Category Archives: Management

I Don’t Sell Insurance, I Tell Business Stories

Business Stories, Management, True Stories, , ,

Ugh, this might seem like a sales pitch. No, I don’t sell insurance. I tell stories. This one, about insurance, might be helpful for other people building their own businesses.

It was about 10 or 12 years ago. Palo Alto Software was a small but rapidly growing company with 15 (or so) employees. My wife and I worked shoulder to shoulder with the others in a small office. It was a happy and hard-working group, with a lot of shared values. Those times produced a lot of good memories. We had no outside investors, though, which means no deep pockets. The money we spent was our own.

surgeryOne day, one of our employees had a serious health problem requiring four to six weeks in the hospital. We were very worried about him. So one of the first things we did was make sure he knew we’d be paying him his salary until he got better.

Just about a month later, another of our employees had a heath problem requiring several weeks out of the office. She was a great person, a friend, great in her job, tireless, and loyal to the company and all its values. So we told her not to worry, and paid her salary while she was out.

Shortly after that, somebody pointed out that if we were going to provide de-facto disability for our employees — which is exactly what we were doing — then it would be smart to buy disability insurance. As in a cartoon, you could see the light bulb appearing over our heads. Buying disability for our employees was the same as buying it for ourselves.

And so we did. And to this day, many years later, we still provide disability insurance for our employees.

Planning Fundamentals 4: Its About Accountability

Back to Fundamentals, Business Planning, Management, Planning Fundamentals, , ,

(This is the fourth in a series of posts reviewing the fundamentals of planning, with an eye for how they’re changing over time. Part one was Form Follows Function. Part 2 was All Business Plans are Wrong. Part 3 was Cash Not Profits.)

I predict accountability is going to be an increasingly important issue as we head into this new decade. The old-fashioned tools of accountability, mainly physical presence, as in hours in the office, or days on the road, are fading. If for no other reasons, it’s because the world can’t continue to support needless commuting, an average of 51 minutes per day in the United States, and way worse in some of the larger cities in the developing world.

So what’s going to happen? We’re going to look increasingly for accountability as part of our real-world business planning process. The plan establishes the metric, and the regular plan review and tracking establish progress towards the metric.

It’s not just sales, costs, and expenses. It’s more metrics for more people, including lines of code, calls, blog posts, tweets, unique visitors, page views, minutes per call, presentations, proposals, emails processed, and so on.

Our tools will give us ever increasing metrics to use. I’m very biased about Email Center Pro, I admit, but if you’re curious you should look into the wealth of metrics it provides on team-managed emails and email addresses, like the [email protected] or [email protected]. And everybody knows about Google and Web analytics, paid search, etc. And telephones and miles are completely trackable.

All of this becomes the concrete specific portion of the business plan, and it is then managed as part of the business planning process. That means that the plan lasts barely a month before results are reviewed. Managing the metrics is a multiple win when there’s regular review, because all the members of the team can easily look on together and see where things have to change. And why.

And that’s the future of planning: management.

The Best of the Best Lists

Management, Weblogs, Writing,

Of all the “best of” blog posts I’ve seen this month, Bob Sutton’s Work Matters: The Best of 2009 posts is the best.

No coincidence, I suppose, that he writes very well and has a great blog, teaches at Stanford, and is author of several important books. But there are other great blogs around.

What I really like about Bob’s best list is that he goes month by month, specifies one particular post for each month, and — really nice touch — he also comments on the comments.

So his list is a great read. Bob writes about work matters, the whole no A**hole thread, and smart business.

The Dark Side of Extreme Customer Service

Management, Marketing

Sometimes I think the common wisdom on customer service is too common and not all that wise. We oversimplify and we leave the dark side out of the story. Extreme customer service isn’t always good for a business. There’s a dark side to it.

You’ve probably heard this story; I certainly have. It comes up a lot in customer service lore. Some swanky department store’s customer service is so good that they even take back clothes that weren’t purchased there. No receipt required. Even if the store never carried that line.

It may or may not be true. That’s not the point. It might as well be true because it’s customer service bible now, chapter and verse. I read some great stories along these lines in the Heath Brothers’ Made to Stick book (which I reviewed and recommended here, by the way). And I noticed another well-written post by Seth Godin as Win the fight, lose the customer last week too. That’s what brings this to mind. Seth wrote:

Given the choice between acknowledging that your customer is upset or proving to her that she is wrong, which will you choose? You can be right or you can have empathy. You can’t do both.

