Firing Up Organizations in Tough Times


 
QuestionThings are very tight right now. Our outlook is uncertain and people are afraid for their jobs. Under these circumstances I’d expect people to get more done, but somehow, we aren’t more productive than before. Any hints?


 
Answer
It’s funny, being a human being. You would think that when the pressure is on, we would flip into resourceful, productive mindsets and valiantly overcome whatever obstacles block the path to our goals. Alas, it doesn’t happen that way. When we feel scared and uncertain, our forebrain shuts down and our hindbrain screams, “Run!” That worked great when spotting the saber-tooth tiger grinning at us through the grass. But in the modern world, that’s often the opposite of what we need to do to survive.

Fear motivates immediacy


Creating urgency is a first step in mobilizing organizations. But an important truth about humans is that urgency easily slips into fear. Fear mobilizes, and it mobilizes away from the perceived danger. Which way is “away from?” Whichever direction someone is pointed when that hindbrain screams “Run!” Everyone around will also move quickly—in whatever direction they happen to be facing. Fear gets people moving now, but it won’t move them in the same direction.

Fear does more harm than just scatter effort; it produces stress. Under stress, creativity vanishes, problem-solving abilities diminish, and people stop learning. They react from impulse, they don’t think through consequences of their actions, and they become less able to spot patterns and interconnections. This is fine for a five-minute burst of jungle adrenaline, but it won’t lead to a workforce that can navigate a tricky economy.

Any workforce living in stress will have problems over the long term. When morale is bad for months at a time, people disengage. They stop thinking about taking the company to new heights and start groaning when the alarm clock goes off—and groans rarely bring out peak performance.

Leadership motivates coordinated action


Fear’s companion is, oddly, leadership. Fear motivates people strongly, but in random directions. Leadership aligns them in the same direction. Call it what you will: inspiration, vision, mission—setting direction gives people something to move towards. By sharing a vision, everyone in an organization can orient themselves around the same set of high-level goals.

Working towards a larger purpose also mobilizes people, but it mobilizes them in a way that unlocks their creativity, problem-solving, and resourceful mental states. When working towards a large goal they perceive as achievable but challenging, people create eustress, a positive stress that gives them the energy and resources to make progress on the goal.

It’s a big improvement when everyone is moving in the same direction, but one more piece is needed: coordination. The balance between good stress and bad stress is delicate. Once people agree on a goal and are psyched to go there, coordination becomes ever more important. If two groups become blocked by a lack of coordination, bad stress can re-emerge and begin shutting down morale again. So once people are mobilized, the ongoing challenge is making sure they’re supporting each other, and not getting in each other’s way.

Reconnect leadership at the top


The first step to getting the work force back into a powerful, productive mental state is to start with yourself. You’ve probably got the “Run!” response down cold. Now it’s time to reconnect with your “towards” vision. People take emotional cues from their leaders, and if you’ve been stressed about the economy, you’ll be radiating it throughout your organization, so get yourself and your leadership team into a powerful, positive place.

Leave the daily triggers that pull you back into stress. Turn on the voicemail, turn off the e-mail, smash the cell phone, and head off for a weekend in a mountain cabin. Get enough sleep, enough food, and enough physical relaxation so your brain starts working again. Reconnect to your vision. Write, daydream, and brainstorm where you want your group in five years, a year, six months, and three months. Factor in your personal goals as well so you really tap your own intrinsic motivation.

You’ll know you’ve done enough when you feel a strong pull towards your goals. Uncertainty about the economy may still be in the background, but once you’ve regained your equilibrium, you will also feel a strong sense of where you’re going.

Spread that feeling to the rest of your leadership team. Invite them for an off-site, and together, clarify the vision of where you’re headed until it’s at least as clear as perceptions about current problems. Take the time to make sure everyone understands the direction. Bring in their goals, wishes, and aspirations for the organization. While you work, watch their faces. Notice the energy level. When they start getting excited, you’ve tapped their motivation and gotten them back on a powerful path.

Back to the business, decrease stress


Once you return to daily business, you’ll have to decrease stress as you align people. Stress from specific causes (“My kids are sick.”) can be addressed on an ad hoc basis. Stress from vague sources like “the economy” is general anxiety. Often, you can help people by just letting people talk. Listen empathetically and don’t rush into solving or analyzing problems (for most of us type-As, this is much, much harder than it sounds). Feeling listened to can be enough to help someone regain equilibrium.

If the anxiety is about Things We Don’t Really Like to Talk About—like the fear of layoffs—talking can help defuse them. There’s no better way to nurture a fear than to let it remain the stuff of speculation. When left to their imaginations, people deal with uncertainty by imagining the worst and then reacting as if it had already happened. Truth is a great antidote for uncertainty. It is, after all, a form of certainty. Discuss what’s happening, even if all you can say is, “No one knows what will happen, but we’ll keep forging ahead toward our goals.”

Oh, yes. Keeping people healthy is also essential to soothing their nerves. Make sure people are sleeping enough. Sixteen-hour days are probably as productive as ten-hour days with enough sleep and an after-work life. Unless you run an assembly line, productivity is probably tied only loosely—if at all—to hours worked (but that’s another column).

Connect people to forward motivation


As you decrease stress, have the leadership team bring the sense of direction into all interactions. Remind people about the direction. Rally them. Excite them. But don’t overdo it; this isn’t about creating a huge one-time pep rally high. You’re setting a direction for the organization that you want to pervade decision making and keep people steady over the long term.

