Category Archives: Management

That It Didn’t Work Then Doesn’t Mean it Won’t Work Now

Back to Fundamentals, Management, Marketing,

I’ve had another stark reminder this week: with the way things change so fast, these days. we can never assume that what didn’t work for our business even two or three years ago won’t work now if we try it again.

That’s tough. It’s so easy to get locked in mentally.

I’m thanking my lucky stars right now that I shut up a few weeks ago. I was in one of our regular coordination meetings. As the marketing team shared its doings, I recognized one new campaign as very much like one that had failed spectacularly a few years ago. I almost said that it had failed in the past, and that it wouldn’t work, but I’m not in charge of marketing and they do a great job. I hope I didn’t roll my eyes. I was sure it wouldn’t work.

So earlier this week I saw the results, and it did work; quite well, in fact. And now I’m very glad I shut up in that meeting.

Just because it didn’t work before doesn’t mean it won’t work now. Things are always changing. 

Why Going Soft Is Good For Business

Business Research, Entrepreneurship, Management, ,

Dyke Drummond had an interesting quote in a comment to my list of entrepreneurship traits post last week:

And I agree about EMPATHY. I think it is a very underused term because people think it is “Soft” … and it is the core of any successful marketing campaign. You must be able to put yourself into the shoes of your prospect.

Me, I’m soft, and that’s good.

In a world that people like to divide into techie vs. fuzzy, I like fuzzy. You could call that liberal arts vs. science and engineering, if you’d like. I don’t care, because, after all, I’m a fuzzy.

In response to my confusing numbers with truth post last week, Kevin McNulty said:

I disagree: data is by definition a body of facts. Misrepresenting data or drawing poor conclusions is the problem.

And I disagreed back: Data is not necessarily facts. “Misrepresenting data and drawing poor conclusions” is commonplace, more the rule than the exception. It’s built into misunderstanding people, stories, truth, and uncertainty. Truth is in stories, not facts; and much less research.

And empathy leads to success way more often than research, data, or facts. Stay soft. It’s good for business.

Business Owners: How do You Treat Employees Who Travel

Management, , , ,

Business travel is tough. It’s a parade of hotels, airports, taxis, deadlines, delays, time zones, and all that. So I ask you, business owners, how do you treat your employees when they travel:

  • Can they deduct the cost of a session at the gym in the hotel?
  • Can they buy a movie at the end of a long day?
  • Do you cover their full costs of meals?
  • Do you let them keep their miles, their hotel points, and other similar perks?
  • Can they take a taxi, or do they have to deal with the shared airporter vans?

Here’s the thing: business travel is hard. It takes people away from their normal life. Delays are common, jet lag is common, and while it may not be work to sit on a plane and wait at the airport, on off hours and weekends … it certainly isn’t fun. There are a lot more hours spent on the job than just the working hours.

The tax code is a problem. The government unfairly (in my opinion) limits the deductibility of some of the associated expenses. But what do you do for them? Do you accept those expenses? Should you?

(Image credit: Tyler Olson/Shutterstock)

Nice People Can be Bad Bosses. Way Too Often.

Business Mistakes, Entrepreneurship, Growing a Business, Leadership, Management, Weblogs, , ,

I’m troubled. The problem, in a nutshell, is that saying jerks and idiots are bad bosses is a bit too easy. It implies that not being a jerk or worse makes you a good boss. And that’s not always true. Nice people can be bad bosses.

I like Bob Sutton’s work a lot. He blogs at Bob Sutton Work Matters, he teaches at Stanford, and his books are good and good for you. I’ve quoted him often on this blog. His latest book, Good Boss Bad Boss, is brilliant. Every boss should read it.

Still, there’s this problem: By focusing so much attention on what not to do, and who not to be, we tend to undervalue the hard side of being in charge.  Being a good boss also means following up on unmet expectations and disappointing performance with leadership, advice, teaching, and demanding better.