However, I say it’s not nearly that simple. Extreme customer service has its dark side. Let’s go back to the fable of the swanky department store and look at two problems:

1. It Burns Out Good Employees

Nobody tells the real story of the guy with the jacket in the swanky department store. Just for sake of illustration, assume he’s rude and mean and insulting. He’s berating the poor salesperson and annoying the other customers. He’s talking about the stupid store and the stupid jacket maker and so on (probably using a word stronger than stupid).

The salesperson, meanwhile, notes that the brand is one the store has never carried. She’s dying to say, loud enough for the sympathetic customers around to hear her, “I’m sorry sir, but I know you didn’t buy this jacket here because this store has never carried that brand.” And, after saying that, to send him on his way. “Now please let me attend to customers waiting for my help.” The other customers want that too.

However, because of the lore of extreme customer service, she has to swallow hard, apologize, and process a return. This is bad for her morale, bad for her health, bad for her spirit, and didn’t do much for the store either.

We forget that good employees in good companies come to care about the company and its policies and they don’t like rude people complaining unfairly. When the policy is to swallow hard and comply with any outrageous request, those employees resent it.

And don’t they matter too?

2. Not Everybody is a Customer

Here’s the other thing that bugs me about that story: that mean guy with the jacket isn’t a customer. He didn’t buy it at that store. And after he gets his ego rush with the screaming customer game, is he going to become a customer? No, probably not.

Somewhere in the oversimplified lore of extreme customer service we forget that there is a market segment focus in the extreme customer service. It depends on good customers. It doesn’t work when you take bad customers, who won’t ever be good customers (is the jacket guy going to be shopping at Swanky Department Store in the future? No, lets just say he isn’t. So the extreme customer service annoys customers, stresses employees, and does no long-term good.

Don’t you think that as humans we have a built-in instinct that wants fairness? That resents unfair demands and having to give into them? I do.

Do you think this kind of extreme customer service trains people to be mean, by giving mean people what they ask for, unfair or not? Should we worry that reasonable people pay more and get less than mean people do, because of our business lore of extreme customer service? I’m just asking.

Marketing Textbook in Top 250 Blog List

Management, Marketing, Teaching Business, , , , , , , , , , , , ,

What if the question was: what’s the best book about marketing to read and recommend? And the answer was: read this compilation: Top 250 Blog Posts – Advertising, Marketing, Media and PR Spotlight Ideas. How things have changed. 

Not Kotler’s Principles of Marketing, not Seth Godin’s Permission Marketing, not even Jay Conrad Levinson’s Guerilla Marketing. But read the 250 posts included in this top 250 posts list at SpotlightIdeas, and you’d have a marketing education.

The posts are divided into meaningful categories, and include a highlights list of best bloggers in any of these marketing-related topics. Seth Godin, Chris Brogan, Leo Babuta, Robert Scoble, and many other generally-recognized blogging leaders.

Fear Is An Entrepreneur’s Friend

Management, ,

It was back in our startup days, in all the excitement of our first getting into channels, which was followed by an onslaught of competition. We were beginning to see financial daylight, but we were behind in payments, and our channels were slow to pay. I was worried.

“But what’s to worry about?” Cahill (Cal) Brown asked. He was a packaging designer and marketing consultant. “For an entrepreneur, you’re very fearful.”

“I think I’m supposed to be fearful,” I answered. “That’s part of my job. I’m supposed to worry.”

Image by SplaTT on Flickr cc I know: fear and worry, not good words, not entrepreneurial, it’s all “you can do it” and “don’t let the bastards get you down” and “nothing to fear but fear itself” in entrepreneur world.

But I say fear, in the right measure, is good for management. It’s related to having the antenna up, watching for danger.

Do you ever do SWOT? Strengths, weaknesses, opportunities, and threats. Threats are one fourth of SWOT.

That’s not paralyzing deer-in-the-headlights fear. It’s fear like the deer in the forest standing very still, ears perked up, listening for danger. Alertness. Thinking ahead.

