knew our customers’ money was protected. Still, we had no idea when we’d get access to those funds or be able to deposit them in employees’ bank accounts without immediate outside intervention.

1. Grassroots Marketing

We did everything possible to create results over the weekend when all banks were closed. Our goal was simple: Encourage the government to release payroll dollars immediately when banks reopened Monday morning.

To do this, Wheeler had been connecting with current and former Silicon Valley Bank bankers who collectively suggested we launch a grassroots marketing campaign.

Late Saturday night, I wrote an Open Letter to Our Government, calling upon our government and lawmakers to step in. A small group of talented writers hashed out a Twitter thread to increase our reach.

2. National Attention

We launched our campaign first thing Sunday morning, which started gaining traction throughout the day. Ultimately, it hit Senators and truly helped show the heart behind helping the everyday working folks who had no investment say in the downfall of SVB.

U.S. Senator Sherrod Brown, the Chairman of Senate Banking, personally called and thanked me for my Open Letter to Our Government. He said that he discussed our letter with Federal Reserve Secretary Janet Yellen, FDIC Chairman Martin Gruenberg, Federal Reserve Chairman Jerome Powell, and other leaders. He thanked Patriot for highlighting how many thousands of American small businesses were impacted by the abrupt closure of Silicon Valley Bank. Way to go, Senator Brown!

By the end of the day Sunday, the Treasury, Federal Reserve, and FDIC had taken action to assure depositors that their money would be fully insured and accessible on Monday morning.

This was huge! But we weren’t done yet.

Monday, March 13

On Monday, we were armed with answers and prepared for a busy day of customer communication.

Still, we had to temper expectations—although depositors would have access to their money, we had to wait for SVB’s direct deposit systems to regain functionality. That didn’t happen until Tuesday.

Tuesday, March 14

The time had come to get 46,000+ employees paid. With SVB’s systems back up and running, they could finally process Friday’s direct deposits.

When employers called us to tell us their employees nationwide received their direct deposit, there was a lot of joy and relief at Patriot.

“Ultimately, I don’t think I took a single deep breath until Tuesday when we saw paychecks start hitting pockets,” Kyle Dreger shared.

The Golden Rule Leads The Way To Success

I credit our success to one thing—The Golden Rule, a core tenet of Patriot’s brand that says we treat others how we want to be treated and genuinely care about our customers.

Sure, we were exhausted. But we put our customers and their employees first. Dreger, who balanced his round-the-clock work with being a dad to three young kids under five—including a newborn daughter—shared, “There were moments where I’d be on a Zoom meeting at 11 p.m. slowly bouncing my newborn to sleep. And you just did it, you know? Because somewhere, there was some other parent with kids who didn’t get their paycheck. My wife and I were lucky; not getting paid was stressful, but we had food in the fridge. I know that’s not the case for many people, and while the physical stamina wasn’t always there, the motivation was.”

And we were thrilled when reassured employers nationwide came out in droves to commend our customer-first mindset.

One Facebook comment read, “I just want to say that Patriot rocks! This whole thing could have been so much worse; your timely response, frequent updates, and handling of this whole thing have been amazing! Thank you!!! I hope your staff gets a well-deserved break soon, I am sure they earned it!”

As we near the end of Women’s History Month, we are reminded of the challenges still facing female entrepreneurs. One of the most persistent issues facing women owned businesses is a lack of support and resources, a problem that was highlighted during the past few years. To overcome these challenges, several key organizations have stepped up to level the playing field for women owned businesses.

Founded back in 2008, The Cherie Blair Foundation For Women is one of the leading organizations in the world which provides support for women owned businesses. From advocating for change and challenging the barriers facing women, to providing training and support for female entrepreneurs pioneering inclusion in their industries, the Foundation is committed to reducing the gender gap when it comes to the low representation of women owned businesses.

I recently had the opportunity to interview Cherie Blair CBE KC and Cherie Blair Foundation For Women CEO Helen McEachern on the work that the Foundation is focusing on in the next decade, the challenges facing women in business, and the future of female entrepreneurs across the globe. Below is a summary of our conversation.

Rhett Buttle: What is the mission of the Cherie Blair Foundation for Women?

Cherie Blair CBE KC: We live in a world where we still don’t have gender equality, and economic gender equality in particular is a long way off – 151 years off, to be exact, according to the most recent predictions from the World Economic Forum. I’m not willing to wait that long!

I set up the Foundation back in 2008 with a vision for women to enjoy equal economic opportunities so they can live to their full potential, and make their own choices about their lives. Our mission is to empower women in low and middle income countries to start, sustain and grow successful enterprises, and to build fair and inclusive business environments. Supporting women entrepreneurs and closing the gender gap in entrepreneurship is an incredibly important part of achieving economic gender equality so that’s how we work towards our vision.

Rhett Buttle: The Foundation has recently announced a new strategy, ‘Ready for Business’, that looks ahead to 2030. Can you tell us more about this strategy?

Helen McEachern: 2030 is the target date for achieving the United Nations Sustainable Development Goals (SDGs). Our work contributes towards Goal 5 on gender equality, and goal 8 on decent work and economic growth. We work in collaboration with so many partners to deliver impact, influence and fund this mission so it makes sense for us to link our work to the SDGs and an ambitious target for 2030. Our objective is to reach one million women entrepreneurs through our services and lead a revolution in business opportunities with our partners to create a world that enables them to thrive. It’s a big ambition – but we know it’s achievable.

