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The Miss Isn’t the Failure. What You Do Next Is · Uphoff on Media Podcast

• 0:02
  SPEAKER_00: There are few questions that can cause more anxiety for a CEO than,
• 0:06
  SPEAKER_00: hey, how's the quarter shaping up?
• 0:09
  SPEAKER_00: From the first week in the quarter to the last,
• 0:11
  SPEAKER_00: C-level leaders regularly get asked how the numbers are looking.
• 0:15
  SPEAKER_00: From boards, employees, and partners, heck, even my wife would ask how the quarter was looking.
• 0:20
  SPEAKER_00: The reason the question can create so much agita is based on several factors.
• 0:25
  SPEAKER_00: Who's asking,
• 0:26
  SPEAKER_00: how the quarter actually is shaping up,
• 0:28
  SPEAKER_00: and what number they're actually asking about.
• 0:31
  SPEAKER_00: In 35 years of P&L responsibility,
• 0:34
  SPEAKER_00: I've found that boards to C-level to operating teams to employees is very easy
• 0:39
  SPEAKER_00: to get four key financial metrics confused and in turn miscommunicate or confuse how
• 0:45
  SPEAKER_00: the business is or isn't performing.
• 0:48
  SPEAKER_00: I have learned a ton about how to run a business to the numbers,
• 0:51
  SPEAKER_00: how to set them,
• 0:52
  SPEAKER_00: manage against them,
• 0:54
  SPEAKER_00: make appropriate plans and changes we're pacing ahead or behind,
• 0:58
  SPEAKER_00: and how to communicate about them to boards, executive teams, and employees.
• 1:02
  SPEAKER_00: In this episode in the related Substack Uphoff on Media post,
• 1:06
  SPEAKER_00: I share the frameworks and systems for managing a business to the numbers.
• 1:10
  SPEAKER_00: On Substack,
• 1:11
  SPEAKER_00: you can download and use the four frameworks referenced in this podcast
• 1:15
  SPEAKER_00: in your own business.
• 1:16
  SPEAKER_00: Okay, let's get to work.
• 1:18
  SPEAKER_00: This episode is called, The Miss Isn't the Failure, What You Do Next Is.
• 1:25
  SPEAKER_00: The board wants answers.
• 1:27
  SPEAKER_00: Your team is afraid to admit doubt.
• 1:29
  SPEAKER_00: What you do, what to do before you say anything to either one.
• 1:34
  SPEAKER_00: The board deck is due.
• 1:36
  SPEAKER_00: The forecast came in soft a week ago and everyone in the building already knows it.
• 1:41
  SPEAKER_00: Nobody has said so out loud because the first person
• 1:43
  SPEAKER_00: to say it risks sounding like they never believed in the plan.
• 1:47
  SPEAKER_00: That's the position every CEO eventually finds themselves in.
• 1:51
  SPEAKER_00: Above you a board and investors who signed off on a number and are anxious
• 1:54
  SPEAKER_00: to know how the business is performing.
• 1:56
  SPEAKER_00: Below you a management team that either doesn't know how bad it is yet
• 2:00
  SPEAKER_00: or is too nervous to bring it to you first.
• 2:02
  SPEAKER_00: Both conversations run through the same person, you.
• 2:06
  SPEAKER_00: And most days you're the only one standing there.
• 2:10
  SPEAKER_00: A recent Harvard Business Review piece on delivering bad earnings news got
• 2:14
  SPEAKER_00: the mechanics right Say it early,
• 2:16
  SPEAKER_00: quantify the shortfall in concrete terms,
• 2:19
  SPEAKER_00: kill the speculation before it starts, pair the bad news with a plan.
• 2:23
  SPEAKER_00: All very good advice.
• 2:24
  SPEAKER_00: It also assumes you already know two things that are actually the hard part.
• 2:28
  SPEAKER_00: What you told people to expect in the first place and what really happened
• 2:32
  SPEAKER_00: as opposed to the version you're telling yourself happened.
• 2:36
  SPEAKER_00: In five CEO roles, I've missed numbers and exceeded them.
• 2:40
  SPEAKER_00: Thankfully, while I was more often on the positive side, the misses taught me far more.