If you’re interested in this, I had a good talk with Jim Blasingame about this last week, on his daily Small Business Advocate radio show. It was about at this point in the discussion that Jim added the idea of fear as motivator, not fear as immobilizer.

To hear the archived radio interview click here.

Which also reminds me, Jim and his team are archiving everything these days, meaning that the Small Business Advocate site has an amazing array of 20-minute interviews on every topic in business. He’s a natural interviewer, and his guest list is enormous. He’s been doing this three hours a day,  five days a week for almost 12 years.

Is Software Management Doomed?

Creativity, Management, Software, Technology, , , , , , ,

Committees don’t make great software. It takes a single person, an author. Maybe he gets some help. Teams don’t do it. Nobody sees the whole elephant.

I’m pretty sure I heard that basic sentiment first in about 1986, from Dave Winer, who was then the author of a Macintosh outlining program named More (now he’s better known as the de-facto father of blogging).

What reminded me of this over the weekend was my son emailing me about Jeff Atwood’s Software Engineering: Dead post on Coding Horror. In his post, Jeff’s looking at this article by Tom DeMarco, author of Controlling Software Projects, a software management classic.

Creative Programming

What DeMarco seems to be saying — and, at least, what I am definitely saying — is that control is ultimately illusory on software development projects. If you want to move your project forward, the only reliable way to do that is to cultivate a deep sense of software craftsmanship and professionalism around it.

The guys and gals who show up every day eager to hone their craft, who are passionate about building stuff that matters to them, and perhaps in some small way, to the rest of the world — those are the people and projects that will ultimately succeed.

That sounds to me a lot like what Dave Winer was getting at about 25 years ago. And if it takes a single user, someone writing code and working the application because he or she wants to use it, then that’s hard to manage.

And if you’re interested in software quality, creativity, and management, you might want to look at an exchange between user interface designerDustin Curtis and an interface designer at American Airlines. It starts here with Justin’s rant about the hostile interface on the AA website; and gets more interesting here with an AA interface designer’s answer.

However, there are large exceptions. For example, our Interactive Marketing group designs and implements fare sales and specials (and doesn’t go through us to do it), and the Publishing group pushes content without much interaction with us… Oh, and don’t forget the AAdvantage team (which for some reason, runs its own little corner of the site) or the international sites (which have a lot of autonomy in how their domains are run)… Anyway, I guess what I’m saying is that AA.com is a huge corporate undertaking with a lot of tentacles that reach into a lot of interests. It’s not small, by any means.

And apparently frustration was had by all.

And it certainly won’t make you wish you had a creative or design oriented position in a large company.

Two guys wrote the original spreadsheet (VisiCalc), one, Paul Brainard, wrote the main part of the first page layout program (Pagemaker). One of the more interesting facets of a lot of Web 2.0 work is that the programs are smaller, written more by authors, less by teams.

5 Thoughts on Hiring People for Growing a Company

Management, , ,

1. The early hires have huge impact.

Just do the math. Think about how much more a single person affects company culture in a company of one, two, three, or four people, compared to a company of several hundred.

2. Building by shedding jobs

We’ve used the shedding jobs strategy as we built from a one-person-do-everything business to a software company with 45 employees. The first job I shed and our first hire was sales, because that’s not my favorite thing, but I was doing it. Next I shed the tech support job and hired someone to do that for us, for the same reason. Then bookkeeping. Followed by programming, and then marketing. What I was getting, most of the time, was my own time back.

3. Create your own workplace environment.

As the company grew, I wanted a workplace atmosphere that felt good to me when I would arrive in the office in the morning. Happy people, sharing the vision, working together.

4. Occasionally you fit the job to the person, instead of vice-versa.

Sometimes you run into somebody who you want involved in the company, and you adjust the job description. For example, one person was hired to do tech support, but ended up as documentation manager.

5. Projects make great introductions.

Sometimes jobs can begin with consulting contracts for specific projects that you need done. That makes a comfortable introduction. Like having a cup of coffee together before you decide to take a weekend trip.

Accountability Part 5: Management

Management,

(This is the fifth and final part of a five-part series on accountability posted first on Small Business Trends. The search box on this blog should get you the first four. )

In 1998 I was walking to lunch with the accountant — outside accountant, CPA, partner in a regional firm — who handled our Palo Alto Software business. Making conversation, he asked me to talk about growth. We had 20 employees then. He said:

The hardest growth point in business is from 25 to 50 employees.