Our new strategy ‘Ready for Business’ guides our work until 2026. We will keep developing and delivering our innovative digital, women-centered services, grow our network of grounded delivery partners, enable a thriving community of expertise in women’s entrepreneurship, lead global advocacy to challenge the systems and structures holding women back, and create a membership community committed to funding and powering our work. Through these interconnected activities we feel confident that we can achieve our 2030 target and meaningfully contribute towards a more equal and sustainable world.

Rhett Buttle: As you know, March is women’s history month. What are the most persistent challenges you have found are facing women entrepreneurs in today’s business world?

Cherie Blair CBE KC: Gender equality across every aspect of society is a fundamental human right and essential for our societies to be safe, prosperous and to thrive. Yet across the world, women are still being short changed and denied their rights. They are burdened with a great deal of challenges that hold them back from entrepreneurial success and equality. This, simply, is not right.

It’s important to look at the economic, social and legal barriers that create these challenges. Deep rooted gender inequality, damaging gender stereotypes and sexist attitudes persist everywhere. These lead to inequalities in education, so women and girls start their economic lives disadvantaged, without essential skills and knowledge; inequalities in the home, where many still view woman’s only purpose as taking care of the family and domestic work; and as a result girls and young women feel (and are told) that they can’t be successful entrepreneurs.

These discriminatory attitudes and practices mean that banks and investors are less likely to finance women’s businesses, that customers and clients are less likely to buy from women, and that business products, services and opportunities are simply not offered to or designed with women in mind. What’s more, in many countries discriminatory laws and policies further impinge women’s entrepreneurship. All these factors mean women often run businesses in the most precarious and least lucrative industries – for example those most impacted by the COVID-19 pandemic like hospitality and retail – or are unable to formalize their enterprises. It really can be a perfect storm of obstacles.

Rhett Buttle: The Foundation released a new research report this month which included responses from over 700 women entrepreneurs across the world. Can you share some of the insights you have found from this report?

Helen McEachern: Late in 2022 we received survey responses from 718 women entrepreneurs in 78 low and middle income countries on their experiences. We found among other things that women entrepreneurs are highly motivated by supporting their families and communities – something we see every day at the Foundation. However, the challenges that they face are many: almost four out of five women told us that COVID-19 had harmed their businesses, but even more than that (nearly 90%) are now also struggling with the cost of living crisis and high inflation having negatively impacted their businesses. The barriers that Cherie speaks to are embodied at the individual level in many of their responses: just under half of the women (49%) said that their unpaid care work has increased since the beginning of the pandemic, and 19% told us this has undermined their business performance or limited its growth. Almost half told us they had experienced gender discrimination as entrepreneurs.

Our research has also helped us identify what women entrepreneurs need to tackle these challenges. Almost half told us that they need high-quality, contextualized skills training designed with and for women – this is the kind of training the Foundation creates. They absolutely need greater access to finance and markets (indeed, 78% of the women we spoke to told us they need financial support). They also need supportive policy, greater visibility and for gender stereotypes to be dismantled if we are ever going to remove the barriers that hold women back. Seeing role models of successful women entrepreneurs and having the kind of personalized mentoring that provides guidance and a safe space can support women to overcome some of these barriers.

Rhett Buttle: What makes you optimistic about the future of women entrepreneurs?

Cherie Blair CBE KC: I feel optimistic because I see such an enormous will for change from community based organizations through to heads of state and major business leaders. While it’s slow progress – that needs accelerating – we are finally seeing the economic gender gap starting to close and more countries bringing in reforms that afford women greater economic equality in the eyes of the law. Now, through our new strategy, with our partners and others I feel there is the potential for a business revolution so that we can close the economic gender gap for good. I know that together with the will we can do it.

Helen McEachern: What I find incredibly heartening is that our new research also found that women are highly optimistic about the future of their businesses despite the challenges they face. 83% of them told us this, in fact, with almost four out of ten saying they felt optimistic because of ‘internal’ reasons, such as a deep self-belief, hope and passion for their business – by far the most common reason. When you’re working alongside these incredible women every day, witnessing their fantastic entrepreneurial spirit and optimism, it’s certainly contagious and motivating for the work that we do.

Rhett Buttle: Is there anything else you would like to add?

Cherie Blair CBE KC: To add to that, you might be wondering ‘well, what role can I really play in all of this?’. I would like to invite the business people out there to join our Mentoring Women in Business programme as one of our professional mentors. Through our year-long, online programme, by giving just two hours a month you can support a woman entrepreneur to overcome the challenges she faces, grow and strengthen her business, and be positioned to create fantastic impact. You don’t need to have experience in mentoring, and everyone who takes part consistently tells us what a life-changing experience it is, be they young entrepreneurs themselves or CEOs of major corporations. You can help level the playing field for women entrepreneurs, be part of our movement to reach one million women by 2030, and develop your own leadership skills while you are at it.

Helen McEachern: While there is so much work to do in the world in the face of enormous challenges, it may feel like women’s entrepreneurship is not the most critical focus. But I would argue that it must be: women’s economic empowerment is first and foremost an issue of gender justice and women’s rights, but it also presents a route to solve some of the world’s most pressing challenges. We know women entrepreneurs are the backbone of low and middle income economies, the people creating jobs and solving social issues in their communities, and the ones who are creating better futures for their families. Now, in the wake of the COVID-19 pandemic, and amid high inflation and a worldwide cost of living crisis, one of the smartest, most sustainable things to do is invest in women entrepreneurs’ equality and success.

Every year since 1987, the month of March has been designated by Congress as Women’s History Month. The President issues an annual proclamation on Women’s History Month, highlighting the progress the Administration has made on behalf of women and girls, and federal agencies announce new programs, initiatives and funding opportunities for women owned businesses.