You build the strongest connections when decisions are made. Have your teams ask continually, “Will this decision move us further in the direction we wish to go?” Once everyone unifies around this question, coordination becomes possible and it will be much easier for people to move forward, which is what productivity is all about.

Your job becomes keeping your leadership team tied to the company vision, and helping them propagate the vision to their teams in turn. People are more productive when they know where they’re going and feel like they stand a chance of getting there. By reducing their stress and fear, addressing their uncertainty, and linking everyday activities to a future direction, people will be able to concentrate on producing results, rather than just running in circles from their anxiety’s imaginary monsters.

Stever Robbins is President of Leadership Decisionworks, a leadership consulting, speaking, and facilitation firm. His work is featured on LeadershipDecisionworks.com and VentureCoach.com.

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Organizational Learning is No Accident


 
QuestionWhy do companies fail to learn from their mistakes?


 
Answer

With so much riding on success, you would think that companies would be better at learning. Amazingly, it seems as if they fight tooth and nail against learning, often with disastrous results. The reasons, however, make a lot of sense. And once you understand the reasons, you just might be able to make a difference. If not, at least you can feel self-righteous when the insanity starts.

Few of us think much about learning when not in school or in a training environment. But learning doesn’t just happen; it takes reflection and thought. Reflection time used to be built into the world. It took three weeks for a head-office communication to arrive via Pony Express, allowing ample time to ponder and rethink decisions. Now we have overnight letters, junk mail, e-mail, voice mail, fax, cell phones, 30-second-delayed stock quotes, and the expectation that responding immediately is far more important than responding thoughtfully.

Organizations rarely build in time to do thoughtful learning, and when they do, that time is the first to go when emergencies beckon. When we built the original Quicken VISA card, we scheduled a learning debrief and documentation time. But long before the project’s end, other demands squeezed all the slack out of the schedule. The learning review was the first to go. If you don’t do it deliberately, learning won’t happen.

Implementing insights from a learning review is tough. Learning means behavior change. Organizationally, behavior change is daunting.

Think about what organizational change is: It’s changing structure and processes. At the very least, a lot of people must change how they work. Responsibilities, roles, and reporting relationships change. And that’s just in the easy case; learning that your phone system is the bottleneck in your customer service department may demand reworking physical plant and equipment in several locations. Getting the affected people together to coordinate can take weeks. Then new systems must be designed, built, and documented, and everyone must be taught how their jobs have changed. Then there’s still a learning curve for the new procedures. People get up to speed at the new ways of doing things, and only then has the business “learned.” And, oh yes, this all happens in spare time, because the normal workload is still present and has to be carried for the business to survive.

Part of changing the systems and structure is changing the people. A reorg can be done on paper in an afternoon. But changing just one person is hard, even when he or she understands the need for change (Yes, my doctor said to lower my intake of saturated fats, but those cookies at lunch yesterday were so good I just had to eat … six … of them). Ultimately, organizational learning is doomed to failure unless people can learn.

For starters, a lot of learning breaks down because it’s never communicated. Telling someone “Now you report to Sally and your department is no longer sales, it’s account relationships.” still leaves them to figure out how their day-to-day job has changed. They weren’t necessarily privy to the learning discussions, and can’t do anything meaningful without more information about the changes and the context.

Context answers the question “Why is this happening?” It’s especially important when motivating people. People like things to stay the same. But when we find out why the request was made, it suddenly makes sense. Without knowing the “Why?” most change just makes life difficult with no obvious payoff … thus, resistance.

Even if people understand the changes, they may not have the skills for the new job. When Microsoft learned that security matters to customers, Bill Gates proclaimed that all programmers would spend two months just fixing security problems. A great goal, to be sure, but the programmers had spent their careers building systems without regard to security. How can we expect them to suddenly develop the expertise to find—much less fix—any but the simplest security flaws?

And as with any change effort, Microsoft is starting with workers who uniformly lack the skills being developed. Over time, organizational priorities shape the work force. Security-conscious engineers never had a chance to develop their skills at Microsoft, so if they really cared they left years ago for companies more aligned with their style. Those who stayed are the ones who thrive in the “get it out the door and capture the market” mentality. So the change is starting with the employees least likely to intuit how the changes should happen.

Money can come to the rescue by training people. For a simple skill, it can be quick and easy. But training for large skills must be developed, delivered, and practiced. No matter how much we “thrive on chaos” and jump “into the vortex,” new habits take time to develop. Humans only change at a certain rate and we’ve never figured out how to speed that up. The world may change faster than ever, but people just don’t.

The ones who most need to change, however, are the managers. As the organization reshapes itself, resources will shift. That means money and people. Budgets will get slashed. Empires will topple. Even if everyone else is willing, one recalcitrant manager with the right budget authority can halt a learning effort in its tracks. Managers must let go and support the learning for it to happen. Being human, they can have as much difficulty changing their behavior as everyone else.

By now, I’ve probably convinced you that organizational learning is hopeless. But take heart: now that you know why learning is hard, you can deliberately make it easier.

Organizational learning isn’t easy. There’s no perfect solution. Despite the many reasons why learning is hard for individuals and even harder for organizations, it’s just a behavior that can become a habit. Develop the learning habit. Practice moving learning into individual action. Help people change and grow. Over time, the very forces that make change hard will come to your aid: those who don’t like learning will gradually leave, and you’ll attract a culture of people committed to learning. Even when an organization fights it, strong, dedicated action can at least produce pockets of smart business savvy.

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How Your Company Can Learn From Mistakes


 
QuestionAny ideas about how to capture lessons learned for a knowledge base—i.e. getting colleagues to NOT fear repercussions of admitting ‘mistakes’ and/or admitting what they did not know?