I didn’t really believe him then. And I believe him now. Palo Alto Software has more than 40 employees now. We went up to 36 by 2001, then back to 22 later that year (recession problems), and we’ve grown back to more than 40 since. And I’m pretty sure now that the stumbling block, the traps and pitfalls he was talking about, might be called structure, or scaling, or management; but all of those roll up into accountability.

For the record, I do have a fancy graduate business degree, and maybe they were teaching this stuff when I was in business school and I just wasn’t paying enough attention; but this feels like stuff I learned by doing, not in a classroom.

I think I can summarize this series with the following seven points:

1. Accountability is critical to small business growth.

I refer back to my previous post on the accountability dip. People work together well and easily and often as you grow from one or two to 10 or 20; but somewhere between 20 and 50 the structure gets more important. You need to figure out who reports to whom and who’s responsible for what. Just assuming things will get done doesn’t cut it.

This takes a change in culture. Sometimes it’s a drop in perceived quality of office life. It’s hard to do.

2. It’s about people.

While it relates to tools and planning and locations in points 3, 4, and 6, it really comes down to people skills. There are built-in hard moments, when people fall short of expectations and somebody has to follow through with acknowledging disappointment.

3. Tools can help.

I wrote about tools in part 1, war of the worlds. Basecamp, Zoho Google docs, Box.net, GotoMyPC, Webex, Wetpaint, shared RSS, Skype, Yammer, all instant messengers, and (disclosure: I’m involved with this one) Email Center Pro.

Tools can help keep people close, focus on specific goals, metrics, tracking, and analysis. Think of the magic of pay-per-click advertising on the web, and apply that delightfully high level of analytics — an enormous luxury compared to what we used to work with early in my career — to projects, and work, even emails and telephone answering. Break things down into objective measurement and analysis. That really helps. I predict we’ll get more tools and better tools over time, as work spreads out onto the web. These are all tools that build communication and contact.

4. Place matters less every day.

The past is accountability by time clock and physical location. Who’s in the office, and how much. The future is remote working and working from home and teams connected virtually by instant messenger or yammer and basecamp and the like. I’m very close to a CTO who manages a team of programmers in four or five different countries, in real time.

5. Metrics are magic.

I called my part 3 Metrics and Management. The more metrics in the business, the better. Not just sales, but calls, trips, minutes, leads, presentations, milestones, bug fixes, minutes per call, or whatever you can. People like to watch their own metrics, and metrics make the hard side of accountability — the bad news — easier to manage.

6. Planning process is critical.

Not just a plan, but planning process: the plan has to set the expectations and establish the commitments, and the planning process has to track results and changing assumptions and revise and manage. Metrics are about tracking, and they’re part of planning. A business plan is a necessary but not sufficient condition — you have to follow up on results, watch changing assumptions, and make the course corrections. You can actually do it without a business plan if you have all the metrics and tracking set up, but by the time you do, you have a business plan whether you realize it or not.

7. More than anything else: set expectations and follow up on performance.

It’s sort of like this: if I were to write a book on successful dieting (and I can’t; I’d have to lose about 10 pounds first) it would have one page, saying: “Eat less. Get more exercise.”

Similarly, the complete book on accountability in small business could have one page saying: “make expectations explicit and measurable. Then measure performance. Reward good performance and make the disappointment for poor performance clear and explicit. Over time, weed out bad performers.”

That’s a lot easier to say (or write), I’m afraid, than to do. And on this one, I’m not pretending I’ve been that good at it, either. But I do know that it’s critical to small business growth.

Accountability Part 3: Metrics and Management

Management

(This is the third of a five-part series for Small Business Trends on accountability in the new world, the increasing need for fundamental accountability in small business as the business landscape breaks apart into cyber vs. physical. Part 1 was War of the Worlds, and Part 2 was Both Sides Now. I'm reposting it here because this is my main blog.)

What if I told you I’ve built you a straw man? In my first two posts on accountability I looked at the vaporization of accountability and the splintering of work into real physical presence vs. virtual or remote. As if physical presence means accountability, and working remote means the lack of it. But what if that’s not the real problem?