The last three years have been exceptionally difficult for everyone, though especially for women. As a result of the pandemic, rising costs and supply chain disruptions, a record number of women left the workforce to care for children and loved ones, to establish a stronger work-life balance or because they felt underappreciated in their roles. While many women left jobs during the pandemic, data suggests that some of them did so to start their own businesses, with 80% of women who started businesses did so from scratch, as opposed to buying another business or franchise. More than half also launched their ventures solo, which is double the rate of men who did the same. A bright spot has been that many new businesses started by women are started by Black women, who have been the fastest growing group of entrepreneurs in America even before the start of the pandemic.

In spite of the difficult challenges that women continue to navigate, they are returning to work and starting businesses. There are more resources to support the growth of women owned businesses now than ever before. This week, the President announced ongoing and additional resources for women owned businesses, including an expansion of the Women’s Business Center (WBC) network. This expansion will bring the total number of WBCs to 160 across the country to assist women entrepreneurs through mentorship, technical assistance, business development and financing opportunities. The SBA’s network of additional resource partners, including SCORE and the Small Business Development Centers (SBDCs) offer a strong portfolio of resources that women entrepreneurs can access to help grow their businesses, including the SCORE resource hub for women entrepreneurs.

These are much needed resources for women owned businesses, especially now as more and more women are turning to entrepreneurship, and track with the concerns that women entrepreneurs share as it relates to economic challenges facing their businesses. Earlier this year, I had the opportunity to sit down with the leaders of several women and minority business organizations, including the President and CEO of Women Impacting Public Policy, Candace Waterman. She said that women are approaching the future with cautious optimism, and that they want to see leaders in Congress prioritizing what they can agree on to find solutions to the challenges faced by small businesses.

On the policy front, there’s reason to be optimistic, with Congressional leaders coming together to explore solutions to paid leave with the launch of the Bipartisan House Working Group on Paid Leave, led by Reps. Houlahan (D-PA) and Bice (R-OK). Additional policies seek to address access to affordable healthcare options, a major barrier to success for entrepreneurs, including the fix for the “family glitch,” new health reimbursement arrangement options, and reducing barriers to enrollment in the Marketplace for women-owned businesses will allow female entrepreneurs to have the tools to grow. The Inflation Reduction Act also took actions to control prescription drug costs by allowing Medicare to negotiate drug prices for the first time, a top concern among small business owners, and pressure is mounting to build on the momentum of that legislation to expand savings outside Medicare into the private market.

As women continue to start more businesses, it is crucial that they have access to the resources and tools they need to be successful. The increased investments in resources that help them start their businesses and in policy issues that acutely impact women, such as paid leave and increasing access to affordable healthcare options, will be strong determinants to their success.

It is bad enough that we have to deal with sticky inflation, now we’re talking about a possible banking crisis. The policy to fight inflation is “tight money,” slow the economy, reduce spending financed by loans. The policy to deal with bank illiquidity? Just the reverse. What’s a regulator to do? Over the shoulder, the answer is don’t put yourself in a position like this again (although there will probably be other mistakes, just not that one specifically). Too low for too long, we all saw it and urged caution (higher policy rates). Then Covid and an avalanche of new money, government support payments financed by increased Treasury borrowing. This money collided with shortages of goods and labor due to Covid, and inflation ensued, as citizens tried to convert those government checks into goods and services. Inflation hit 9.1%.

The Fed responded with rapid increases in its policy rate (up 475 basis points since March 2022). Banks overwhelmed with deposits of all that government largess had wisely put a lot of it into longer term US Treasury bonds (with historically low yields thanks to “too low for too long”) while they tried to figure out how to lend it out to businesses. Suddenly, the market value of those bonds (100% safe from default) began to fall (because new Treasury bonds carried much higher coupons) so when Silicon Valley Bank (SVB) needed to liquidate them to support customer withdrawals, they lost money, a lot of money. SVB started failing, not so much due to bad loans, but to the decline in market value of all those low yield totally safe Treasury securities. The Fed and Treasury responded by guaranteeing all deposits regardless of size to ward off bank run contagion. At some banks, as high as 90% of the deposits were in excess of the FDIC insurance limit of $250,000. Set many years ago (2008), and not adjusted for inflation, maybe that should have been $400,000 or higher, reducing the number of depositors withdrawing their funds. The CPI in 2008 was 215 compared to 300 now, up 40%.

We live in a very divided economy, including on economic policy. In the latest University of Michigan Surveys of Consumers, the net percent of consumers viewing government policy as “good” was -25% (20% saying “good” less the 45% saying “poor”). Among those identifying as Democrats, a net 23% said “good.” Among Independents, a net -30%, and among Republicans, a net -73%. Fed supervision is now under scrutiny, risk management at SVB was poor and should have been caught by regulators.

Banks are tightening credit standards for new loans and small business owners are noticing. The percent of owners reporting their last loan was harder to get has risen from 2% in January 2022 to as high as 7% by December as the Fed hit the brakes (chart shows values in the first month of each quarter). The Federal Reserve regularly surveys bank lending officers and it is clear that banks are indeed raising their lending standards, in anticipation of a weakening economy.

By insuring all deposits regardless of size, the government has reduced the incentive to withdraw funds, heading off more “runs” on banks. However, risk management needs to improve. A deposit in a bank is a 24-hour loan. Re-lending that money for 10 years (Treasury bonds) makes it safe from default, but when the depositors need the money, they can’t wait 10 years to get it. The Fed’s control of interest rates set up this problem (very low rates), and by raising rates it has triggered the liquidity issues and bank failures (and a bad housing market). Interest rates are very important prices in our economy and the Fed needs to let markets do the rate setting, not a bunch of regulators.