• 2:45
  SPEAKER_00: What follows are the systems those misses forced me to build,
• 2:49
  SPEAKER_00: how I manage a business against its budget,
• 2:51
  SPEAKER_00: how to diagnose the cause of a shortfall,
• 2:54
  SPEAKER_00: how to build a bridge plan,
• 2:55
  SPEAKER_00: and how to communicate about performance with the board and your operating team.
• 2:59
  SPEAKER_00: The charts and frameworks that come out of it are yours to download and use
• 3:04
  SPEAKER_00: in your own business.
• 3:07
  SPEAKER_00: Most misses get decided before the year starts.
• 3:11
  SPEAKER_00: Ask 10 CEOs whether their team can tell the difference between the budget,
• 3:15
  SPEAKER_00: the forecast, the pipeline, and the quota assignment.
• 3:18
  SPEAKER_00: In my experience, most can't.
• 3:21
  SPEAKER_00: Those are four different numbers doing four different jobs,
• 3:24
  SPEAKER_00: and most organizations flatten them into a single phrase, the number.
• 3:28
  SPEAKER_00: That flattening isn't harmless.
• 3:30
  SPEAKER_00: It creates confusion at the leadership table,
• 3:33
  SPEAKER_00: produces inaccurate numbers,
• 3:35
  SPEAKER_00: breeds anxiety that has nothing to do with actual performance,
• 3:38
  SPEAKER_00: and every so often sets up a mistake serious enough to be catastrophic.
• 3:42
  SPEAKER_00: The budget is what the board approves,
• 3:44
  SPEAKER_00: the number the business is actually run on,
• 3:46
  SPEAKER_00: the baseline every operating decision gets measured against all year.
• 3:50
  SPEAKER_00: The forecast is what you actually expect to deliver in the month,
• 3:54
  SPEAKER_00: quarter,
• 3:54
  SPEAKER_00: and year,
• 3:55
  SPEAKER_00: updated as real data comes in,
• 3:57
  SPEAKER_00: and it's usually the number the board cares most about,
• 4:00
  SPEAKER_00: even though budget is the one they signed off on.
• 4:03
  SPEAKER_00: Pipeline is the raw material underneath the forecast,
• 4:06
  SPEAKER_00: always larger than what will actually close, discounted by stage and probability.
• 4:11
  SPEAKER_00: The quota assignment is what you've asked the sales organization to carry often set
• 4:16
  SPEAKER_00: above the forecast on purpose as a stretch and it should never be confused with what
• 4:21
  SPEAKER_00: the company expects to report.
• 4:25
  SPEAKER_00: Confuse those four numbers and a casual comment turns into a real problem.
• 4:29
  SPEAKER_00: An executive tells a board member in the hallway that the team is running 10% ahead
• 4:34
  SPEAKER_00: of the number and everybody nods.
• 4:36
  SPEAKER_00: That's a good update if the number in question is budget.
• 4:39
  SPEAKER_00: If it's forecast and the forecast has been trending below budget for six weeks,
• 4:43
  SPEAKER_00: that same comment is wrong and by the time it gets corrected,
• 4:46
  SPEAKER_00: the board has already recalibrated around a number that was never real.
• 4:50
  SPEAKER_00: The discipline isn't more communication.
• 4:52
  SPEAKER_00: It's specifying which of the four numbers you're talking about every single time.
• 4:59
  SPEAKER_00: The tool I've used for 30 years to manage the forecast is a best case,
• 5:03
  SPEAKER_00: worst case,
• 5:04
  SPEAKER_00: realistic case model built specifically for quarterly and annual forecasting.
• 5:09
  SPEAKER_00: Not a single figure,
• 5:10
  SPEAKER_00: but a range with a 10 to 15% variance band that tracks actual
• 5:14
  SPEAKER_00: and projected performance against budget as the quarter unfolds,
• 5:17
  SPEAKER_00: not after it closes.
• 5:19
  SPEAKER_00: Run the business against that range every week and a shortfall shows up as
• 5:23
  SPEAKER_00: a trend line long before it shows up as a surprise,
• 5:26
  SPEAKER_00: which is what actually lets you act on it early.
