growth

Once again, something completely unrelated to business has me thinking about employee motivation. This morning I was reading about conditional regard—a parenting concept in psychology that describes what happens when children feel valued only if they behave, perform, or achieve in specific ways. At first, conditional regard can look like a powerful motivator. Parents see children following rules, chasing grades, and striving for approval. From the outside, it can look like success.

But in the long term, the results are corrosive. Children raised on conditional regard often learn to fear mistakes. They come to believe that their worth depends entirely on what they produce or how perfectly they behave. Approval isn’t unconditional; it must be earned again and again. The cost is often anxiety, self-doubt, an inability to take healthy risks, or checkout of of ambition altogether.

The Employer Version of Conditional Regard

I think there’s a loose corollary to employment.

Of course, employment is not parenting. It is, by definition, conditional: we hire people for a role, we pay them to deliver results, and the basic expectation is that they meet the responsibilities of the job. Employment is conditional in a way parenting should never be.

But as managers and leaders, we also have responsibility for motivation. It’s in our best interests to cultivate a culture where employees are innovative, driven, and helping us outshine competitors. But here’s the thing: human motivation doesn’t come in separate flavors for different roles—whether parenting or management, the same psychology is at work.

Conditional Regard as Employee Motivation Often Backfires

Business leans heavily on conditional approval as a tool of employee motivation. But it often backfires. So much so, that one of the current themes in employment memes is that employees now declare they will “Not be excelling. They will simply be meeting expectations.” This resonates for a reason.

Too many organizations send the message that meeting expectations is never enough. That unless someone is always going “above and beyond,” they aren’t truly valued. Yet “meeting expectations” is not failure. It’s success—it’s exactly what the employment contract is for.

Most employers don’t pay 20% above benchmark salaries with the understanding that employees will are expected to exceed expectations by 20%. They pay the benchmark—the amount the market suggests is correct for a given role in a given context. Yet managers routinely expect employees to exceed expectations all the time. And the tool they reach for is conditional regard: approval only when performance exceeds.

The Flaw in Performance Management

This points to a major flaw in performance management. Exceeding expectations is not about producing more widgets, working later hours, or piling on additional tasks without recognition. True exceeding comes from insight, creativity, and innovation. It’s when an employee notices something in the customer experience that no one else has. Or understands a process so deeply they can redesign it for better outcomes. Or tests a new idea that may fail—but might also lead to a new level of achievement.

That kind of exceeding doesn’t happen every day (and if you have employees doing it constantly, I hope you’re paying them like the rock stars they are). Real exceeding comes in sparks and leaps. And it can only happen when employees feel safe in two specific ways:

The Biggest Drivers of Employee Motivation

First, they must know their “meeting expectations” selves are valued. That showing up, doing the work they are paid to do, and doing it well, is genuinely appreciated.

Second, they must know it is safe to make mistakes. To experiment. To bring their full perspective to the work. Because if every misstep risks their approval—or worse, their job—why would they take the risk?

So yes, employment is conditional. But if we want employees to go beyond the contract, piling on expectations won’t get us there. Creating trust, safety, and genuine regard are the true keys to employee motivation. When people know they are valued even when they’re “only” meeting expectations, they will choose, perhaps even often, to exceed them.

As Artificial Intelligence (AI) ushers in the era of Industry 5.0, transforming every industry and every size of business, it’s impact will be most keenly felt in the realm of workflow efficiency as businesses adopt AI for productivity. Repetitive tasks, long the domain of human workers, are now being automated by machine learning driving large language learning models (LLMs) and intelligent machines, leading to significant time-savings and quality improvements. From jump-starting marketing and messaging to streamlining customer service to optimizing production lines, AI is revolutionizing how businesses operate. No matter what size of business you have, you  can do more with less and focus on higher-level work by incorporating AI in your technology stack. The result? Cost reductions, increased productivity, and stronger competitive performance.

AI for Marketing

AI can be a powerful tool in your sales and marketing toolbox. So far, much of the discussion about AI … at least in the small  business sector … focuses on AI as a content generator. Given how much has been written on this aspect already, I’m going to focus on other areas of sales and marketing benefits. (edit 2024/4/8: I recently did a short talk on AI for content generation, which you can watch here). 

Lead Generation and Qualification

AI can also transform your lead generation and qualification efforts by transforming vast amounts of data into insights you sales team can quickly put to use. Tools already exist that can crawl blogs, social media posts, and online forums to identify users interested in specific topics. It can analyze demographics and past behavior to further refine lead pools, and it can produce lead scores based on interactions with your website, email, and social media presence. This type of work would take sales and marketing teams an extraordinary amount of time, but AI tools can achieve similar results in days or even hours.