Spending enough time on strategy is key. It helps keep an organization focused on the future and move forward. However, with time being many people’s scarcest resource and other things asking for immediate attention, many organizations spend too little time on strategy. But, how much is too little, and what is enough? The One-Hour Rule provides some help.

Why Spending Time on Strategy Is Critical

While most leaders subscribe to the idea that strategy is important for their organizations, it is non-trivial to ask why. After all, the mere fact that people think so, doesn’t make it true. Of the many reasons, four stand out:

1. Strategy creates coherence. Strategy is about integrating the various parts of an organization and making sure that there is alignment. If done well, it is the “glue” holding the parts together and the overarching framework making the pieces of the puzzle fit.
2. Strategy brings focus. Strategy involves making choices, about what to do and what not to do, and about how to do it. Without strategy, organizations tend to digress in all directions with resources, time and money spread too thinly across too many initiatives.
3. Strategy fosters stability. Strategy is about the long-term, or at least longer-term. As such, it helps keeping people’s eyes on the more important things, not just on their day-to-day activities. This creates a relatively stable point of reference in a fast-changing world.
4. Strategy engages people. Strategy, if done well, motivates and energizes people. It helps them understand why the organization does what it does, and how their own work contributes. This makes their work and life more meaningful and enjoyable.

The mere fact that strategy is critical means that spending time on it is critical too. Because, strategy does not generate itself, it cannot (yet) be generated by AI, and it does require time to generate, execute, evaluate and update it.

Why Companies Don’t Spend Enough Time on Strategy

Most organizations spend too little time on strategy. Not just at the board level, but throughout, at all levels. There are many reasons for this, with the following as some of the most important ones:

• Absorbed by operational work. Many people, including managers and executives are overloaded with day-to-day short-term work.
• External distractions. In today’s information society, there are many distractions that consume time and attention.
• Comfort and fear. For most people it is more comforting to focus on their daily work, rather than on an uncertain future and tough choices.

All reasons are perfectly understandable. They are natural, while strategizing is not. But, this doesn’t mean strategy shouldn’t get more attention and deserves more time.

How Much Time? The One-Hour Rule of Strategy

To decide how much time one should actually be spending on strategy, here is a simple rule of thumb:

Executives should spend one hour per day on strategy;

Managers should spend one hour per week on strategy;

Employees should spend one hour per month on strategy

For obvious reasons, I call this rule “The One-Hour Rule” of strategy. It is also the core message of my new book, The One-Hour Strategy.

The idea behind this rule is that strategy is important for everyone in the organization and that everyone can also contribute to it. Not by talking high-level about the strategy as a whole, but by approaching strategy from their own unique role and perspective.

At the same time, strategy is not equally important for everyone and not everyone can or should contribute equally to the organization’s strategy. Because of their role and responsibilities, executives need to spend more time on it than managers, and managers more than employees.

Hence the rule: one hour per day for executives, one hour per week for managers, and one hour per month for employees. For those who think this is much, expressed in percentages of a 40h workweek it is 12.5% for executives, 2.5% for managers, and 0.6% for employees. This doesn’t seem an awful lot, does it? For executives maybe, but if not on strategy, what else should they be spending their time on?

How to Spend the Time?

A critical question is how to spend the time on strategy, what to actually do during the hour. After all, the mere act of spending more time on something doesn’t make it better or lead to better results. The time spent needs to be effective.

A short article like this is not the place for a comprehensive answer to this question. That answer is given in The One-Hour Strategy book. Yet, the gist of it is as follows:

• Everyone works at strategy at their own level and from their own perspective. So, if one is leading a department, then the main focus is on the strategy of that department.
• Strategy is made concrete, tangible and detailed through a single framework across levels. In my own work I use the Strategy Sketch or the 6M Model for this.
• There is a continuous process, which focuses on the key issues and opportunities that deserve attention next in order to make the progress that one wants to make with the organization.

Here are five things in tech that happened this week and how they affect your business. Did you miss them?

1 – These are the top 5 best password manager software companies in 2023

Tech Times has listed the five best password manager software–programs that store encrypted lists of passwords only verified users can access. The first is LastPass known for their sophisticated cloud technology. The most widely used on the list is Sticky Password. All five have something to offer with free 30-day trials. (Source: Tech Times)

Why this is important for your business:

Every business – and every individual – should be using a password manager. The biggest benefit is you can use complex passwords on important sites like banking and ecommerce platforms and then save and retrieve them from the password manager. Good managers will also evaluate the effectiveness of your passwords.

2 – One hundred drones are now being used across IKEA retail for stock inventory

The company confirmed that 100 drones are currently in operation to streamline inventory control and assist workers with certain tasks. The first drone was employed two years ago with 100 now operating in IKEA locations across Europe. (Source: INGKA)

Why this is important for your business:

“Introducing drones and other advanced tools – such as, for example, robots for picking up goods – is a genuine win-win for everybody,” Tolga Öncu–Head of Retail at Ingka Group (IKEA)–said about the technology that was developed in partnership with Verity–a company that specializes in warehouse drone systems. He’s right and I’m seeing more of my smaller and mid-sized clients using drones to check safety and help with cycle counts.

3 – These are the 10 most popular SaaS providers for small businesses

Business banking platform Novo has released its list of the 10 most used Software As A Service (SaaS) providers. Taken from a sample of 70,000 small business and self-employed customers, the end result indicates these 10 SaaS providers serve an essential need. (Source: Novo)

Why this is important for your business:

No surprises here. Top of the list is Intuit–the provider of QuickBooks. Website builder Wix is the tenth most popular. Adobe and Google’s GSuite were numbers three and two respectively. I’m betting your business uses half of these.