 
AnswerFirst, the Truth: most of us are afraid to admit mistakes or ignorance for good reason. Culturally, we don’t tolerate mistakes. Since first grade, we’ve been scolded, punished, given poor grades, passed over for promotion, ostracized, and belittled for our mistakes. 2003’s most popular TV series is “American Idol II.” The first several episodes were a countrywide mockery of talentless pop-star wannabes who at least had the courage to take a risk in front of 250 million people. Their reward? Public ridicule.

Sometimes we get the message that mistakes are OK. A well meaning, understanding person—usually from the Human Potential movement—says in a soft, caring voice, “It’s not a mistake, it’s a learning opportunity.” Two days later, the team member who didn’t make the mistake is promoted to team leader. It was a learning opportunity, all right. The learning was, “Don’t screw up, follow the rules, and we won’t punish you. You’ll take home your weekly paycheck, get your gold watch at retirement, and all will be well.”

Society’s message is, “Don’t admit mistakes or bad things will happen.” Before people will embrace their not-knowing, you have to make it safe, even desirable, to take risks.

The organization must support risk taking


Look first to your reward systems. Most organizations reward outcomes: sell the most, get promoted; meet your ship date, get a bonus; meet your earnings projections, get an analyst’s stamp of approval. The rewards come from reaching an outcome, no matter how it was reached. Imagine Laurie, a shoe salesperson for OutcomeCo. Laurie’s sales tactics work on just 1 percent of the customers. Fortunately, the territory is flush with that 1 percent, so meeting quarterly targets is a breeze. Laurie is motivated to milk the 1 percent, rather than take risks to capture the other 99 percent.

And why should Laurie take risks? Risk taking by its nature produces missed targets much of the time. The solution is to reward the learning process as well as the targets. Imagine LearningCo, where the bonus is based on helping the company move faster toward its goals by gathering useful information, developing better ways of doing things, or identifying what not to do again (mistakes). In LearningCo, Laurie is rewarded for capturing the 1 percent, but is also rewarded for noticing market trends, trying cool new sales tactics that don’t work—no doubt involving unicycles, French horns, and a powdered wig—and inventing cool new products that may someday take over the market.

People do what you pay them for, so pay them to learn. Add personal risk-taking plans to your yearly reviews. Ask, “Are you taking enough risks? How can I help you take more?” Applaud in public (and in private!) when someone fails at something wildly, audaciously new. Celebrate whoever has the wackiest new ideas. Otherwise, time spent thinking outside the box is also time spent thinking outside-the-bonus-structure. Given the choice between outside-the-box poverty and inside-the-BMW business-as-usual, don’t be surprised when people choose the BMW.

It’s hard to reward learning in an outcome-based culture; it takes real strength of conviction. Are you willing to pad your schedule with time for failures and experimentation? Will you step up to the plate and give a larger bonus to someone who learned and failed than to someone who reached an important outcome through sheer luck?

A software company rewarded their flagship product’s manager with a Hawaiian vacation when the product shipped. Since the flagship product accounted for 70 percent of the company’s revenue, the manager was given whatever budget and staff he requested to insure success. He had no need to learn; he could just commandeer more resources. Other managers—whose projects were cannibalized without notice for the flagship project—learned to streamline their development and ship on time with limited resources. Taken at face value, it sounds reasonable to reward the flagship manager more than the other managers, yet he contributed much less to the organization’s ongoing strength and capability. By not rewarding the other managers for their learning in a difficult situation, they eventually lost many of their good performers.

Support risk taking one-on-one


Once the organization structures support risk taking, support the behaviors one-on-one. When you see or hear someone pushing the edge of their thinking, step up and ask questions to push further. Brainstorm with them, and walk the example of encouraging people to push their (and the organization’s) edge. When someone has an idea that could lead to great learning, help her pursue it by giving her time and resources.

Also watch how others treat risk taking and mistakes. If you overhear someone making fun of someone else’s mistake or missed targets, ask them, “I wonder if the mistake was because they were trying something new?” Start exploring in conversation whether those present are taking enough risks. If you’re greeted with cynicism and incredulity, “If we did that, we’d just get fired and lose our bonuses,” celebrate! People are handing you their specific objections to risk taking. You can then ask simply, “What would have to happen for you to feel safe enough go out on a limb and try?”

Start learning reviews with facts


Even with one-on-one support for your people, it’s safest to structure project reviews as a review of facts. In fact, there’s no need to make a retrospective personal. Limit analysis to an examination of what did and didn’t happen. Keep personal responsibility out of it, and bring in personal commitment only when the team begins exploring the future. Once learning becomes commonplace, people will become comfortable owning their part in what happens.

At project reviews, the team will assume that its own behavior was flawless. The ubiquitous “they” was the source of all problems. “They” delivered materials late. “They” passed restrictive legislation. “They” didn’t provide the needed direction or focus. A team must get “they” out of its system before considering its own part in what happened.

Have everyone gather together facing a whiteboard (so it’s “us” vs. the whiteboard), and make a big list of everything that went wrong, no matter whose fault. List facts without judgment. If specific people are mentioned, remove the blame and just describe circumstances. “Bob handed in the report late” would become “Report handed in late.”

Then make a second list of all the good things that happened. Be specific. “We supported each other” is too vague. “We stayed late and took on each other’s work in order to meet a tight deadline” is just about right. At the end of this exercise, you’ll have a list of specific actions that can serve as a jumping-off point.

