Category Archives: Management

Do You Suffer from Distraction Sickness

Does this seem familiar to you: Distraction Sickness

I had sensed a personal crash coming. For a decade and a half, I’d been a web obsessive, publishing blog posts multiple times a day, seven days a week, and ultimately corralling a team that curated the web every 20 minutes during peak hours.

Andrew Sullivan

That’s from Andrew Sullivan: My Distraction Sickness — and Yours, in New York Magazine this week. I recognized the author’s name immediately because I’ve seen Sullivan on talk shows often. On TV he comes off as thoughtful and articulate, and he’s frequently introduced as a gay republican and prolific blogger. Here’s the first paragraph of his Wikipedia biography:

Andrew Michael Sullivan (born 10 August 1963) is an English author, editor, and blogger. Sullivan is a conservative political commentator, a former editor of The New Republic, and the author or editor of six books. He was a pioneer of the political blog, starting his in 2000. He eventually moved his blog to various publishing platforms, including Time, The Atlantic, The Daily Beast, and finally an independent subscription-based format. He announced his retirement from blogging in 2015.

The independent blog mentioned is The Dish, where the last post is dated June of 2015.

But that’s just background information. What’s notable about his background, in this context, is the sudden change, the lack of Andrew Sullivan writing and talking on TV in the last year. I read this piece and discovered why. And decided that what he’s calling distraction sickness might be an epidemic.

Distraction sickness

Sullivan describes a process that seemed alarmingly familiar to me – and, I bet, to you too:

Facebook soon gave everyone the equivalent of their own blog and their own audience. More and more people got a smartphone — connecting them instantly to a deluge of febrile content, forcing them to cull and absorb and assimilate the online torrent as relentlessly as I had once. Twitter emerged as a form of instant blogging of microthoughts. Users were as addicted to the feedback as I had long been — and even more prolific. Then the apps descended, like the rain, to inundate what was left of our free time. It was ubiquitous now, this virtual living, this never-stopping, this always-updating.

Is that not you? Ok. Nobody you know? C’mon, tell the truth.

He continued:

I tried reading books, but that skill now began to elude me. After a couple of pages, my fingers twitched for a keyboard. I tried meditation, but my mind bucked and bridled as I tried to still it. I got a steady workout routine, and it gave me the only relief I could measure for an hour or so a day. But over time in this pervasive virtual world, the online clamor grew louder and louder. Although I spent hours each day, alone and silent, attached to a laptop, it felt as if I were in a constant cacophonous crowd of words and images, sounds and ideas, emotions and tirades — a wind tunnel of deafening, deadening noise. So much of it was irresistible, as I fully understood. So much of the technology was irreversible, as I also knew. But I’d begun to fear that this new way of living was actually becoming a way of not-living.

Is this you?

I’m not attempting to duplicate Sullivan’s whole article here. I highly recommend you read it yourself and think about it. But here’s one more piece of it I want to add:

Our oldest human skills atrophy. GPS, for example, is a godsend for finding our way around places we don’t know. But, as Nicholas Carr has noted, it has led to our not even seeing, let alone remembering, the details of our environment, to our not developing the accumulated memories that give us a sense of place and control over what we once called ordinary life. The writer Matthew Crawford has examined how automation and online living have sharply eroded the number of people physically making things, using their own hands and eyes and bodies to craft, say, a wooden chair or a piece of clothing or, in one of Crawford’s more engrossing case studies, a pipe organ.

It certainly made me think about my level of the disease. For a split second. Before diving back into blogging.

 

 

Planning as Management

Planning, done right, is management. The best reason to adopt planning in your business – and I mean any business, from the one-person solopreneur on up – is because it will help you manage your business better.

Planning as management

NCR-Silver-mypost-2016-08-22-smaller

This is from my post How to Actually Use Your Business Plan to Run Your Business, posted over at the NCR Silver blog. The main point there is a critical point about the purpose of business plans for most business owners:

You may or may not have a business plan for sharing with banks or other lenders. If you do have a plan, are you really using it to manage your business better? And if you don’t, are you missing out? Either way, adopt a powerful business planning process that will turn planning into management.

Lean may be all you need

Good planning process doesn’t take a formal business plan document. You can get most of the benefits from a lean plan combined with good planning process, which means regular reviews and revision.

Contrary to the popular myth, real planning doesn’t require a formal business plan document. If you have that, fine. If you don’t, you don’t have to do a full formal plan to get the benefit of planning. You could do a lean plan, which is just bullet point lists and tables for strategy, tactics, metrics, milestones and essential projections.

Planning manages change.