4 – Businesses need HR Tech as tax compliance grows more complex

Craig Boelte of Paycom offered his insights on how companies can alleviate themselves of the stress and headache of tax compliance. (Source: Bloomberg Tax)

Why this is important for your business:

Boelte suggests implementing HR Tech is one of the wisest decisions businesses can make. He cites examples such as tax deadlines because HR tech lessens the demands on HR managers and handles the minutia with a high-level of accuracy. Payroll tax management is another process that should be automated. In cases where advanced software is being used Boelte said most executives he’s spoken to reported that not all of their staff uses the technology. Selecting the right system tailored to a company’s – and employees’ – needs is crucial.

5 – Study shows retailers are revving up for a technology boom

The latest upsurge of technology in the retail industry is being driven by “operational efficiency” as reported by a 2023 study done by Incisiv and Verizon. (Source: Supermarket News)

Why this is important for your business:

Are you investing in technology for your retail store? You should be. By 2025 most retailers expect 70 percent of tasks to be “partially or fully automated.” Use of AI to support operations is projected to increase 9 times in the next two years. Point of Sale (POS) systems will expand as well. Scott Lawrence, a Senior Vice President Global Solutions at Verizon Business, noted that this will be a consequential experiment of sorts to see if retailers can handle the increased traffic on their system. “The key is to build a network architecture that will give in-store applications access to the right bandwidth at the right time…” Lawrence said.

The big question going into this week’s Federal Open Market Committee (FOMC) meeting was whether Fed Chair Jerome Powell would announce a continuation of interest rate increases. As we saw, the answer was yes.

In announcing a 0.25% interest rate hike on Wednesday, Powell pointed at growth in spending and production, job gains, a continuously low unemployment rate, and elevated inflation as factors in the decision.

The Fed chair said that recent developments, such as the SVB collapse, are likely to result in tighter credit conditions for both households and businesses. Nonetheless, the Committee remains highly attentive to inflation and continues to aim for an inflation rate of 2% in the long term. In support of these goals, the FOMC decided to raise the target range for the federal funds rate to 4-3/4 to 5%.

Powell said that if left unaddressed, isolated incidents can undermine confidence in healthy banks and threaten the ability of the banking system as a whole. The Fed, the Treasury Department, and the FDIC, took actions to strengthen public confidence in the banking system and created the Bank Term Funding Program to support American businesses and households by making additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

According to Powell, this program is effectively meeting the unusual funding needs that some banks have faced and makes clear that ample liquidity in the system is available.

The Fed chair said that higher interest rates and slower growth appear to be weighing on business investment and that the FOMC expects subdued growth to continue. Meanwhile, the unemployment rate remained low in February, at 3.6 percent. The labor force participation rate has edged up in recent months, and wage growth has shown some signs of easing.

Small businesses are in a tight spot right now. High material costs, fluctuations in gas prices, and a tight labor market (leading to higher wages) combine to raise cost structures hurt cash flow. Meanwhile, since many small business loans are adjustable rate loans, businesses are finding the cost of existing debt to be growing.

Some good news for business borrowers is that the Fed did not assert that more interest rates are on the horizon to quell inflation. This most recent rate hike may have been debated a few days before the announcement, but likely the Fed did not want people to view a halt in planned increases as a sign of panic following SVB and Signature Bank collapses.

Without doubt, the turmoil in the banking industry and shaken confidence in midsize and community banks will hinder small business access to capital since the smaller banks are responsible for a large percentage of small business funding. In particular, they have been a reliable source of credit for women-owned and minority-owned businesses.

According to the latest Biz2Credit Small Business Lending Index (February 2023 figures), the approval rates of small business loan requests at big banks have declined for nine consecutive months, and they are granting just 14.2% of applications. In February of 2022, the eve of the pandemic, they approved almost double that percentage (28.3%).

Meanwhile, regional and community banks approved 21.3% of funding requests. While that number is greater than the figure of big banks, it pales in comparison to February 2020, when they approved more than half (50.3%) of applications.

Recent events will likely result in heightened cautiousness at banks. Those who have experienced significant withdrawals of deposits may be even more reluctant to lend to small businesses. Right now, we are experiencing a small business credit crunch, and we can expect to see that shortly when the March lending figures are released.

While raising interest rates is a historically successful tactic used to combat high inflation, the rising cost of capital is putting a squeeze on small business owners. Often, small business loans are variable rate loans, and continuously rising rates are increasing the among of their revenues that go towards debt service. Many small businesses are already experiencing cash flow issues.

When we combine the rising cost of capital with the reluctance of banks to make loans in the last several weeks, the result is a credit crunch for small businesses. Companies are now looking at non-bank, alternative sources of credit for working capital and money for growth. Unfortunately, those institutions charge higher interest rates than banks do.

Often, the speed of transaction and the increased chance of securing capital from alternative lenders makes using these lenders an attractive option for companies that need working capital and funding for growth. But those who are already concerned with the rising cost of existing debt and cash flow issues may indeed put off borrowing plans in the near future until rates stabilize.

For all of its challenges, the Covid-19 pandemic has proven to have rightfully accelerated discussion and possible action on a few public policy issues, one of those is paid leave. Efforts to tackle paid leave have provided a prime bipartisan opportunity for lawmakers, especially following the current Administration’s efforts to include paid leave in their Build Back Better (BBB) framework, lawmakers on both sides of the aisle and in both Chambers, have rightfully so, rolled up their sleeves to attempt to tackle this challenging issue.