Predictive Analytics for Campaign Development

AI can also help you target marketing  campaigns by moving beyond simple demographics and past behavior. It can analyze massive customer datasets to identify hidden patterns and correlations … connections that only the most skilled and experienced data analysts would otherwise pick up on. AI tools can predict which customers are most likely to churn, which are prime for upselling, and which customers will respond best to specific types of promotions or messages. 

Wouldn’t you love to know which customers were least likely to repurchase before offering a discount? Would you love to know the best time to send a re-engagement communication to a past purchaser? These are things AI can facilitate for you.

Sales Forecasting

Forecasting is always going to be part art, part science, but AI tools can make the science aspect of forecasting much, much (much) more accurate. This is  because AI tools can factor in far more variables than traditional approaches like spreadsheets with human interpreters or even business intelligence (BI) tools like Power BI or Qlik.

AI algorithms can analyze historical sales data, market trends, customer behavior, seasonality, and even external factors like economic indicators, local weather, and local or regional politics. The tools can pinpoint subtle patterns and correlations that untrained (or even skilled) data analysts might miss. Even better? AI tools can also pull in data regarding competitor product launches, industry adoption rates, and your own lead generation data. All this adds up to better prediction of potential sales activities. 

Why do you need this type of forecasting? Because better visibility to future changes in sales will help you eliminate pipeline bottlenecks, get ahead of production opportunities, and rebalance your offerings and inventory to reflect changes in demand. 

Beyond Marketing

But now let’s look beyond sales and marketing, to topics that are being discussed extensively at the Fortune 500 level, but aren’t being given enough attention for small and medium sized businesses … even though the tools for many of the things I’m about to describe are already available and affordable for smaller businesses.

AI for Productivity in Operations and Logistics

AI tools can help you optimize and streamline your inventory, improve demand forecasting (see Sales Forecasting above), and improve your route planning, again, b y analyzing complex data. AI can take the historical sales pattern data you are probably using right now to plan your inventory, provide a more nuanced view of seasonality, add in lead times and external factors like weather and politics to predict what stock is needed and when. All this leads to better inventory and production decision-making.

For route-planning, AI can integrate with your warehouse management system, add in constantly changing real-time factors such as traffic conditions, weather, construction, and delivery time windows, and update routes automatically. 

This is already useful data for large logistics companies like UPS and FedEx. But imagine what it can do for your local delivery team or regional distribution efforts.

Data Analytics

One of the things most small and medium-sized enterprises (SMEs) struggle with is numeracy (edit 2024/4/8: Check out this snippet from my presentation on numeracy in manufacturing). Even though businesses of every size are swimming in vast quantities of data today, very few companies employ … or truly know how to use … sophisticated data analysts.

Even with excellent BI tools, most companies fail to optimize their data insights for better decision-making, because the typical IT, accounting, or even marketing team member doesn’t really know how to structure the data models that will give them better insights.

AI tools can help with this. AI excels at extracting valuable insights from massive datasets. Machine learning algorithms wade through all that data to uncover the patterns, trends, and correlations that help you make better decisions. Even better, AI data tools can convert those insights into effective graphics to help your management team “see” the data similarly and get on the same page.

These tools can also assist with fraud and anomaly detection. By establishing baselines for typical behavior within your data, AI can flag deviations and suspicious activity. 

This same anomaly detection is useful for manufacturers, which can use AI to analyze sensor data from machines, detect subtle anomalies in vibration or temperature patterns, and signal equipment malfunctions before they cause costly breakdowns or isolate quality problems before you throw more labor at them.

Administrative Automation

How much time and money does your company waste in administrative tasks? From duplicative data entry to unnecessary printing to missed opportunities, admin is an area ripe for disruption.

AI accelerates document processing, automates routine tasks, and minimizes the tedium of data entry. Using tools like Optical Character Recognition (OCR), AI-powered tools can extract text from images or PDFs, making them searchable, editable, and indexable. AI can then classify documents based on content, route those documents to the right people or departments, or trigger specific activities.

In email management AI can draft responses to common inquiries and free up time for other, more valuable tasks. It can even interpret the intent of emails to suggest meeting times (and share a meeting link to keep you out of the “what time is good for you” back-and-forth), dropping those meetings right into your calendar for you. 

In data entry you can use AI tools to analyze forms, invoices, or receipts, extract information from them, and directly populate your databases or spreadsheets.

Of course, accessing these AI tools assumes that you have at least begun the work of modernizing your tech stack (need help with that? Book a consult now to find out how StrategyWerx can help). 

Competitiveness in 2024 and beyond will hinge on your ability to automate more of your business processes. We are nowhere near the peak of effectiveness for AI-powered software yet, but the tools you can use to begin this process are already available and affordable. If there’s one thing that SMEs should be thinking about right now, it’s how to automate processes beyond marketing. Implement any one of the ideas in this article, and you’ll increase your competitiveness immediately.