I’ve posted here the essentials of the lean plan, most recently with the metaphor of lean business planning as dashboard and GPS for running your business. The rationale for that is fairly simple:

Planning isn’t voided by change; planning manages change. The plan is like a route, and the monthly meetings turn that route into something more like a complete navigation system, with GPS positioning and real-time information on weather and traffic.

The secret is plan vs. actual analysis. That’s looking at the difference, in numbers, between what you had planned and the actual results. You don’t have to be an accountant or financial analyst to do it. You just need common sense, knowing your business and tracking what actually happened and comparing that to was expected.

Two Paradoxical TED Talks Every Business Owner Should Watch

My thanks to Hubspot and post author Mike Whitney for today’s two Friday videos. Whitney included these two in his selection of 4 TED Talks Every Marketer Should Watch, from last year. I want to focus today on these two as not just for marketers, but also essential TED talks for business owners. They go beyond marketing into product and business definition. choice, and business data. Neither of these is new, but both are fundamental, and the contrast is important.

Malcolm Gladwell says trust the data

Whitney included this summary:

[Gladwell] tells the tale of Howard Moskowitz, a consultant who revolutionized the way companies align their product with their brand in the 1970’s and 80’s. There is much to be learned from Moskowitz’ example, especially as told by Gladwell, about how to use data driven buyer personas (sound familiar?) to provide the most possible value to your customer base.

Previous to Moskowitz’ research, companies were in the habit of seeing product development as a linear path towards one ideal item, as perfectly aligned with the desires of their customer base as possible. In order to develop an idea of what those desires were, traditional focus groups were used obsessively, rounding up endless groups of sample-consumers, and simply asking them what they prefer in a product.

Sheena Iyengar says put limits on choosing

Whitney followed that with this one, which he describes as “coming at the same problem from opposite sides of the ideological spectrum.” I like that. It fits my view of how much business is full of paradox and contradiction. Iyengar talks about the “choice overload problem”. The following is from his summary.

As a graduate student, Sheena executed a very interesting experiment with a local grocery store which was noteworthy for having a plethora of different options for all of their different product offerings (75 different olive oils, 348 flavors of jam etc.).

Sheena, though, was curious as to whether this actually promoted revenue or was a hindrance to it. To test this, she got permission from the store manager to set up a ‘Free Samples’ table in the store and do two trial runs: one with 6 options, and one with 24 options. She found that about 20% more people stopped when there were more options.

However, when tallying how many people actually bought a jar of jam as a result of stopping, she found that the table with fewer options was more effective as a marketing tool. Why might this be? This goes back to the choice overload problem. Sheena finds that if a consumer is bombarded with too many options, he/she will often ‘choose not to choose.’ For your business, that means lost revenue.

Paradox of Product Persistence

ParadoxParadox: On one hand, to keep a business healthy you have to be able to cut mediocre products. On the other hand, some successful products require sticking to them for a long time, stubbornly, to get either the product or the marketing right. Take a minute and think about it, and you’ll find examples of both cases.

Ruthlessly killing products

I vaguely remember a quote from a computer company chairman (I think it was Lou Gerstner, of IBM) talking about how success depends on being absolutely ruthless about deciding to kill products that weren’t working.

I also remember a chilling moment in my personal past when I listened to a guy who’d been running a sailboat company for 15 years tell me how he’d hated it the last 10 years. It was always borderline failing, but he couldn’t get out because he’d started it with friends and family money and he couldn’t tell his parents, sibling, and cousins that they’d lost their investment.

Sometimes persistence produces success

In my specific business history, with Palo Alto Software, I had trouble giving up on products that didn’t make it. I’m stubborn, and I’m optimistic. Still, for the record, especially during the early growth years we killed a bunch of products. The list includes Business Plan Toolkit to Financial Forecasting Toolkit to Business Budgeting Toolkit, Cash Plan Pro, Cash Compass, DecisionMaker, Incorporation Toolkit, and Systems Continuity Plan Pro. I’ve probably forgotten a few others. , and I’ve probably put others into repressed memory where I don’t have to think about them.

However, on the other hand, I first started productizing business plan financials in 1984, as templates; and did them again in 1988, as more advanced templates; and stuck to the idea of business plan software into the 1990s when we launched Business Plan Pro, which was successful. And Palo Alto Software is a market leader today, with LivePlan, which we introduced in 2011. So that story argues for sticking to it over the long term.

So it’s all case by case

That’s why it’s paradox. You can argue this one either way. General rules and best practices don’t always apply. And you can find experts advocating both sides of this question. And my business experience includes both killing some products and sticking to others.