Following a strong push for paid leave in the 117th Congress, a group of bipartisan lawmakers in the House, led by Representatives Chrissy Houlahan (D-PA) and Stephanie Bice (R-OK), formed a working group to study options for making working and caregiving more compatible, the effects of paid family leave on maternal health and to learn from states programs what has been successful for businesses and the financial security of working caregivers. Other group members include Reps. Colin Allred (D-Texas), Julia Letlow (R-La.), Mariannette Miller-Meeks (R-Iowa) and Haley Stevens (D-Mich.).

I recently had the opportunity to interview Representatives Bice and Houlahan on the issues facing paid leave legislation in Congress and how the bipartisan working group on paid leave is working to drive the conversation forward. Below is a summary of our conversation.

Rhett Buttle: Paid leave has consistently received support and attention on the Hill, yet Congress has struggled to reach consensus on the role the federal government should play in helping to facilitate paid leave. Why do you think that is?

Rep. Bice & Rep. Houlahan: Part of the reason consensus has been a challenge is the misrepresentation that this issue isn’t a bipartisan one. Paid family leave received attention under both the previous administration and the current administration, and that is not always mentioned as part of this conversation. This reiterates the notion that solutions from both sides of the aisle have been proposed, which we hope to examine and enhance. A consensus on the federal government’s role in facilitating paid leave can be difficult to come to; however, many states across the country have implemented paid leave initiatives that benefit both the employee and employer. We will examine some of those successful paid leave state laws on a national level. With the addition of new members of Congress on both sides of the aisle, we are hopeful that paid family leave once again receives the attention it deserves.

Rhett Buttle: Since the announcement of the bipartisan working group on paid leave in December, many groups have expressed their support for some kind of federal paid leave solution. Do you think the 118th Congress is any closer to achieving a federal solution for workers and employers as it relates to paid leave than the previous Congress?

Rep. Bice & Rep. Houlahan: We have had tremendous support from groups across the spectrum and with the launch of the first working group in the House of Representatives dedicated to this issue, including members, Rep. Miller Meeks (R-IA), Rep. Stevens (D-MI), Rep. Letlow (R-LA), and Rep. Allred (D-TX), it will serve as a reminder for our colleagues that this is a pressing bipartisan issue with a group actively working to bring attention to it. With this momentum we can hopefully garner support for the group’s work, which will offer solutions that both Republicans and Democrats would support. We believe this group has a unique ability to bring together important voices on both sides of the aisle and are hopeful for what is ahead. Most importantly we remain committed to strong bipartisanship cooperation this Congress.

Rhett Buttle: What are the goals of the working group in the coming year? How will the working group define success?

Rep. Bice & Rep. Houlahan: Paid family leave is a complex issue. Over the next year, we plan to look at what has been successful and what hasn’t worked. We want to examine ways to bridge the gap between Americans with generous leave options and those with no options, as well as how we can provide paid family leave on the federal level to eliminate the current patchwork access that many Americans must navigate. We will explore options including but not limited to policies that have been implemented at the state level, tax incentives for businesses as well as individuals, and potential engagement from insurance companies.

Rhett Buttle: We know that many small business owners view their employees like family and want to be able to provide paid leave benefits to their workers. Yet they face many obstacles including affordability, complexity of administration and backfilling. What is the working group’s approach to addressing these challenges in particular?

Rep. Bice & Rep. Houlahan: Only 23% of workers have access to paid family leave, so a priority for our working group is finding a solution which is not only pro-business but also pro-family to ensure more people have access to paid leave. We have heard from numerous companies throughout Oklahoma’s Fifth Congressional District and Pennsylvania’s Sixth Congressional District that are facing workforce shortages, especially with women. We plan to engage stakeholders and business owners, both large and small businesses, throughout this process. It’s important we hear from every voice involved in this issue to see what consensus we can achieve.

Since its inception, the working group has received a positive response from across the small business community, demonstrating the importance of a paid leave solution for small business owners and entrepreneurs. In response to the working group’s launch, several small business organizations representing diverse and women owned businesses and online marketplaces signed a letter in support of the goals of the working group and are eager to collaborate with the working group towards a solution: “We welcome the launch of the House bipartisan paid leave working group. We support the objectives of the working group to identify and explore paid leave policy solutions that help support business owners and working families…”It’s crucial that the voice of small business – including the self-employed and microbusiness – is reflected in this policy discussion.”

Paid leave is a critical workforce and competitiveness issue. The ability to offer benefits helps small businesses remain competitive with larger firms with more resources. Furthermore, it’s important that the needs of small businesses and the self-employed are reflected in policy discussions regarding paid leave, and that they have a seat at the decision making table.

More organizations are ramping up their efforts to close the wealth gap for future generations after the Covid-19 pandemic and murder of George Floyd laid bare these longstanding inequities. Since it was founded in 2018, the Black Economic Alliance (BEA), a nonpartisan group of Black business leaders and advocates, has worked to expand the political and economic power of the Black community. Over the last three years, the group has mobilized business leaders to advocate for preserving voting rights and established programs to accelerate Black business ownership. BEA also helped identify candidates of color for economic positions in government.

In January 2023, BEA elevated Samantha Tweedy from her role as president of the BEA Foundation to her current role as chief executive officer of BEA. I interviewed Samantha last year when she was serving as president of the BEA Foundation and she told me that, “From entrepreneurship and business ownership to every area of our economy, it’s time for systemic change across the public, private, and social sectors to create a new economic infrastructure that is truly inclusive and prioritizes Black wealth-building.”