The real problem is a simple combination of metrics and management. Simple to say, hard to do. Not unlike diet and exercise, or having more patience with the kids; everybody knows what’s right, but doing it is so much harder than knowing what you’re supposed to do.

And I say it’s a lot worse in small business, and entrepreneurship, than anywhere else. Why? Because in a small business setting you end up working with friends, and it’s really hard to give negative feedback to friends.

Some examples will help:

  • When I was in my 20s I knew a man who ran the 500-employee Mexican subsidiary of one of the 100 largest companies in the world.  He tried to teach me that a boss can never be a friend. In Spanish we have both the formal (Usted) and familiar (tu) forms of speech. He would never drop the formal with anybody related to the company. He had a saying he used that doesn’t translate well, but means “I can’t ever be your friend if I might have to fire you (for you Spanish speakers, it was along the lines of “A ud. no lo puedo tutear porque mañana lo tengo que correr.” )
  • I say he tried to teach me because I failed to learn that lesson. One of the strongest drivers in my building my own business was wanting to create a pleasant place to work, surrounded by like-minded people, so it wouldn’t feel so much like work. I hired people I liked. I liked them more as we worked alongside each other. I think I was pretty good at sharing the credit, but I know I was bad at holding people accountable for poor performance. Particularly when they were well-meaning honest people who came on time and worked hard during the day. Unfortunately working hard doesn’t always mean getting the right things done on time.
  • Seriously: what do you do about somebody who’s trying hard, means well, but doesn’t hold up the job? You know the answer, and so do I, but can you do it?

So through the years, watching what I don’t do well, I’ve developed my respect for metrics and management.

Metrics

It’s been a lot of years with a  lot of concentration on what’s good about business planning, and how it works in a business when it works well, that I’ve realized the magic of metrics. A good business planning process generates metrics throughout the business: not just the obvious sales and cost of sales and expenses, but milestones with dates and deadlines, and tracking of metrics such as calls, presentations, programming modules, trips, key word insertions, downloads, page views, conversion rates, subscriptions, leads, and so on. For every job there’s the hope of an objective metric that people can live and work with. A good business planning process goes from the high-level general to the specific steps and then to the metrics, and tasks, and responsibilities. Make commitments.

Riddle: in the classic bacon and eggs breakfast, what’s the difference between the pig and the chicken?
Answer: the chicken’s involved, the pig is committed.

Metrics are magic. Build metrics and a planning process, and, as if by magic, you and your team members (friends, or not) are suddenly standing together looking at the metrics. The positive and negative feedback is there in the numbers. You both see them together. You both remember what the goal was, and you look together at performance.

Management

Metrics are magic, yes, but not the whole solution. Accountability means what do you — your organization, your team, your company — do about poor performance? And that’s management.

You have to ask some questions: were the metrics based on real assumptions? Were they fair and reasonable? Did everybody understand them? Did the playing field (such as budgets, tools, access) change in the meantime?

And then, as you look together at performance based on those metrics, you have to be able to be the manager and do the hard thing. I don’t think I did the hard things all that well throughout my career. I had some successes with changing the job description for poor performers, which meant that once or twice we found a round job description for a round person who’d been in a square-person job. But I’ve also had some failures. The last time my company was named one of the 100 best companies to work for in Oregon, that honor was based on a confidential poll in which our employees gave us the worst marks for not weeding out poor performers.

I think it’s the baby-boomer ex-hippy in me, still, these many years later. As I came to adulthood in the late 60s, we all hated authority and mistrusted the establishment. With that in my background, it is hard for me to be the hard nose manager when the company needs it.

But if you look at the long term, most companies need it. Build the metrics as the first step, track them as the second, and then follow up, the very hard third step, to hold people accountable.

Paradox

Business is full of paradox. Especially strategy and management. I find it delightfully ironic that the splintering of the workplace into virtual and remote may actually increase the likelihood of tools and metrics to help build accountability. It can separate the physical presence from the performance, and make metrics easier to accomplish. That’s for my fourth part of the series, next Thursday.

And another paradox, sort of a postscript: That highly successful business leader I mentioned in my example above, the one who said a boss can have no friends in his company — he committed suicide.