• 5:29
  SPEAKER_00: The board benefit is real, but it's a byproduct.
• 5:31
  SPEAKER_00: A board that has already seen the worst case in writing doesn't treat a shortfall as a betrayal.
• 5:37
  SPEAKER_00: Here are some examples.
• 5:39
  SPEAKER_00: Information Week was a $15 million business and losing money,
• 5:43
  SPEAKER_00: and we took it to $175 million and $75 million in EBITDA in four years.
• 5:48
  SPEAKER_00: We built the plan on a series of key indicators,
• 5:50
  SPEAKER_00: not the year-end target,
• 5:52
  SPEAKER_00: qualified pipeline by vertical,
• 5:54
  SPEAKER_00: ad page growth against the prior year,
• 5:56
  SPEAKER_00: market share against six competitors, and market share by individual advertisers.
• 6:01
  SPEAKER_00: Every leader could recite them so nobody was surprised by the outcome.
• 6:05
  SPEAKER_00: But growth that fast creates its own pressure.
• 6:07
  SPEAKER_00: Systems built for a $15 million business buckled at $75 million.
• 6:12
  SPEAKER_00: The leader who gets a business from one tier to the next isn't always the leader
• 6:15
  SPEAKER_00: who gets it to the tier after that.
• 6:18
  SPEAKER_00: Scaling meant rebuilding systems,
• 6:19
  SPEAKER_00: changing out people who weren't scaling with us,
• 6:22
  SPEAKER_00: and resetting expectations upward every quarter because a board
• 6:25
  SPEAKER_00: that just watched you beat the number by 20% won't accept a repeat
• 6:29
  SPEAKER_00: of last year's target.
• 6:31
  SPEAKER_00: The Hollywood Reporter 30% growth in a single year against
• 6:35
  SPEAKER_00: a legacy print category everyone assumed was done growing.
• 6:39
  SPEAKER_00: The number came from a specific plan built around total reach
• 6:42
  SPEAKER_00: and early integrated print and digital offering, not a guess.
• 6:46
  SPEAKER_00: We passed variety and share of market for the first time and the board never had
• 6:50
  SPEAKER_00: to ask what was driving it because they'd seen the components every quarter.
• 6:54
  SPEAKER_00: Dramatic growth curves are the trickiest forecast of all.
• 6:58
  SPEAKER_00: No history to build a plan from.
• 7:00
  SPEAKER_00: The Game Developer Conference and the event Black Hat both grew more than 40% a year
• 7:06
  SPEAKER_00: on plans built from real registration and sponsorship data, not hope.
• 7:10
  SPEAKER_00: The pattern I've watched repeat,
• 7:12
  SPEAKER_00: the target got set to satisfy a board conversation,
• 7:16
  SPEAKER_00: not because anyone had evidence it was achievable.
• 7:20
  SPEAKER_00: A recent survey of more than 2,000 business leaders found 81%
• 7:25
  SPEAKER_00: of companies missed their sales forecast in at least one quarter over
• 7:28
  SPEAKER_00: a two-year stretch.
• 7:30
  SPEAKER_00: Most misses aren't a market surprise.
• 7:32
  SPEAKER_00: They're the plan finding out in public that it was never that precise to begin with.
• 7:38
  SPEAKER_00: Don't explain it before you understand it.
• 7:40
  SPEAKER_00: The moment the number turns negative, there are two instincts and both are wrong.
• 7:44
  SPEAKER_00: The first is to offend the plan.
• 7:46
  SPEAKER_00: The market's soft, the timing's off, give it another quarter.
• 7:50
  SPEAKER_00: The second is to overcorrect.
• 7:52
  SPEAKER_00: Blow up the strategy, replace the team, apologize your way through the next board meeting.
• 7:56
  SPEAKER_00: Both are a way of deciding what happened before you've actually found out.
• 8:00
  SPEAKER_00: I give myself and I tell any operator to give themselves roughly a week
• 8:04
  SPEAKER_00: before forming an opinion out loud.
• 8:07
  SPEAKER_00: Not a week of silence, a week of gathering the actual signal.