I recently had the opportunity to follow up with Samantha about her vision for BEA and upcoming summit bringing together leaders across the public, private, and social sectors. Below is our conversation.

Rhett Buttle: At the beginning of the year, you were appointed the inaugural Chief Executive Officer of the BEA. What are your priorities for the organization as CEO?

Samantha Tweedy: My priority is to ensure that expanding work, wages, and wealth for Black Americans is a focal point of decision-making from Washington to Wall Street. BEA is working to curate and build consensus around, and drive action on, the solutions most likely to expand Black economic prosperity and close the racial wealth gap, which, as research shows, would grow the entire American economy to the tune of $1.5 trillion.

This work of expanding Black economic power is exactly what the Black Economic Alliance – a coalition of leading Black business executives and aligned allies – was built to do, and why I am so thrilled to be the organization’s inaugural CEO.

Rhett Buttle: What new initiatives and goals has BEA been working on for 2023?

Samantha Tweedy: Following years of political investment in competitive races across the country through our PAC and building strong partnerships in corporate America through our Foundation, BEA is uniquely positioned to unite a wide cross-section of stakeholders to advance solutions that improve Black economic outcomes in the U.S. Today, nearly 30 BEA PAC-endorsed policymakers committed to our work, wages, and wealth agenda are serving in elected offices across the country. And from BEA’s extensive network, we have dozens of C-suite leaders in the philanthropic and corporate sectors committed to partnering with us.

With partners like McKinsey’s Institute for Black Economic Mobility and Urban Institute, we are curating the data-driven, evidence-based policy and practice solutions most likely to move the needle on expanding work, wages, and wealth for the Black community. Those interventions cut across sectors and issue areas, just as these challenges do. We will soon release an Architecture for Action that will help leaders look at potential solutions through a different set of lenses, designed to specifically measure their long term gains for Black work, wages, and wealth. That’s how we can re-imagine our economic infrastructure, from the real estate market to the education system, identifying and striking down structural inequalities that stand in the way of Black economic prosperity. And we’ll leverage the extraordinary convening power of our networks, as exemplified in our upcoming inaugural BEA Solutions Summit, which will bring leaders together to build consensus around those solutions.

Rhett Buttle: What does BEA’s work mean for entrepreneurs?

Samantha Tweedy: Business ownership is one of our nation’s surest pathways to wealth generation. The notion that anyone can take an idea, work hard, and transform it into a successful business lies at the heart of the American Dream. Today, 17% of Black women, the fastest-growing demographic of entrepreneurs, are in the process of starting a business in spite of structural barriers that make it that much harder for Black Americans to reap the benefits of business ownership and entrepreneurship at scale. These obstacles are costly to all of us. We need to build systems and markets that facilitate Black entrepreneurship, which will benefit the Black community and the economy as a whole. BEA is addressing this issue with programming while researching and sharing solutions that can operate at scale. We launched the Center for Black Entrepreneurship (CBE) – a partnership with Spelman and Morehouse Colleges, powered by an anchor investment from Bank of America – to train a new class of Black entrepreneurs. And through our BEA Entrepreneurs Fund, anchored by Wells Fargo, we will offer $50 million in capital to businesses founded and led by Black entrepreneurs, which will lead to hiring more Black workers and additional investment in Black businesses and communities. Our goal is to help build a thriving ecosystem that provides Black entrepreneurs with the resources and support they need to succeed.

Our entrepreneurship initiatives serve as scaleable ideas for policymakers and the private sector alike – in fact, just last month we hosted Deputy Secretary of the U.S. Department of Treasury Wally Adeyemo and U.S. Small Business Administration (SBA) Administrator Isabella Casillas Guzman for a roundtable discussion centered on improving access to capital in historically underserved communities and the importance of supporting Black businesses and workforce development programs.

Rhett Buttle: BEA is hosting its first-ever Solutions Summit on March 21st. What can you tell us about this summit?

Samantha Tweedy: The inaugural BEA Solutions Summit is bringing together leaders across the public, private, and social sectors – such as Ambassador Susan Rice, Ariel Investments Founder and CEO John Rogers, Blavity CEO Morgan DeBuan, journalist Jonathan Capehart, and former Massachusetts Governor Deval Patrick – to highlight and build consensus on the leading solutions to advance Black economic prosperity and wealth-building. We’ll hear from experts, policymakers, corporate leaders, and on-the-ground practitioners about what’s working around the country, the major obstacles they are facing, and the role we each need to play to make meaningful change.

Our message to CEOs, policymakers, and philanthropists alike will be that we have to let go of the idea that we can usher Black Americans down the same path to economic prosperity taken by their white counterparts – and instead work to reshape the systems and markets of our economy so they advance, rather than hold back, Black economic prosperity. We look forward to working together with these leaders following the Summit to drive action and investment in the solutions with the greatest impact.

Rhett Buttle: BEA has been an anchor partner in the Business & Democracy Initiative. Tell us about this effort and why it’s important to BEA?

Samantha Tweedy: The Business & Democracy Initiative (BDI) is necessary to BEA’s mission for the simple reason that advancing Black prosperity requires having a strong economy, and a strong economy isn’t possible without a strong democracy. As businesses continue to expand their influence on the American public, we see that they have an increasing responsibility to proactively preserve and protect our democracy – for example, by leveraging their unique influence to help preserve voting rights, as in the 2021 Stand for Democracy call to action that BEA helped to facilitate with over 500 companies and CEOs uniting to oppose state bills containing discriminatory voting measures. That effort was the largest-ever showing of corporate support for the protection of voting rights. Through BDI, we are engaging business leaders on their important role in ensuring the next generation of American prosperity that is so critical to our work, wages, and wealth agenda.