There’s something low-key terrifying about starting something new—especially when we’re no longer beginners in most areas of our lives. Whether you’re launching a new idea, stepping into unfamiliar territory at work, or picking up a skill you’ve never tried before, the discomfort of not being good at something can be enough to make you stop before you start.

But that’s the moment where most of us get in our own way—not because we’re incapable, but because we’re resisting being seen or seeing ourselves as incapable. We avoid the stumbles, the awkward first tries, the trial-and-error process that learning requires. We choose perfection over progress, mastery over movement.

And in doing so, we block ourselves from our own potential.

The Power of Yet

There’s a tiny word with enormous power: yet.

“I don’t know how to do this... yet.”
“I haven’t figured this out... yet.”
“I’m not sure if I can succeed... yet.”

Yet reframes failure as process. It places the emphasis on becoming, not being. It reminds us that growth isn’t static, and that skills are not innate gifts, but cultivated abilities.

When we embrace the word yet, we give ourselves permission to stay open. We shift our focus from what we lack to what we’re building. We turn fear into curiosity—and curiosity is the fuel of every bold new beginning.

Getting Out of Your Own Way

If you’ve been feeling stuck or uncertain about a new challenge, try asking yourself:

• Am I waiting until I feel completely ready before I move forward?
• Am I avoiding discomfort because I fear how I’ll be perceived?
• What would change if I allowed myself to be a joyful beginner?

You may find that the only thing standing between you and leveling up is your resistance to being a student again.

Start Before You Feel Ready

If my experience is any guide, you won’t feel ready. You’ll feel unsure, maybe even foolish. But the way forward is not through knowing—it’s through doing. Learning is messy. Growth is nonlinear. Progress is built on imperfection.

So the next time you face something you don’t yet know how to do, remember: your full potential isn’t waiting at the finish line. It’s unfolding right here, in the moment you decide to begin anyway.

Run laughing into it.

Today (but it happens quite often) I encountered yet another meme that made fun of Gen Z. A few years ago the bashing was all about Millennials. Some time soon we'll be picking on Generation Alpha. I remember what it was like going into the workforce as a one of the first Gen X (or possibly a very young Boomer... the boundaries seem to  be fuzzy) and being picked on for... being younger? But I am old enough to remember my grandparents and great Aunts and Uncles (Silent Generation) bemoaning the profligacy (and long hair) of those Baby Boomers.

The idea that any one generation is any better or worse than another is extremely limited. Moreover, it's fruitless, as time and generations march on regardless.

Every generation brings its strengths and its shortcomings to the world, a product of the world they grew up in and the parenting they received as a result of the world their parents grew up in. I have encountered employees of every generation that are amazing, and employees of every generation that fail to impress.

When I was raising a house full of Millennials I was blown away by their ability to collaborate and their desire for and pursuit of purpose. Gen Z's independence and inclusiveness are inspiring. Gen Alpha's innovativeness and global awareness will help us build a better world. We can capitalize on all these attributes as business owners and leaders.

The person who posted the derogatory meme today billed himself on LinkedIn as a motivational speaker and leadership coach... a dealer in hope. Huh. Being a leader is about motivating and empowering people regardless of generation (or any categorization). When we approach that role with open hearts, open minds, genuine enthusiasm for other humans, and a bit of self-awareness and humility, we find all the labels drop away, and what remains is community, alignment, and progress.

"What if I miss something? What if someone makes a mistake?"

I'm often asked these questions when trying to get business owners to empower their employees to be more autonomous, so the owner can focus on the bigger picture.

It's not necessarily because someone is a control freak either. It's because the stakes are so high. As an owner, they're "my stakes," and we rarely have a safety net.

Here's how we break through. Even if you could pay attention to every detail (which you can't), even if you could weigh in on every task (ditto), you would end up devoting 99.9% of your energy to the details, ensuring that the business never grows. For a solo-preneur who just wants to make or do the thing they make or do, that's fine. But if you want to grow, you have be able to let go.

Let's skip 'how to set yourself up so you can effectively let go' for a minute (that's an entirely different post. Or a book. Books, actually).

Let's just focus on the fear of mistakes. It's easy to interpret that word as "mi-stakes." "My-stakes." But that's wrong. They are "Mis-takes." "Mis... takes."

How many "takes" do you get in a day? If your business were a film set, there would be, what? 200 takes? 500 takes? 1,000 takes? Each day? If you miss a take, what do you do? You just do it again, and you move on.