• 8:11
  SPEAKER_00: Pipeline conversion by stage, not just pipeline size.
• 8:14
  SPEAKER_00: Win-loss detail on the specific deals that slipped.
• 8:17
  SPEAKER_00: Not a summary someone else wrote for you.
• 8:19
  SPEAKER_00: What customers say when I get them on the phone myself.
• 8:22
  SPEAKER_00: Not the paraphrase in a deal review.
• 8:24
  SPEAKER_00: What's actually changed with competitors?
• 8:26
  SPEAKER_00: A price move, a new feature, a new entrant?
• 8:29
  SPEAKER_00: And whether they're seeing the same softness we are.
• 8:32
  SPEAKER_00: Whether customers are telling us directly that budgets are under pressure,
• 8:35
  SPEAKER_00: which is a market signal, not an excuse.
• 8:37
  SPEAKER_00: Whether the shortfall is brought across the business or concentrated in one product,
• 8:42
  SPEAKER_00: one region, or one team.
• 8:44
  SPEAKER_00: The diagnosis takes discipline precisely because the pressure to have
• 8:48
  SPEAKER_00: an answer arrives faster than the evidence does.
• 8:51
  SPEAKER_00: This is where most leadership teams skip a step.
• 8:54
  SPEAKER_00: They jump straight from we missed to here's the plan to fix it
• 8:58
  SPEAKER_00: without ever confirming what actually broke.
• 9:01
  SPEAKER_00: A recovery plan built on the wrong diagnosis doesn't just fail to fix the problem,
• 9:06
  SPEAKER_00: it burns the credibility you'll need the next time something goes wrong,
• 9:09
  SPEAKER_00: and there will be a next time.
• 9:13
  SPEAKER_00: Every miss traces back to one of four places.
• 9:16
  SPEAKER_00: After 35 years of this,
• 9:17
  SPEAKER_00: almost every miss I've seen sorts into one of four categories,
• 9:20
  SPEAKER_00: and the category determines nearly everything about what you do next.
• 9:26
  SPEAKER_00: Miscalculation.
• 9:28
  SPEAKER_00: That's ours.
• 9:29
  SPEAKER_00: It was wrong from the start.
• 9:30
  SPEAKER_00: The gap shows up in month one,
• 9:32
  SPEAKER_00: not month nine,
• 9:33
  SPEAKER_00: because the leading indicators were off before you ever went to market.
• 9:37
  SPEAKER_00: This is the most common cause behind a new launch that misses.
• 9:41
  SPEAKER_00: Not a market that turned, but a target nobody had real evidence for.
• 9:45
  SPEAKER_00: The fix is to rebuild the model instead of defending it.
• 9:47
  SPEAKER_00: Re-forecast off of real data, set the new number, and hold it.
• 9:52
  SPEAKER_00: Market dynamic.
• 9:53
  SPEAKER_00: The target was fair when you set it, but the market is contracted.
• 9:56
  SPEAKER_00: The whole category slows at once and peers are missing similar numbers.
• 10:01
  SPEAKER_00: This is what happened across most B2B print brands after the internet arrived faster
• 10:05
  SPEAKER_00: and cut deeper than any of us modeled.
• 10:07
  SPEAKER_00: The plan wasn't naive.
• 10:08
  SPEAKER_00: The ground underneath it moved.
• 10:11
  SPEAKER_00: The move here is to adjust the timeline, not the thesis.
• 10:14
  SPEAKER_00: Protect the plan's core assumptions and reset the pace against them.
• 10:19
  SPEAKER_00: Execution gap.
• 10:20
  SPEAKER_00: That's on us.
• 10:22
  SPEAKER_00: And the target was right.
• 10:23
  SPEAKER_00: Pipeline, hiring or launch date slipped against a plan nobody disputes.
• 10:27
  SPEAKER_00: The math still works.
• 10:28
  SPEAKER_00: This is the one that's hardest to admit because it's the one closest to home and
• 10:32
  SPEAKER_00: the fix is operating discipline.
• 10:34
  SPEAKER_00: Name what didn't get done, who owns it and the date it gets done by.