For each “bad” action, ask the team:

  • What choices could we have made to avoid the bad action?
  • What choices did we make that should have been avoided?
  • What misinterpretations of events, motivations, and actions did we make that led to the bad action?
  • What were the correct interpretations?
  • What do all these imply about what we should and shouldn’t do going forward?


For each “good” action, ask:

  • What did we do to cause this?
  • Is there anything we refrained from doing that allowed this to happen?
  • Did our interpretation of events, motivations, and actions help this action come to pass?
  • What do all these imply about what we should do and shouldn’t do going forward?

What you’re after is team learning. If Bob handed in a report three weeks late, the only question that mentions Bob is the question, “How can the team help Bob get the report done on time?” By discussing facts and framing the team’s involvement as one of future joint responsibility, you are shifting from a frame of “Who did what right/wrong?” to “What happened, and how can we help it happen better next time?”

Cultures—learning or not—become self-fulfilling prophecies. If your company has a conservative culture, it’s probably full of people who self-selected not to take risks and not to admit mistakes. Shifting that culture means addressing fears with substance: make sure your organization supports risk-taking in its rewards and performance measures. Model that support in your daily interactions. And even then, you’ll get the best learning when you carefully separate judgments from facts, and keep people engaged in finding solutions rather than rehashing blame. Our society does a great job of squelching learning instincts, but with patience, care, and precise communication, you can make it safe for a group to re-create a culture of learning and exploration.

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Young Leader, Veteran Team


 
QuestionI am a projects and operations manager at a multinational oil giant based in Cape Town, South Africa. I have seven people reporting to me. I am twenty-four years old and the youngest member of my team—the ages range from thirty to forty-three. What strategies/tactics can I use to gain genuine respect and trust of my direct reports? We have been working as a team for the past seven months.


 
Answer
As you’re finding out, positional authority is only vaguely useful for getting things done in an organization. The right job title will certainly get people to follow directions thanks to social psychology’s “obedience to authority” principle (see “Harnessing the Science of Persuasion”) but it won’t engage or align them unless they respect and trust you. Respect and trust don’t come from an organizational position; they come from building a strong relationship. Trust and respect are intertwined, but distinct; you can give respect without trusting, and you can trust without giving respect.

You’re six years younger than the youngest member of your team, so don’t count on gray hair or decades of industry experience to contribute to building respect. You’ll have to earn it from scratch.

Let’s build respect the old-fashioned way: by showing you’re really good at what you do. Being the youngest on your team, don’t even try to demonstrate the highest technical expertise. Even if you are the best technically, people won’t feel great about being out-performed at their own game by someone half their age. They will feel great, however, at having their own strengths magnified by someone who’s becoming a really good leader. Build respect by demonstrating excellence at leading.

Ask for help


First things first. Address what no one’s talking about: your age. People trust you when they believe you understand them. When you say what everyone is thinking but afraid to say, you’ll build trust rapidly. Done well, admitting when you’re in over your head can be the foundation for strong relationships. “I’m younger than the rest of the team, yet I’m the manager. We have a job to do as a group. I don’t have your industry experience, and I’m counting on you for our success. My job is doing what I can to help you create that success. If we all do our part, we’ll make a superb team.”

You’re laying the issue on the table and using it to frame a mutual working relationship. Yes, you’re young. And that’s just a fact. The team can either get over it, pull together, and get the work done, or they can turn it into a problem and stonewall. Either way, once you’ve had this conversation, you can talk about the choice they’ve made, rather than silently accepting their implicit reaction.

Now, start helping your team shine. If you make your team members successful as individuals and as a group, you’ll earn not only trust and respect, but also that most coveted leadership quality: loyalty.


Set a mission

Teams that shine use each person’s strengths to get the greatest results. But before you delve into strengths, you need a team mission to set the direction.

Make sure everyone knows and buys into the mission. The mission is why the group was formed in the first place. If you don’t have one, ask the group to help develop the exact wording based on the team’s original charter. Have them choose words that are meaningful and emotionally charged to them. What’s important is that the mission be more than just nice words. It will be how people know they’re doing the right thing. If your team will “develop processes that make existing production more effective” and everyone knows it, they know not to spend time brainstorming new product development. Since a mission is a definition of success, make sure it aligns with your boss’s idea of what success means for the team.

Missions and goals may be vague or may become obsolete over time. That’s fine. Notice when they aren’t adequate and fix them as needed. Just make sure everyone shares an understanding of the team’s current direction. Unless goals are clear, communicated, and agreed upon, you’ve already lost the battle.

A big part of your job is keeping people aware of the mission. Many new leaders assume that once the team knows what it’s supposed to do, all will be well. Nope. Daily work sucks people in and they gradually lose sight of the goal. Remind them often. Use the mission to introduce weekly status meetings, and ask the team to relate their status reports to the team’s larger objective.

Figuring out team dynamics


Once you have a common goal, you’re ready to enlist the team in crafting their working relationship. Take the time to understand each person’s unique strengths and blind spots. For each person, challenge the group to ask:

  • What are that person’s strengths?
  • How can that person’s strengths contribute to the group?
  • What support will that person need from the group to use his strengths most effectively and to compensate for weaker areas?

Include yourself in the discussion. You’ll be contributing direction, facilitation, and management. You’ve already said that your strengths don’t include decades of industry experience, so the team can expect you to bring them questions only experience can answer. Likewise, invite them to tell you when their experience contradicts your plans or decisions. With a roadmap of skills and needs, the team provides mutual support towards a common end.