We business owners make mistakes all the time. Sometimes pretty big ones! Our employees will rarely have the gumption to make the kind of mistakes we as owners make. So yes, they will make some mistakes. They will miss some important details. And it will be just fine.

The fear of making mis-takes is mis-guided. Instead, be afraid... be very afraid... of getting mired in the details. Because the ultimate risk isn't that someone makes a mistake — it's that you stay stuck making every single decision.

Every couple of years, McKinsey does one of these surveys where they ask big investors (the kind managing billion-dollar portfolios) what makes a company attractive. And every time, the answers reveal more about the state of business than just “what investors are looking for.” They tell us where business owners and executives should be aiming their attention.

What Investors Are Looking For: EBITDA

This year’s survey (August 2025) put financial performance right back at the top of the priority list. Specifically, EBITDA — earnings before interest, taxes, depreciation, and amortization. Thirty-one percent of the investors said it was their primary lens for deciding whether a business is worth their attention. If you’ve been in the trenches of a small or midsize business for any amount of time, you know that EBITDA isn’t some fancy Wall Street metric. It’s the clearest way of showing whether your operations actually make money once you back out the tax math and other things accountants add in. EBITA is how you can see what your business actually earns.

In a world that is buzzing non-stop about AI, the loudest message from investors is still, “show me the profit engine.” Not just the profit … but how you’ve engineered your company to continue earning that profit. And that’s a reminder small businesses can use. AI might get you in the conversation, but healthy cash flow is what keeps you in the game.

Competitive Advantage Still Matters, But...

In this survey, competitive advantage came in second place. About 19 percent of investors said they look for businesses that have carved out and defended their market position. Interestingly, that number has dropped since McKinsey’s last survey. Which tells me that in an environment of inflation, volatile interest rates, and an uncertain economy, the big-money people are less impressed by differentiation for its own sake. They want evidence that your advantage translates into consistent financial performance, not just a clever story about why you’re different.

That doesn’t mean competitive advantage is dead—competitive advantage always matters. It means you have to prove your advantage works. It’s insufficient to say “our product is unique” or “our service is unmatched.” You have to show how that uniqueness translates into higher retention, repeat buying, or better margins. If your competitive advantage claims are just confetti and canned applause, investors, bankers, and your own customers will see it for what it is.

Don't Underestimate the Value of Leadership

The third most important factor in the surve is leadership. This is one area where small and midsize businesses often underestimate themselves. Investors don’t just look at whether the numbers are good; they look at whether the leadership team is aligned in what it says to investors, employees, and customers. When leaders send mixed signals about mission, culture, or strategy, it’s a big red flag.

I wish everyone understood that this is just as true outside the investor world. Customers pick up on misaligned leadership. So do employees. Even your supply chain partners can sense it. Alignment isn’t about everyone repeating the same slogans. It’s about clarity of intention, how well what you say lines up with what you do, and whether or not every decision points in the same direction.

Which brings us to something McKinsey highlighted that I think is useful far beyond the investor space: the equity story. Investors want a narrative that ties together your financial performance, your competitive position, and your long-term vision. They want consistency across every touchpoint, whether it’s a quarterly report, a pitch deck, or a just conversation over coffee.

Should SMBs Care What Investors Are Looking For?

Of course, most SMBs aren’t pitching billion-dollar investors. So why does this matter? Well, your equity story is still incredibly important. It’s just that your audience might be a bank, a prospective customer, or the people you’re trying to recruit. Your equity story isn’t just about ambition; it’s about showing who you are, what you do that makes you different, why you matter, how you’re planning to grow, and how your numbers and strategy fit together.

What About AI?

In case you’re wondering, AI showed up in the survey results too. Thirty-one percent of investors said AI or technology utilization was part of what they’re looking for. But that’s an important sentence. “AI or technology utilization.” That’s a huge jump from just two years ago, when it wasn’t even on the list. But it’s also not the hype-y demand for AI at all costs. Still, it’s important. If a third of investors now expect AI as part of the baseline, then “we use AI” isn’t a differentiator anymore — it’s table stakes. But the real question is if you’ve implemented AI in ways that actually change your economics or your customer value.

So if I were to boil this survey down into guidance for small and midsize business leaders, it’s this:

• Get your financial house in order and know how to talk about it in plain terms.
• Show that your competitive advantage creates tangible outcomes, and that it’s not just a good slogan.
• Keep your leadership team aligned and clear, because consistency builds trust way faster than charisma.
• Build your equity story like your future depends on it, because it does.
• And if you’re touting AI, be ready to explain how it changes the game for you. If it’s just a box that you’ve checked, that’s going to be obvious.

The investors may have been talking about billion-dollar portfolios, but these lessons cut straight to the heart of what keeps a business attractive at any size. And that’s in every business’s interest.