• 10:39
  SPEAKER_00: Competitive gap.
• 10:40
  SPEAKER_00: Our competitive position moved under us.
• 10:43
  SPEAKER_00: You're losing competitive deals you used to win.
• 10:45
  SPEAKER_00: Win rate is down against a market that isn't shrinking,
• 10:48
  SPEAKER_00: which is a different challenge than a market that is.
• 10:51
  SPEAKER_00: The fix is to fund the product gap directly.
• 10:54
  SPEAKER_00: No amount of sales effort outruns an uncompetitive offer.
• 10:58
  SPEAKER_00: The distinction matters because each of these four demands
• 11:01
  SPEAKER_00: a completely different conversation with the board and a completely different set
• 11:04
  SPEAKER_00: of actions with your executive team.
• 11:07
  SPEAKER_00: Mistake an execution gap for a market dynamic and you'll spend two quarters waiting
• 11:11
  SPEAKER_00: for a recovery the market was never gonna hand you.
• 11:13
  SPEAKER_00: Mistake a market dynamic for an execution gap and you'll fire people for a problem
• 11:18
  SPEAKER_00: that was never theirs to own.
• 11:21
  SPEAKER_00: A shortfall should never arrive without a plan attached.
• 11:25
  SPEAKER_00: Every company I've run, the rule was simple.
• 11:28
  SPEAKER_00: If you're forecasting a shortfall, you don't bring me the problem alone.
• 11:31
  SPEAKER_00: You bring a bridge plan,
• 11:33
  SPEAKER_00: a specific plan to close the gap and get back to or above budget within
• 11:37
  SPEAKER_00: the next two quarters with the specifics, the owner and the dates attached.
• 11:41
  SPEAKER_00: Not a general purpose to work harder,
• 11:43
  SPEAKER_00: an actual bridge from where the number is heading to where it needs to land.
• 11:47
  SPEAKER_00: This is two things.
• 11:48
  SPEAKER_00: A recovery conversation after the fact never can.
• 11:52
  SPEAKER_00: It surfaces the shortfall while it's still fixable months
• 11:55
  SPEAKER_00: before it would otherwise show up in a board deck and it forces the person closest
• 12:00
  SPEAKER_00: to the problem to do their own version of the diagnosis above miscalculation,
• 12:05
  SPEAKER_00: market,
• 12:06
  SPEAKER_00: execution,
• 12:07
  SPEAKER_00: or competitive before it ever reaches me because nobody can build a credible bridge
• 12:12
  SPEAKER_00: without knowing which one they're actually standing on.
• 12:17
  SPEAKER_00: The board and the team need two different conversations, not one memo.
• 12:21
  SPEAKER_00: The board wants the diagnosis,
• 12:23
  SPEAKER_00: the revised trajectory,
• 12:24
  SPEAKER_00: and the plan in that order delivered before they have to ask.
• 12:28
  SPEAKER_00: State the shortfall in dollars and percent against the number they approve,
• 12:32
  SPEAKER_00: not a description of how things feel.
• 12:34
  SPEAKER_00: Tell them which of the four categories you've landed on and why with the evidence,
• 12:38
  SPEAKER_00: not the instinct.
• 12:40
  SPEAKER_00: Give them a revised number with a date attached and be available for
• 12:43
  SPEAKER_00: the follow-up questions instead of hiding behind a deck.
• 12:46
  SPEAKER_00: What kills credibility with the board isn't the miss,
• 12:48
  SPEAKER_00: it's finding out later that you knew more than you said when you said it.
• 12:53
  SPEAKER_00: The team needs something different,
• 12:54
  SPEAKER_00: clarity about what's actually being asked of them now and honest signal about
• 12:59
  SPEAKER_00: whether this is about them or not.
• 13:02
  SPEAKER_00: If the diagnosis says market dynamic or miscalculation,
• 13:05
  SPEAKER_00: say so plainly and protect the team from carrying blame that isn't theirs.