Your job description as a leader is simple: Support your team in whatever they need to meet their goals. Your goal—telling the truth, framing the relationship as mutual support, setting direction, and aligning team members’ strengths—builds culture and working relationships. In the day-to-day, your team’s need for additional support will change. You’ll find yourself acquiring resources, scheduling projects, and shielding people from organizational politics. By occasionally asking, “How can I help you do your job better?” you’ll quickly learn how you can help your people succeed.

The more you demonstrate true commitment and honesty, the more people will trust you. The better you do your job, the more the team will respect you. You’re doing your job well by honestly addressing the status quo and having the group design working relationships that bring out their best. You may be the only manager in your team members’ careers who has taken this approach. They’ll respect and trust you for doing what it takes to make them successful, and won’t care for a moment that you’re twenty years their junior.

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The Essence of Leadership


 
QuestionAs the author of this column, I receive a number of questions each month on the topic of leadership. Manu asks how young men and women in India can be taught to think about leadership. A pharmacy director in the U.S. is having difficulty firing up a small number of workers who are not engaged in their work. Linda wants tips on being more decisive. An executive leading a crossfunctional team asks: “How can I motivate them to stay committed to the team and focused on our goals when they have their day-to-day work responsibilities?”
The answers to these questions begin with the very basics. What is the definition of leadership?


 
Answer
In my experience, “business leadership” is often associated with a CEO of a company who made a lot of money and got rich in the process. Yet when clients tell me their company needs leadership, impressive job titles and large salaries aren’t what they’re after.

We say, “So-and-so is a born leader.” No such thing. Leadership is a relationship between a person and a group plus the skills to guide the group to success. As with any relationship, success depends on both parties. One group’s stellar leader may fail utterly when leading another group. The lack of competent leadership is the number one complaint I hear from non-CEOs.

Rather than just study leaders (thousands of books on leadership cover that ground), I’ve asked hundreds of people who they follow and why. They say leadership is emotional; it’s about inspiration, motivation, and connection. Unlike management, it doesn’t lend itself to systems, structure, and traditional classroom teaching. What inspires people to follow is surprisingly consistent, and surprisingly simple. But be forewarned: Simple doesn’t mean easy!

Establishing the leadership relationship

Call it “vision,” or “mission,” but it all boils down to one thing: First and foremost, people look to leaders for direction. Only by knowing their organization’s direction can people apply themselves to achieve their goals. It needn’t be formally stated; the leader’s actions and decisions convey the direction to the company. The direction needs to pervade every decision and conversation within the company, and it’s the leader who makes that happen. Providing direction for others is a key to creating a leadership relationship.

Even with direction, people must trust a leader. Trust is built on honesty and integrity. People want the truth from their leaders. Outrage from Watergate, the Monica Lewinsky affair, Enron, and many other public scandals were fueled less by the events than by the accused parties’ cover-ups and lies. When Salomon Brothers covered up improper trading in an early-1990s scandal, it fueled the flight of a billion-dollars’ worth of customers as people lost trust in the organization. Warren Buffett rescued the company by using complete and total candor with Wall Street and regulators as a way of restoring trust. Far from being a disaster, telling the truth proved astonishingly effective in quickly restoring the company’s integrity, with a minimum of fines.

Leaders must have integrity, establishing clear values and living those values. One of my clients worked for a newly public company whose CEO urged employees to hold their shares to keep investor confidence high. He then sold several million-dollars’ worth of his own shares. He responded to his employees’ feelings of betrayal saying, “It was just a small percentage of my holdings.” But that didn’t matter! He contradicted himself by selling shares while exhorting his employees to hold theirs. It killed his leadership.

Interestingly, the key is having actions match values, more so than what those values are. If one leader values quality and another values speed-to-market, they will simply attract different people to their organizations. But in either case, they must live their values consistently.

Consistency is another vital leadership element. When a leader changes direction with the market fad-of-the-day, or when his or her values shift according to the latest public opinion polls, people stop following. People want dependable leaders who provide a touchstone in times of change. You may ask: In a world of constant change, don’t we need to shift and adapt? Of course. But you must choose a direction and values that stay stable even while adapting your tactics.

A software company once had a company vision, “We will produce the best ABC widget for DOS the world has every seen.” It was a great vision statement, until Windows squashed the company out of existence. The software maker’s vision was so narrow it couldn’t adapt to change. A mission of, “We will solve the ABC problem for computers worldwide” would have been flexible enough to keep the vision while adapting to technological evolution.

Lastly, followers need to feel connected to their leaders. Leaders almost always connect through shared values; that’s one reason followers leave when a leader doesn’t live his or her values. Helping people feel they are part of something much greater—giving them a personal vision—is another strong tactic. For instance a leader in the healthcare industry may say, “You’re not just joining our company, you’re becoming part of transforming the world of healthcare.” Recognizing and rewarding employee achievement helps cement the connection. On the other hand, taking credit for others’ work is a powerful connection destroyer.

I was surprised by this framework’s simplicity—direction, integrity, consistency, and connection. But its simplicity hides how difficult it is to pull off. It’s difficult because these qualities can’t be faked for long. Creating a direction is easy. Integrating it into every breath and decision is not. Choosing values is easy. Aligning behavior, decision making, policies, and organization around those values is not. Consistency is easy … until things don’t go quite as planned. And connection is easy until things get busy and instinct tells us to stop all this fluffy foolishness and just get down to work.

Building the organization

Direction, integrity, consistency, and connection create the leadership relationship. That’s a first step in building an organization, but it doesn’t address the issue of how leaders make their organizations successful. History is littered with great leaders who didn’t have a clue how to turn their leadership into an enduring business. Let me share some of the highlights:

  • Focus, focus, focus. Know what the organization should be doing and ruthlessly say “no” to anything that would be a distraction.