I think I did this wrong myself. I think I let being a supposed nice guy interfere with my managing a company. You can’t be liked by all and also optimize performance. Sure, some people work best when left alone and encouraged, but – hard, ugly truth – others lose interest and grow entitled. Good bosses deliver both positive and negative feedback. Good bosses make the company better.  Whether they’re liked or not.

This is not Bob Sutton’s fault, not the fault of his work. But he tells great stories of jerks and idiots, and stories are powerful, so stories gather. So we unconsciously think being a boss is about being nice. We forget the hard part.

You Decide: Business Rules vs. Case by Case

Management,

It seems to me that carefully defined rules clash with judgment calls and case-by-case common sense. You grow a business team based on one or the other, but not both.

Take the example of customer returns: do you define the rules and stick to them, or do you make exceptions all the time. You can’t do both. If you offer a 60-day money-back guarantee, some of your team will want to refuse returns from beyond 60 days, because that’s the rule. Others will want to give an unhappy customer their money back even if it’s been 61, 90, 120 days or longer.

The problem is that you can’t do both, but you want to. I’ve always wanted employees empowered to break the rules for special cases. I’ve always thought people wanted to be empowered to use their common sense and good judgment. But I’ve learned through the years that “you decide” and “use your judgment” is not everybody’s favorite policy. That makes some people very uncomfortable; they want to know the rules and follow them exactly.

This conflict applies to lots of issues that come up as a business grows. Think about bonuses in this context. Think about sick days and vacations. If you build a lot of rules, making exceptions gets harder.

(Image: RAGMA IMAGES/Shutterstock)

The Three Most Common Pricing Mistakes

Back to Fundamentals, Business Strategy, Management, ,

(Note: This was first posted last week on the Amex OPEN Forum. I’m reposting it here, with permission, for the convenience of my readers here. Tim.)

All the years I’ve been following business, strategy and small business—from the late 1970s through today—I’ve always wished for a magic formula for proper pricing. What’s the right price for this service? How should you price a new product? In teaching, writing and answering emails, this question comes up all the time. And, much as I’ve looked for the right answers, they aren’t at the back of the book.

Pricing is magic. There is no formula that works for you, or me, or any generalized group. You set your pricing as a matter of situation, strategy, costs, competition, weather, instinct and all of the above.

While I can’t really tell you how to set your pricing right, I can at least share something that I’ve learned—in classrooms, in making mistakes, in growing my own company—about how NOT to set your pricing.

Here are the three most common pricing mistakes that I see. And, just to be clear, while I wish I could drum up some rigorous research to back me, this is based on anecdotal evidence, common sense, and three decades of dealing with business problems.

1.  Trying to be the lowest price provider

One of the most damaging cliches in business is the idea that the lower price gets the highest volume.  The whole lower price equals higher volume idea, a fundamental law of economics, is for undifferentiated commodities, not your business or mine.

Successful lowest-price strategies are unusual. They usually take a lot of capital, resources and visibility. What works for Costco and Walmart doesn’t work for the corner store, some discount airlines and gasoline stations, but those strategies usually require a lot of capital and very large scale implementation.

2.   Mixing your pricing message

We forget way too often—and too soon—that price is the most powerful marketing message you have. Do you think people don’t buy your work because it’s too expensive? But isn’t it worth it? Don’t you believe in it? It’s about positioning. How are you different from the others? Is what you sell better than the one across the street? Does your price say so?

Would you get a root canal from the cheapest dentist in town? Would you save money by buying two-day-old sushi? And why isn’t the cheapest car made the most popular?

I lost a consulting job I really wanted once when I bid $25k for it and a competitor bid $75k. The guy who gave me the bad news told me everybody liked my proposal, but they wanted the best, so they went for the higher price.

What would you rather have for dinner: a $1 hamburger or a $20 steak? We used to go to a restaurant that had really good food and surprisingly low prices. But I often wished they’d raise their prices so we didn’t have to wait 45 minutes or more to get a table. And guess what: they no longer exist. They went out of business. Do you think pricing had something to do with that? I do.

