Results of Using and Ignoring Guardrails – Zig Zag Principle #59
January 26th, 2012 by Rich Christiansen
Eating Our Own Cooking
In our current test business, Curtis and I received a request from a client that wanted to place a large order for high end, specialty products. We went to the manufacturer of these products and were able to open an account. However, when it came time to sign the contract with the vendor, it contained language prohibiting our operating a business model that was identical to our business model. The order we were trying to fill was worth a large sum of money. And the likelihood of the vendor ever figuring out we were in violation of the contract was minimal. In our zeal to land this account, Curtis and I conveniently forgot to pay close attention to this clause in the contract. However, Koral, who is one of my trusted gatekeepers, reminded us that signing the contract would run counter to our values. As lucrative as this deal would have been to our company, we passed on the order. It just seemed that if we were going to lose sleep, it would be better to lose it over the loss of revenue rather than the violation of our code of conduct.
In a previous business Curtis and I founded, we did not follow our own guardrails. We had put a financial guardrail in place stating that we would always keep a $100,000, three-month buffer in place to protect us if the business took a downturn. We also agreed that if things went south, we would reduce expenses, rather than dip into our reserve, in order to maintain a positive cash flow.
After several years of mind-blowing success, the business did suffer a downturn. It wasn’t long before we saw ourselves dipping below the $100,000 threshold. At the time we had a team we felt loyal to, and we did not want to have to cut back. So we lowered our threshold to $50,000. In making that decision, we broke our rule and crashed through our guardrail. But we felt justified in doing so because of our previous success. Before we knew it, we had crashed through the guardrail again and spent that last $50,000. At this point, instead of cutting our losses, we decided to create another business plan. Unfortunately, our team was not a good match for our new venture. Ultimately, with no cash left, we had to lay off the entire team we had been trying to protect. We also had to terminate what had been a very productive partnership and part ways.
We would have all been so much better off if we had reduced our expenses and stayed within that first guardrail. Yes, we would have had to lay off one or two employees or cut back on expenses in some other way. As painful as that sounds, it would have been so much better than having to kill the whole business. We could have saved our most valuable employees and avoided a lot of pain and heartache.
Our blunder led to Curtis and me parting ways for almost four years. Now we are working together again and building a successful business. And we’re hoping we will have the good sense not to forget our need to stay within the guardrails we’ve established.
Summary
As you are traveling toward your beacon in the fog, you will need guardrails to keep you from heading over a cliff or wandering out into the weeds. For each of your zigs, you should establish a financial number, an allocation of time, a duration of time, and a financial target to control the resources and energy you are going to put into that particular zig. You then need to create a list of the other guardrails that will keep you out of the weeds. Finally, remember the need to establish a network of trusted associates who will keep you from heading out of bounds network or drifting toward the edge of a cliff. These guardrails will grow out of and be aligned with the values you defined in Chapter 3. They will then have the power to keep you on target as you zigzag toward your beacon in the fog.

A young man named Tanner Greenwood currently works for me. He’s a fine young man—a hard worker with bright eyes and good intent. This week Tanner has had a hard, rotten, no good, very bad, good-for-nothing week.
I control the finances of my business
Last night after my family and I finished a meeting in preparation for our trip to Guatemala this summer. Afterward, we stopped into a nearby restaurant for a bite to eat. As we entered the dining room, I noticed the General Manager working at one of the back tables. It was very evident that he was the General Manager, because he had all his financial reports and other documents and reports and details and his reports spread out. Plus people kept bringing him drinks and you could tell that they were rather respectful of this man.
The following are brief elaborations on the rules I have set for myself—the reasons behind each guardrail. Again, remember that your circumstances and needs are different from mine, just as each ski slope is different. The key is that you need to define what guardrails you need in your life.
In the conclusion of
Weeds are diversions, inefficiencies, and even short-term successes that distract you from the course you have set for yourself. Weeds can be either negative or positive forces. They may take the form of being stuck with a large team you just can’t find a way to keep motivated. They might involve becoming so mesmerized with the profitability you’ve achieved that you forget to move on to your next step. Your personal weeds might have to do with a tendency to continually react to everyone else’s demands instead of moving toward your goal.
Paying it forward is a beautiful concept that I came to enjoy this holiday season. As the Christmas season rolled around I was kind of in a little bit of a bah-hum-bug mood. I hadn’t really had the Christmas spirit hit me.
The guardrails you create must be closely aligned with the values you set in chapter 3. You need to have people in your life who will tell you out when you are out of bounds. I have a good friend who was a successful and well-known college basketball coach until he got embroiled in some politics and lost his job. We were talking not long after that, and he shared what I consider to be a very profound insight. He said, “Rich, when I was winning championships, everyone laughed at my jokes. Now they only laugh when my jokes are actually funny.” You need someone in your inner circle who knows you and who you trust to tell you if your jokes are funny or not.
One of the traditions that I have began with my children is a sheer delight. Just before they get ready to permanently
Anyone who knows me personally knows how important marriage and family are to me. Anyone who reads my blog knows that by now too.
Rich:
One of my favorite books of all time is Viktor Frankl’s Man Search for Meaning. Although he covers two or three major concepts in the book, one of the major themes he discusses is that we all collaborate on a conscious or subconscious level.
As you zigzag down that mountain toward your goal, you need to realize there are hazards on either side of the ski run. Ski resorts groom and prepare the areas intended for skiers; however, experienced skiers know that just beyond the groomed runs are trees, rocks, potential avalanches, cliffs, and other dangers that may cause injury or even death. The same is true in business and life. If we’re smart, we establish boundaries and guardrails to keep us away from perils and on the groomed slopes that lead to our goals.