I was at the pre-competition meeting of the judges of the University of Oregon intercollegiate venture contest a few years ago when we (the judges) were asked to introduce ourselves. One of them, Ty Pettit, said “I probably have the best qualifications for judging this contest because I recently oversaw a company going bankrupt.” That struck me as a very wise comment. Ty has had several successes since.

 

10 Clues That You Aren’t a Leader

LeadershipI really know what makes you a leader. I’ve seen dozens of quotes and hundreds of articles, and I took a course on leadership in business school. But leadership depends so much on context and style that it’s hard to make any universal statements that aren’t just empty clichés.

What I do know, though, is that just wielding authority doesn’t make you a leader. Just having responsibility, or a title on your business card, doesn’t automatically make you a leader, either.

And also, I have a pretty good idea of what isn’t leadership. I learned that the hard way. And yes, since you insist on asking, I learned some of them by realizing that they applied to me.

I’m going to list 10 clues that show that you aren’t really a good leader. This is for people in authority. I’m talking to you. You are not really a leader if …

  1. Everybody always agrees with you. If you think that, get a clue. They don’t always agree with you. They are lying to you. And if so, it’s your fault, because you made them decide to pay you lip service with fake agreement.
  2. You talk more than you listen.
  3. Nobody who works for you owns anything by themselves. Ownership means owning a task, having responsibility, being empowered to operate, make decisions, and — yes — make mistakes.
  4. You do all the work. Because you don’t, really. If you think you do, then you’re not giving others enough credit. Or, if your people are really that bad, then change your team. You hired them.
  5. You correct people more than you applaud people. In the real world, performance seeks balance, like water seeks its level. If you correct way more than you praise, something’s wrong. And it’s probably you, not them.
  6. You take more credit than you give. There again, balance.
  7. Achievement in your group is something you bestow on people, rather than something they achieve themselves. Don’t make people work for praise. That’s ugly. Make them work for objective numbers that they can see, their peers can see, and you can see, at the same time.
  8. People pause to think, or guess, what you believe in. When you stand for something, and have values, people know it. It’s not just what you say, it’s what you do .
  9. You criticize more than collaborate. Don’t call yourself collaborative if people don’t want your help. Do they come to you? If not, you may not be as open to new ideas, or other people’s ideas, as you think.
  10. You don’t get bad news quickly. That means people are worrying about how to tell you. If people hide bad news or — worse still — spin it to look like good news, then get a clue. You’re not a leader.

And I want to conclude by emphasizing that last point, which is a clear case of last but not least, and perhaps even the first coming last.

Think about your leadership style in context of the flow of information, particularly bad news. If people wait to tell you, then you’re in trouble.

A leader wants the bad news instantly. Good news can wait. Bad news can’t.

(Note: this post first appeared as my monthly column for the Eugene Register Guard.)

My 5 Top Tips for Business Owners

Roll the DiceWhat, you want my five favorite small business tips for business owners? That’s flattering, thanks for asking. I had to think about it, because, like all business owners, I get so busy with the details that I forget to take a step away and think about the larger picture. Looking back on decades of it, I survived, and supported my family, through more than a decade of self employment;  and then two decades of building this business, Palo Alto Software, (sponsor of this blog and the entire bplans.com site that it’s on), from zero to where it is now, without outside investment. So yes, I do have a few tips to offer.

1. Profits are not Equal to Cash

This is vital. Cash flow is not intuitive. Profits are accounting, depending on rigorous rules and fuzzy decisions, basically an opportunity for creativity and fiction. Cash is rock hard reality, what’s in the bank. I saw a study showing more than a third of the companies that went under were profitable as they died. You can be profitable without having cash in the bank. Sales on credit to business customers are sales for the Profit and Loss Statement, whether theyve been paid or not. Profits don’t care if they hang around forever in Accounts Receivable, not in your bank balance. But cash flow does. Repaying debts doesn’t count against profits, but eats up cash. Buying assets doesn’t count against profits, but eats up cash. Money spent on inventory doesn’t count against profits, but eats up cash. For more on this: you think in profits, but you live on cash.

2. Don’t Mistake Business for Life

Your business is supposed to make your life better, not your life make your business better. This is vital, but so easy to forget. Do not give up what’s important in life because you are building a business. Don’t spoil your relationships. Don’t miss the soccer games. It seems obvious, but most of us have fallen into obsession at one time or another, waving the hand, taking the attitude of “Don’t you see that I’m running a business? I don’t have time for that.” That can become habit forming. And your people start to assume it, and leave you out. For more on that, don’t mistake business for life, a previous post on this blog.

Take care of your health. And mind your priorities. Make it a mantra: business for life, not life for business.