  • Play to individual strengths. Understand the abilities of everyone you hire and make sure their job plays to their strengths. Don’t spend too much time developing weak areas. If someone can go from good-to-great in their strength, that’s more valuable to the organization than taking someone from poor-to-acceptable. Build organizational competence by teaming up complementary skill sets. Ditto for yourself; know what you’re good at and can do well, and spend most of your time doing that.
  • Play to organizational strengths. Stick to what you’re good at as a company, and get very good at it. If you’re a great software company, opening a chain of high-end fashion clothing stores won’t build a strong organization.
  • You can train people for skills, but it’s much harder to hire attitude. Most companies hire for specific job history or resume keywords, which is precisely the wrong way to go about it.
  • Bring out the best in your people. Hire the best, give them a common direction, and let them do their job. You’ll have a much stronger organization than if you make yourself too important. Remember: Every time you hire someone who isn’t as smart as you, you lower the average IQ of the company.

My favorite books on building organizations are Good to Great: Why Some Companies Make the Leap… and Others Don’t by Jim Collins (it also touches on the “Level 5″ leadership character qualities that correlate with success), The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization by Peter Senge, with Bryan Smigh, Charlotte Roberts, Richard B. Ross, and First, Break All the Rules: What the World’s Greatest Managers Do Differently, by Marcus Buckingham and Curt Coffman. All are research-based, easy to read, and have enough great material to keep you building organizations well into the next century.

Most of this column has concentrated on the “soft” skills. When it comes to leadership, I remember what the COO of a multibillion-dollar company once told me: “At the end of the day the financial and strategic issues are there but they are reducible largely by analytics…the people and process issues are not.” If your goal is to become a successful business leader, your route will be smoother if you spend some time working on relationship skills and “softer” aspects of leading. Because at its heart, leadership is nothing more and nothing less than inspiring others to follow your dream and doing what it takes to make possible their success.

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No Authority? Use Persuasion


 
QuestionI am leading a cross-functional team in a company initiative but the members on the team do not report to me. How can I motivate them to stay committed to the team and stay focused on the goals established when they have their day-to-day work responsibilities?


 
AnswerDéjà vu! My first project management job was the Quicken VISA Card. We were creating software to import credit card statements into financial software. The software had to be integrated with six different Intuit products. I had “dotted-line” relationships galore, but no one who actually reported to me. Much of my team had other primary projects, all with separate deadlines.

Leading a team in those circumstances is an ongoing negotiation between you and your team’s other priorities. You need to capture your team members’ share-of-mind, and keep them wanting to move the project forward. Unlike a direct supervisor, you don’t have the tool of authority to help. You’ll have to rely on relationships and persuasion.

Easy commitment

Think of your job as helping your team members make your project a priority. You need to know enough about them and their competing commitments so you can work the joint project into their lives. Schedule a one-on-one meeting with each member. Find out what else they’re working on, how much time they can commit to the team, and what their big challenges are. Ask about challenges related to their other projects, and spend some time brainstorming ways that you can help them on those projects.

Don’t be afraid to confront the elephant in the room: “Our project isn’t your top priority, so how can we insure we make forward progress while helping you complete your other priorities?” Just asking the question signals that you care about their priorities. They’ll often care about yours in return.

Once you know their other goals, lend them resources. Intervene on their behalf. You heard right: Help them succeed at their competing commitments. The more they fulfill those commitments, the more time they’ll have left for you, and the more they’ll become committed to your project.

Is one of your team distracted by a national product launch, for which the logistics are screwed up? Help straighten out the logistics, even though it isn’t your job. You would love it if she made you a priority over their other commitments, so demonstrate you’re willing to make her the priority as well. Do something selfless for her. She’ll respond. It just might be the first time someone other than a direct supervisor tried to make her life easier.

Staying in mind

Once you’ve opened channels of communication, diligently maintain the relationship. As in many relationships, frequency trumps duration: People remember many brief encounters more than a single long one.

Have you ever attended a full-day project kick-off, followed by six months of silence from the project team? That’s called “getting off to a resounding thud.” When a project starts quietly but comes up daily in conversation, it infiltrates your thinking and becomes part of the culture. That’s what you’re after. You want your project ever-present in your team members’ minds.

But you want it to be present in a good way. Make sure each project-related contact leaves people feeling like it was a good use of time. That means finding excuses to interact that aren’t “status meetings.” Most people dislike status meetings. Personally, I despise them. For frequent-but-brief contacts, connect to provide value to your team members and use as little of their time as possible. Contact them with help, with direction they need, with resources, or with one-on-one requests for status. Remember: Your goal with these contacts is simple awareness.

In addition to awareness, a team for a large project may need to feel a team identity. Do that separately. I believe teamwork should happen naturally, not through off-sites and ropes courses. From your early meetings and ongoing relationship-building, you’ll understand the needs and strengths of your team members. Facilitate their working together, so they build respect for each other as part of getting the work done. Find opportunities for them to help each other and match them up at those times. “Hmm, Sandy, you need help with the bar graph tool? Did you know that Aaron was working on it just last week?” If team cohesion is a real issue, ask them if they would like formal team-building meetings. At all times, let them drive the process in a way that works given their other commitments.

Put your project in context

If people in your organization are generally committed to the goals of the overall organization, you can strengthen commitment to your project by helping them understand how the project fits into the company’s larger goals. For instance, if the company is branching out into new markets with your project, you can help the team understand that the project is strategically important, and not just busy work.