3.  Underestimating real costs

Businesses go under when they run out of money. The research on how they run out of money is confusing and ambiguous, and there are rarely single identifiable causes. Still, just betting on what I’ve seen with my own eyes through a lot of years, I think businesses frequently run out of money because they underestimated real costs.

We talk a lot about gross margin in business analysis. That’s your selling price minus your direct costs. So if you buy that widget for $2 and sell it for $6, then the gross margin is $4, and your gross margin percent is 67 percent.

Unfortunately, focusing just on gross margin isn’t enough. Aside from the $2 you paid for that widget, there are all those other expenditures, including your rent, your payroll, your insurance, your electric and water bill, all of your marketing costs, and lots of hidden costs, like the computers and software you’ll need to buy next year. We call that overhead and tend to forget it. Which is a shame, because a lot of businesses forget about it all the way to the business grave. You run out of money.

It’s Easier to Maintain Business Momentum Than Overcome Inertia

Advice, Business Mistakes, Entrepreneurship, Management, Momentum

Actually my title for this post is a shortened version. It should have been:

In business, just as in physics, and in life in general, it’s easier to maintain momentum than to overcome inertia.

My two best examples are neither physics nor business: diet and exercise. spinning topYou know full well what I mean. Keeping the healthy routine, in either one of these, is easier than letting go and restarting. I’ve known this one from both sides. I’m sure. And I’ll bet nobody’s arguing.

I’ll bet that with those examples in mind you can think of a lot of examples in business. Of course there are the blogs, Twitter and Facebook presences, email campaigns, newsletters, word of mouth in general, awareness, branding, plus a lot of things related to tools and systems, plus teamwork, and even human nature.

Where I see it a lot, because of my special focus, is in business planning. To make planning work for you and your organization, it’s better to keep it going, keep it in mind, keep it easy to access, keep bringing it up and reviewing and revising. If your planning is about a document in a drawer somewhere, then it’s not very useful.

Don’t let down. Ease off if you have to, but don’t let down entirely. If you do, it’s too hard to get the momentum going again.

What’s Really Wrong With Urgency Addiction?

Advice, Management, Personal Productivity, , , ,

Business Insider tipped me on this post from Mark Suster on his Both Sides of the Table (investor and entrepreneur) blog. Especially the drawing below. Notice importance on the vertical, and urgency on the horizontal. At first glance, it seems to me like operating in the upper right quadrant is a good thing. You’re addressing urgent and important problems.

But that’s what makes the post interesting (or more interesting): in fact, if you live in the upper right, you’re suffering from urgency addiction. He’s paraphrasing Steven Covey in the book First Things First as he answers:

You retain less knowledge.  You take shortcuts.  You make too many trade-offs.  You suffer too many internal stresses.

Okay, I guess. I wasn’t entirely convinced, to tell the truth; and Mark himself notes that urgent and important is still pretty attractive. He says:

Actually, people with the “urgency addiction” thrive on the pressure.  We rise to the occasion as it stirs our creative juices.  There is something about the adrenaline rush of being under time pressure that excites us and teases out our creativity.

Don’t you want to join him there, in that upper right quadrant, when you read that? I do.

But then it turns out, reading even further, that I want to be in the zone of effectiveness. Do you think maybe that’s why they named it that? Here’s how Mark (again, paraphrasing Covey) describes it:

The examples that Covey talks about here are things like exercise and planning.  They can’t be rushed.  If you can carve out some time during your day to not sit in meetings but instead to dedicate to thinking about the longer-term, strategic initiatives that are important to you then you’ll do bigger things in life.