• 13:09
  SPEAKER_00: If it's an execution gap,
• 13:10
  SPEAKER_00: say that plainly too,
• 13:12
  SPEAKER_00: with names,
• 13:12
  SPEAKER_00: owners and dates,
• 13:13
  SPEAKER_00: because a team that already knows something went wrong respects
• 13:17
  SPEAKER_00: a direct conversation far more than a vague one.
• 13:20
  SPEAKER_00: Silence in front of the team gets read as either panic or indifference.
• 13:23
  SPEAKER_00: Neither is true, and both are worse than whatever you're actually feeling.
• 13:29
  SPEAKER_00: What actually happens in the next 30 days?
• 13:32
  SPEAKER_00: Get the real numbers before you get an opinion.
• 13:34
  SPEAKER_00: A week of diagnosis before any external conversation, board included.
• 13:39
  SPEAKER_00: Diagnose before you communicate.
• 13:41
  SPEAKER_00: Know which of the four categories you're in before you draft a single sentence
• 13:44
  SPEAKER_00: to anyone outside the leadership team.
• 13:47
  SPEAKER_00: Ask whoever owns the shortfall for a bridge plan, not an explanation.
• 13:51
  SPEAKER_00: A specific plan to or above the number within two quarters with an owner and a date,
• 13:56
  SPEAKER_00: not a promise to try harder.
• 13:59
  SPEAKER_00: Tell the board first in writing before the meeting.
• 14:01
  SPEAKER_00: State this shortfall in dollars and percent against the number they approved,
• 14:05
  SPEAKER_00: not how things feel.
• 14:06
  SPEAKER_00: Match the message to the diagnosis, not to your mood.
• 14:09
  SPEAKER_00: A market dynamic gets a timeline reset.
• 14:11
  SPEAKER_00: An execution gap gets names, owners, and dates.
• 14:14
  SPEAKER_00: Don't apologize for a market you don't control and don't excuse the team that didn't do its job.
• 14:20
  SPEAKER_00: Tell the team the same week, not after the board reacts.
• 14:23
  SPEAKER_00: A delay reads as evidence you don't trust them with the truth,
• 14:26
  SPEAKER_00: which is a worse problem than the mist itself.
• 14:29
  SPEAKER_00: Put a recheck on the calendar before you leave the room.
• 14:31
  SPEAKER_00: 30, 60, 90 days out tied to the same leading indicators you should have flagged this
• 14:36
  SPEAKER_00: the first time.
• 14:38
  SPEAKER_00: If you don't have those indicators yet,
• 14:39
  SPEAKER_00: building them is the actual fix, not the recovery plan itself.
• 14:45
  SPEAKER_00: The number was never the hardest part.
• 14:47
  SPEAKER_00: Go back to the room I opened with.
• 14:48
  SPEAKER_00: The board deck is due, the number is soft, and nobody has said it out loud yet.
• 14:53
  SPEAKER_00: The instinct in that room is to treat silence as safety.
• 14:57
  SPEAKER_00: It isn't.
• 14:58
  SPEAKER_00: Every day that passes without confronting the truth and diagnosing the problem is
• 15:02
  SPEAKER_00: a day the board and the team are each writing their own version of what happened,
• 15:06
  SPEAKER_00: and neither version is likely to be generous.
• 15:09
  SPEAKER_00: I've missed numbers plenty of times across five CEO roles,
• 15:12
  SPEAKER_00: print brands that declined faster than the plan accounted for,
• 15:15
  SPEAKER_00: launches where the market taught us something the projections couldn't have.
• 15:19
  SPEAKER_00: None of those misses cost me what a bad diagnosis or a slow evasive conversation would have.
• 15:25
  SPEAKER_00: The number is never actually the hardest part of the job.
• 15:28
  SPEAKER_00: Deciding what it means and saying so before someone else decides it for you is.
• 15:36
  SPEAKER_00: Hey, that's it for this episode.
• 15:39
  SPEAKER_00: If you found this useful,
• 15:40
  SPEAKER_00: please do one thing,
• 15:41
  SPEAKER_00: follow the Uphoff on Media podcast on Apple or Spotify, and please leave a rating.
• 15:46
  SPEAKER_00: It's the single best way to help another operator find this.
• 15:49
  SPEAKER_00: I'm Tony Uphoff, back at it next week.