Uncovering Opportunities to Help

Similarly, if there is an executive whose organization spans both your project and your teams’ areas, you might want to ask the executive to talk at a team meeting, to reinforce how much the project matters to the organization.

Appealing to company goals is powerful in a healthy environment, but should be done with caution if morale is low. In some companies (often those with histories of layoffs or unfair treatment), people view the company and its success very cynically. Appealing to company goals won’t be motivating. In many companies, however, people feel loyalty to and care about the company. They’ll be motivated to help the business reach its goals.

There’s no perfect answer to managing a team with other commitments. But if you take the time to make it easy for your team members to contribute, keep your project top-of-mind, and help them understand how important it is, you’ll have the best chance of pulling together a team that can get the job done even amidst challenges and distractions.

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Great Leadership for Great Teams


 
QuestionI am establishing a publishing house in Africa, and have put together a team with great potential. What strategies and skills must I employ to make the most of this potential? What is the best way to lead a crop of great people?

 
AnswerBy assembling a great team, you’ve already put yourself ahead of the game. Rather than jump-starting the company on your own, you’ll have the easiest time, the most fun, and probably the most success by developing the team and letting the team develop the business. You just have to organize them and point them in the right direction.

Have you ever worked in a really high-functioning team? In great teams, each member brings their best to the party. They only do the things they’re best at, and they do them superbly. The work gets divided to play to each person’s strengths.

Identify your team’s strengths

Get the team together and explore each other’s backgrounds, expertise, likes, and dislikes. Match your discoveries to the work, so tasks go to whoever is most likely to finish them well and quickly.

Does a team member have contacts, industry experience, or experience in specific companies that will be valuable to the group? Put them on related tasks. Experience in a functional area or two can make a resident expert in those areas. Those with great people skills should be doing people work, while those who prefer to work behind the scenes can do research and build infrastructure.

Don’t limit yourself to obvious business strengths. Mental traits can be even more valuable over time: long-term thinking, short-term thinking, idea orientation, data orientation, comfort with stress, technological comfort, people skills, strategic thinking, ability to challenge assumptions. There are hundreds of ways to slice mental traits, but whatever your framework, know that mental traits become great strengths when matched with the right challenge.

For example, some people prefer to follow established procedures. The business press worships “innovation,” “disruption,” and “destroying old paradigms.” Well, guess what? “Out-of-the-box” disruption is great for occasional big conceptual leaps, but it’s the established procedures that drive a successful business. And when boarding a plane, who really wants a disruptive, out-of-the-box pilot, anyway? Give me a pilot who loves completing their sixty-point safety checklist today with the same precision and care they used the first time they went through it.

A strength is nothing more—and nothing less—than a skill so well matched to a task that the results are stellar. Know your team’s skills, and you can all begin turning those skills into strengths.

Use your team to hone direction

Once you have the right “who,” the team can pool resources to choose the “what.” You’ve chosen a business, and your team can hone the strategy and tactics you’ll use to make it successful. In the book Good to Great, Jim Collins suggests that a team choose a single concept—your “hedgehog concept” —to unite the business. The hedgehog does only one thing: roll into an ironclad ball. But the strategy works so well that it’s invincible on its own turf. Your hedgehog concept comes from a brew of your individual values, skills, competencies, and a healthy dose of business sense.

Passion. Rally your company around something you can be passionate about. If you’re all deeply devoted to children, youngsters, and family, for goodness sake, don’t concentrate on publishing HTML reference manuals. Publish books for teens, young adults, and families. Choose a strategy that unleashes your collective inspiration!

Being the best. Your hedgehog concept should be something at which you can be the best in the world. It doesn’t mean you are the best, just that you can become the best. This can be trickier than it seems. Your team members and their skills will contribute to deciding where you can excel. Competition can also affect your choices. Even if you have the perfect team, existing players may have locked up areas of opportunity. If I were starting a grocery store, for instance, I’d be careful about hedgehog concepts that put me head-to-head with Wal-Mart. “Huge stores with great service” is a concept that’s taken. Even a superb team probably couldn’t be best in a world dominated by Wal-Mart.

Using Your Team’s Strengths

Economic viability. Your hedgehog concept should make money. You should also be able to identify your economic drivers in the form of a measurable “profit-per-x.” Often, the “x” is not obvious. For your strategy to make sense, you may choose a subtle “x.” Collins relates the story of a company whose strategy was to cluster stores in one geographic area to be most convenient for customers. Rather than measuring profit per store, the company realized that profit per neighborhood was the key to driving operations, compensation systems, and organizational learning in pursuit of convenience for their customers.

Monitor the commitments your team makes

As you begin implementing your strategy, pay close attention to the commitments you make. Commitments provide flexibility and focus, but can also bind you to a long-term course of action. Since your venture is quite young, you don’t have a lot of operating knowledge to choose commitments wisely. So keep yourself as flexible as possible until you’re fairly sure of your course of action.

Commitments come in all shapes and sizes, but some of the most powerful are the agreements you make on how to frame the world. Your beliefs about what customers want and how they behave, if propagated throughout your company, are a very powerful frame. Ken Olsen, founder of Digital Equipment Corporation, was famous for rejecting IBM’s frame that computers meant room-sized boxes that were only useful to large corporations. He built DEC and revolutionized the industry by inventing the minicomputer. Unfortunately, he got caught in his frame of the minicomputer being The Answer. Oops. In the late 1990s, his once-leading company was acquired by upstart PC maker Compaq.