Rhett Buttle: Is there anything else you would like to add?

Samantha Tweedy: Since the Emancipation Proclamation more than 160 years ago, the portion of America’s national wealth held by Black households has increased by less than two percentage points. In fact, the gap between Black and white homeownership rates remains wider today than it was under Jim Crow, and the typical white family has over eight times the wealth of the typical Black family. McKinsey estimates the cost of this racial wealth divide at up to $1.5 trillion per decade, and Citigroup puts the price tag of historical discrimination against Black Americans at a staggering $16 trillion overall.

For all of us committed to realizing the economic promise of America –– a fair shot at prosperity for everyone –– these facts underscore the urgency of our mission. The work ahead must begin with a fundamental re-envisioning of our economy, its infrastructure, and our collective role as leaders within it that centers the expansion of Black economic prosperity and wealth. Only then will we be able to make the progress that is so long overdue.

If done well, participative strategizing beats top-down strategy. It brings in more perspectives leading to better strategy, and it also improves strategy execution afterwards. But, where to start and how to do it?

Why Participation in Strategy Development Works

For many organizations, the pinnacle of good strategy making is engaging all employees somehow in the strategy process. The reasons for this are fourfold:

1. Better Strategy. Participation means more perspectives and more perspectives means a richer input from different levels and roles in the organization. This makes strategy more fitting, more concrete, and more fool-proof.
2. Smoother Execution. Participation means ownership and ownership leads to engagement. It reduces resistance later on and thereby speeds up and smoothens the overall strategy process.
3. Competence Development. Participation means learning-by-doing. The more people are made part of the process, the more they learn what strategy is, how to create it, and what it means specifically for the company
4. Team Alignment. Participation means communication and communication enables alignment. In a participative process people share and hear each other’s perspectives, ideas and insights, which facilitates alignment across functions and levels.

Why Participation in Strategy Is Difficult

As the four reasons above show, there’s a clear case for engaging employees throughout the strategy process. But, more often than not, companies are afraid to do so, or don’t see how they can do this without creating a resource-consuming mess with high hopes and no results. Here are some of the reasons why leaders are hesitant:

• Increased Politics. The fear is often that the strategy process gets very political if more people are involved.
• Constrained Strategy. Another fear is that it leads to weak compromises rather than strong choices.
• Cultural Inertia. It is assumed that employees resist change and that a participative strategy will merely reinforce the status quo.

While understandable, a 2004 Long Range Planning article by Collier, Fishwick and Floyd, “Managerial Involvement and Perceptions of Strategy Process” shows that these fears are ungrounded. On the contrary, their research shows that more involvement results in less politics, constrained strategy and cultural inertia.

How to Start Engaging Employees in Strategy-Making

With the advantages being clear and the objections rejected by research, the case for engaging employees in strategy development is clear. The challenge that many organizations face now is how to get started in a way that is effective, but that does not immediately contradict the current hierarchy or approach to strategy.

Step 1: Pick an Existing Type of Meeting

The basic idea is to stick to the current meeting structure that is present in an organization. So, instead of adding yet another meeting type, one uses meeting types that are already in place. The reason for this is to lower the threshold and start participative strategizing in an unobtrusive, natural way.

It could be monthly team meetings or weekly standups. It could be one-on-ones or team meetings. It could be face-to-face or online. It doesn’t really matter where one starts and what type of meeting it is exactly. As long as the normal mode of communication and meetings is adopted, this should work.

Step 2: Create an Open Dialogue Around 3Is

To start low risk, one simply adds something to the selected type of meeting: a brief dialogue around Issues, Insights and Ideas (the 3Is). During a dedicated time frame within the meeting, ask people for their:

• I1: Issues. Any problem, bottleneck, or mistake that they have identified since the last meeting.
• I2: Insights. Any fact, observation, or experience that they learned since the last meeting.
• I3: Ideas. Any solution, improvement, or innovation that they identified since the last meeting.

When leading those meetings, the manager’s challenge is to create a safe space where open communication prevails, to listen and understand, and to capture what is said.

Step 3: Elevate the Conversation to a More Strategic Level

Initially, people are likely to talk primarily about operational day-to-day topics. Especially employees that have no leadership position will do so, because they are not used to thinking more strategically. But, also managers, and even executives have this same tendency because those topics are often more visible and urgent.

The trick is to let this go for a while and don’t worry about whether what is brought in is “strategic” enough. As long as people do bring in their Issues, Insights, and Ideas this is perfectly okay. Because it shows and reinforces the most important step: creating an engaging dialogue.

Once that is in place, one can start probing and guiding them to think more strategically beyond their own job, toward their team, unit or even the entire organization. And from the short-term to the medium-term or even long-term. What Issues, Insights and Ideas do they have there?

Step 4: Follow-Up and Act

The final crucial step is to actually do something with what people say. Because, gathering input and not following up is detrimental for continuing people’s engagement. Without it, they will quickly lose interest and no longer contribute because nothing happens anyway.

Therefore, after each meeting, the manager’s responsibility is to channel what was said to the right person, to spiral it up in the hierarchy, or to initiate action themselves. Or, if an Issue, Insight or Idea doesn’t fit, explain to the person bringing it in why it cannot be done. People generally understand this. What they don’t understand is if nothing happens. So, always follow-up. Always.

Copyright notice: the 3Is and the overall idea of participative strategy-making are adapted from my latest book, The One-Hour Strategy, where the 3Is appear on pp54-55.