3. Never Compromise on Ethics and Integrity

This isn’t just some touchy-feely cliché; it’s solid business advice. Every day our technology makes what we do more transparent. Every time we cut a corner, rationalize operating on anything but the high road, we risk having that come out and spoil our brand, our reputation, and our business. Pushing that sale you suspect your client doesn’t really need creates the risk of an unhappy client going public on you, maybe even viral. No business is so small that it can’t be embarrassed by something like the Youtube video of United Airlines breaking the passenger’s guitar. Angry and unhappy customers have instant amplified word of mouth, and I’ve seen research that shows that angry customers are way more likely to go public with complaints than happy customers with testimonials. Don’t risk it.

Along the same lines, don’t make enemies. For example, with contracts, maybe you can get away with screwing the business ally by misreading the contract, or negotiating cleverly to allow you a loophole; but that kid of business doesn’t work well on the long term. There’s a stock market adage: “sometimes the bulls win, sometimes the bears win, but, on the long term, the pigs don’t win.”

4. It’s Planning, not just Plan

The most undervalued tool in management is planning process done right. Just like steering is constant course corrections, so too is managing a business right. Let the plan set the course from long-term goals (the horizon) to specific steps along the way (milestones, metrics, responsibilities, etc.) and the essential numbers you need to keep cash flow.

It’s such a shame that people think of a business plan as a big daunting document that you use once and throw away. For business owners who don’t need the old-fashioned formal plan, lean business planning is a like having a destination, route, and real-time information with GPS to run your business right. It builds accountability. Instead of being voided by change, it manages change. For more on that, lean business planning as dashboard and GPS, a previous post on this blog.

5. Compete on Quality, Not Price

We are way too influenced by that first lesson in economics that suggests the lowest price gets the highest volume. That was always true only qualified for commodity products with no differentiation. Adam Smith wrote about lumps of coal. But in the real world, where real businesses compete, the lowest price strategy works only for very large, very well capitalized businesses. McDonald’s, Burger King, Costco and Sam’s Club can manage low price strategies; but they are a select few.

For most of us, it’s way better to aim for high quality and relatively high price. Price is your most powerful marketing message. Be better. Be exclusive. Charge more and make your customers glad they paid more. For small businesses, that’s much more likely to work than trying to be the lowest price offering.

(Postscript: My thanks to Eventbrite for suggesting small business tips as a topic for a blog post.)

Video: Don’t Just Ask for Feedback – Listen

My Friday video today, from Stanford ECorner, Mike Rothenberg talks about inviting honest feedback. How to ask for it, how to listen, and how people will go slowly at first. You have to reassure them that you really want the feedback.

I’ll add that in my decades in business, I’ve come to treasure the people who give me real feedback. And I’ve noticed that relatively few of us really ask for feedback and then listen to it, and use it. We all say we want it, but most of us want praise more than real opinions, much less constructive criticism. This is a short video, which I post as a reminder.

Or you can click here for the YouTube source video.

Planning Builds Metrics and Accountability for Business Management

business managementGood business management boils down to managing expectations and results. Define expectations clearly, with objective numbers you can track. Track results with the same metrics. Deal with the difference between expectations and results, positive or negative. There’s nothing better than that for developing accountability in a business. And good planning process is the best way to do that.

That’s easy to say, or write, but hard to do. What I’ve seen, in real life, is that every small business owner, or startup founder, has a built-in problem to deal with related to management and accountability. What happens is that in these small groups, co-workers are friends. You roll up your sleeves and work together. And that close collegial relationship, the team mentality, makes it harder to manage well.

Lean business planning sets clear expectations and then follows up on results. It compares results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating them, after the fact, to those responsible.

Business management is about what gets measured

Metrics are part of the problem. As a rule, we don’t develop the right metrics for people. Metrics aren’t right unless the people responsible understand them and believe in them. Will the measurement scheme show good and bad performances?

Remember, people need metrics. People want metrics. You and your business need metrics.

Then you have to track. That’s where the lean business plan creates a management advantage, because tracking and following up is part of its most important pieces. Set the review schedules in advance, make sure you have the right participants for the review, and then do it.

Measurement and feedback

In good teams, the negative feedback is in the metric. Nobody has to scold or lecture, because the team participated in generating the plan and the team reviews it, and good performances make people proud and happy, and bad performances make people embarrassed. It happens automatically. It’s part of the planning process. Besides, guilt and fear tactics are the worst kind of fake management.

And you must avoid the crystal ball and chain. Sometimes — actually, often — metrics go sour because assumptions have changed. Unforeseen events happen. You manage these times collaboratively, separating the effort from the results. Your team members see that and they believe in the process, and they’ll continue to contribute.