That sounds really good to me: Exercise and planning, and long-term thinking too. It makes me think twice about urgency addiction. If only there weren’t those urgent important matters to deal with first…

(Image credit: I took it from Mark Suster’s Both Sides of the Table. Click it for the original)

Beware of What Used to Work But Doesn’t Anymore

Business Stories, Leadership, Management, Marketing, , , ,

This is a great example of how quickly business assumptions change, and how badly we can screw up just by assuming the status quo. I just read Coffee Shops are Taking Wireless Off the Menu. News StoryIt reports how coffee shops are turning away from free wireless. It’s an interesting commentary on changing times, but, much more important, a really good business reminder. The LA Times reports:

Coffee shops were the retail pioneers of Wi-Fi, flipping the switch to lure customers. But now some owners are pulling the plug. They’re finding that Wi-Fi freeloaders who camp out all day nursing a single cup of coffee are a drain on the bottom line. Others want to preserve a friendly vibe and keep their establishments from turning into “Matrix”-like zombie shacks where people type and don’t talk.

That shift could gather steam now that free Wi-Fi is less of a perk after coffee giant Starbucks stopped charging for it last month.

Put yourself in the place of coffee shop owners. Just yesterday, free wireless was a feature, a sign on the outside window, a customer lure. You just blink, and now it’s no wireless instead. Business climates, competitive environments, customer loyalties, and customer preferences changed in the blink of an eye. Suddenly, what worked isn’t working anymore.

Think about the rise and fall of direct mail marketing, Web banner ads, V8 engines, artificial sweeteners, TV dinners … we’ve all seen that happen so many times. In business, you keep your mind open. Revisit your assumptions as often as you can.

Because something similar is about to happen in your business. Or maybe it already did. Maybe what you think works, what used to work, isn’t working anymore.

Too Many Bullets and Not Enough Zen

Leadership, Management, , , , ,

I posted here Monday on Kermit Pattison’s interview with Randy Komisar. That was about the writing, which I found intriguing. I can’t resist commenting as well on what Randy Komisar says there.  He’s now a partner in prestigious VC firm Kleiner Perkins, and has been a co-founder, CEO, or founding director of several major successes including Apple’s Claris, Tivo, and LucasArts. carrots and sticksAnd what he says there is brilliant.

On classic mistakes of manager-wannabe-leaders:

A key point here is that leaders aren’t necessarily managers, and vice-versa. Randy says assuming a good manager is a good leader is “a classic mistake.” Here’s more:

Management is more operationally focused. It’s more of a supervisory role of setting priorities, allocating resources, and directing the execution. Leadership is more forward thinking, more about enabling the organization, empowering individuals, developing the right people, thinking strategically about opportunities, and driving alignment.

On needing the right kind of leadership at the right time:

The conversation there goes through how CEOs are like breeds of dogs, and I’ll leave you to click to the original to get Randy’s description of the retriever, the bloodhound, the husky, and the St. Bernard. The important lesson there, which I completely believe, is:

There are different talents in the creation of businesses and running of businesses that need to be taken into consideration.

And Randy fills that idea in with practical examples:

A mistake often made in the venture investment business is rushing to bring in a big CEO into what is still a small venture. The mismatch of skills is severe. The big CEO needs resources, needs a strong sense of direction and momentum, and is not very effective day-to-day with a bunch of people putting bits and bytes together. The other mismatch that’s harder to foresee is the small company with momentum. You say, great, let’s bring in the guy who can grow it to $100 million and take it public. The problem is that you may face yet another significant right or left hand turn in your business which that CEO may be completely unqualified to do.

Too Many Bullets and Not Enough Zen

This is my second post on that phrase now — bullets and zen — and I’m still loving it. Kermit asks Randy who’s being particularly thoughtful about leadership lately. I love his answer (warning: this is another Zen reference, even after my not Zen post last week. Discretion is advised.)

I’ve given up on the guru model and think more in the Zen model: things will change and that’s okay. What we need is a set of constant provocations. What I like to read are those things that really challenge my assumptions, authors who are willing to think differently, no matter whether I agree with them or not, because they at least broaden my own thinking. What I don’t like reading is the pablum–the 10 habits of great leaders or whatever. Those are constraining and not very effective for the average person.

I agree. Well said.