Drive a Market Analysis with Stories Instead of Numbers

Do you need to prove a market to investors or bank loan managers? More than ever, good market analysis lives on stories, not numbers. The difference between 10 and 20 million people, as prospects, is minimal. A story of real market need, a solution that a lot of people want, is way better. If you were an investor, which of these cases would pique your interest better:

  • 5 million prospects
  • Every small business owner doing social media marketing without having a budget to have a dedicated social media person as an employee.

Stories as BusinessOf course this is a matter of opinion. But what I’ve seen, among angel investors looking at possible investments, is that the story works better than numbers. The investors themselves imagine the size of the market, for themselves, when the story is done right.

Don’t Ignore Market Analysis Numbers

And I don’t mean you should ignore the numbers; but tell the story first. And never leave a market analysis with just the numbers. Granularity and credibility are very important. Investors would much rather hear about a market made up of small business owners who value social media but don’t want to do it themselves than a market of 4.5 million small businesses. For more on this, you might like other posts here including How Startups Estimate Market Size, Stories as Strategy and Will Your Startup Get Angel Investment.

Informed angel investors and judges at business plan contests accept educated guesses easily, but only if the underlying assumptions are laid out openly. The story behind them drives the credibility.

But the Story is Most Important

Fundamentally, at the core, what proves a market is that people will need or want the business offering. It takes enough people to make the market interesting. And it can be a need or want, not necessarily just need. People need gasoline, food, and clothing; but they want status, prestige, self confidence, and image. Make that story believable.

Furthermore, no market numbers are ever exact. They are always guesses about the future and extrapolations of available information. So whether Have Presence determines its total potential market is one million or two, there is no practical difference between these alternative numbers. There is enough market to operate in, and the business will have to win customers one by one.

Numbers and research rarely if ever really validate a market for investors or banks. Sales validate the market. One of the best opportunities for real entrepreneurs, these days, is to put a product idea on Kickstarter.com or a similar site, to show that people will pay money for it when it’s available. This is essentially pre-sales, or commitments to buy, and it’s very convincing.

Other good validators are early sales, market tests, or letters or commitments from distributors and buyers.

Avoid surveys that collect random or anonymous opinions from people about what they say they would buy or what price they would pay. People behave very differently when answering survey questions than when they are actually spending their own money.

Define Your Market By Strategic Intersection

Sometimes segmentation itself – dividing a market into meaningful segments – is strategy. I knew a consultant who divided potential small business clients up according to their decision-making process. Small businesses divided into a range that varied from the seat-of-the-pants autocratic owners, on one extreme, to the consensus-with-the-team owners, on the other extreme. And I was consulting with Apple Computer in the early years when they changed their marketing from focusing on the model and power of the device (Apple II, Macintosh, etc.) to the nature of the users (home, classroom, small business, enterprise, government). That changed the marketing overnight.

One new spin on this that intrigues me is something I want to call segmentation by strategic market intersection. But, I confess, I’d like a better tag for this. I haven’t found it in a book or article, I just started using it.

I developed it first for havepresence.com, in its lean business plan, which defines its target market as an intersection of traits of small business owners. Have Presence does social media posting for business owners. Its potential market consists of owners who match three specific traits:

  • They understand the value of social media;
  • They want outside help (not doing it themselves, or with an employee);
  • They have available budget to pay for the service.

I can draw that as a Venn diagram, showing the intersection of various factors, as shown here:

Intersection Have Presence

This intersection is also potentially a good example of how market numbers are sometimes educated guesses at best. This one isn’t going to angel investors. However, in a hypothetical pitch for a scalable defensible product, the vast majority of the angel investors I know and work with would accept this definition without having to put hard numbers behind it. They’d understand that the variable of wanting outside help eliminates most businesses with more than 20 or so employees, narrowing the U.S. version of this market to about 5 million with employees and another 25 million without employees. And they’d understand that the variable of having available budget would eliminate most of the 25 million without employees. They wouldn’t demand exact numbers and they would understand that there is a market there. The potential market is clearly big enough to operate in.

And I also mentioned a hypothetical market definition of a business addressing women between 50 and 70 with a minimum income. That’s another intersection.

Finally, I was working recently with a company that wanted to address the needs of entrepreneurs outside the U.S. who had relatively high disposable income and were regular users of social media. That diagram is shown here:

Market Intersection Example

In that case, available information gave these entrepreneurs reasonably good numbers of Facebook and Twitter accounts in various countries. And they had to estimate what percentage of the adult populations of these countries were entrepreneurs; and what percentage of those had sufficient disposable income. The result is their target market.

Disclosure: I have a financial interest in Have Presence (my daughter’s business).