Supplier and distributor relationships can become commitments. Decisions to vertically integrate (or not) can become commitments. Deeply held cultural values can become commitments. Large capital expenditures can become commitments. One entrepreneur recently told me his company had perfected the ability to open a new market and quickly achieve a 25 percent-plus profit margin. Unfortunately, while going up their learning curve, they built factories several times their optimal size. The company’s survival is still touch-and-go—not because it’s a bad business, but because early commitments have saddled the company with unproductive, expensive assets.

Become a leader, not a manager

Finally, spend regular time leading rather than managing. You’ve got a good team, and you’ve jointly chosen a direction. Now your job is keeping the company on track. Keep your team working well together, and make sure you’re building a company where everyone plays to their strengths. Know your hedgehog concept, discuss it regularly, and make sure it guides the company’s daily decisions. Spend time thinking strategically with your management team. Have them project the hedgehog concept out one, three, or five years into the future, and steer the company and its commitments towards that reality.

Your job is creating an environment where your employees can do their best. Give them all the credit. Recognize and celebrate their accomplishments. When they screw up, lead an “after action review” to help them learn. Remember that you’re building a culture that brings out and amplifies everyone’s strengths, so use mistakes as an opportunity to reexamine the strengths of the team and change your tactics, your assumptions, or your organization.

For now, focus on getting your company off the ground. You’ve hired the crew; together you’ve charted the course. Now stand back and let them bring the dream to fruition.

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Inspiring the Jaded Employee

QuestionI am interested in motivating long-term employees who have fifteen-plus years with an organization. This group has heard all the visions of transient leaders who were furthering their own careers, and have become apathetic to improving their own lot, space, or environment. I’m keen to hear the latest thoughts on whether it’s possible for these people to shift their thinking and practices.

AnswerCurrent wisdom says, “Hire for attitude and train for skills.” That’s because humans are stubborn, and don’t like change. Well, that’s not exactly true: We like change when other people are changing to make our lives easier. That’s why social change takes a generation—the old mindset has to die off to make room for the new. But all is not hopeless. When attitudes are just a reaction to the work environment, people can change. Fix the situation, show them it’s fixed, and let the change begin!

People get cynical and apathetic for good reason. Scandal after scandal reveals golden parachutes, endless perks, and upper managers making millions without linking pay and performance (management by objective seems to stop at the EVP level). Jim Collins says in his book Good to Great (HarperCollins 2001) that there’s even evidence that the worse the leader, the more he or she takes home.

But let’s assume in your situation that management is prepared to be accountable, will accept a pay level the rank-and-file consider reasonable, and genuinely wants to create a new company culture.

Do as I do

Start with action, not words; people want results, not promises. You’ll have to start by delivering change that’s in their best interest, and back up your action with words, not the other way around.

A good place to start is by making a visible sacrifice for the company’s common good. You might consider cutting your own pay, bonus, and raise–especially if you’ve had layoffs recently. Give it back to the people who made it: your employees. Increase their benefits, hire back some laid-off workers, or boost salaries. The role model here is Aaron Feuerstein, CEO of Malden Mills, who in 1995 kept 3,000 employees on the payroll after a fire leveled the business. His belief was that his responsibilities extended to employees and the community as well as to shareholders.

Next, give everyone a sense that showing up for work could make his or her lives better. At first, they won’t be able or willing to believe you. You’ll have to combat their lack of emotion with added emotion. Find the emotional connection people have with the company.

Some research indicates that people are most motivated when challenged to use their strengths to reach goals they think are doable. (See Authentic Happiness by Marty Seligman, Simon & Schuster 2002.) Find emotionally important goals by asking, “What’s important about the work you do?” When they answer, ask, “What’s important about that? What will that do?” a couple of times. Their answers will reveal values and passions. If they reply, “for the pay,” and don’t connect with any further goals, they may have no job passion to awaken. If someone’s never had job-related hopes, dreams, or aspirations, he or she probably won’t develop them mid-career. (Significant emotional and spiritual events might do it, but that’s a bit beyond the scope of this column. Business research suggests that it’s easier to change skills than attitudes, so your best bet may be to start hiring people with a more engaged attitude.) Watch people’s faces: If they become animated, or talk with longing in their voice, you’ve tapped into something real.

Now ask them to stay in that passion, and describe their perfect job. Have ‘em go wild. If the past culture has been especially oppressive, you’ll probably be amazed at how unwild their dreams actually are. Things like, “having a desk with three drawers” may be a big deal. Ask them, “What one thing can I do to help you move closer to that dream?”

Listen very, very carefully to the answer; you’re at a critical moment. They’re telling you how you can send an emotional message, not just a verbal one. Whatever they say to do, just do it. Say, “I appreciate your sharing that. I’ll keep it in mind.” Don’t promise anything; they’ve learned that promises get broken. Just quietly get it done. Then check back and ask about next steps. As soon as possible, have them suggest what they can do to drive the change further.

Beware the temptation of self-promotion! Don’t crow about how responsive you’re being. It’s no big deal. Choose small things and take visible actions that people find meaningful. Actions are what people want, not words. They’ll notice, and the word will spread that you’re a leader who actually makes life better, rather than issues empty promises.

Once you’ve taken action and people have evidence that things can be different, it’s time to encourage them step up and do their part. Once they start going, your job is supporting them and helping them align their action with the direction of the overall company.

This isn’t an easy process. If people are truly happy in their work environment, don’t expect them to embrace change. But if the apathy comes from bad leadership and unchanging drudgery, you can change that, and they’ll get it once you start demonstrating that you’re truly different.

Help the change take root

Be vigilant! People will have trouble adapting to you. Even if they’re psyched to take the reins, they may need help coping. I worked with a secretary who dreamed of becoming a project manager. When given her first project, she discovered she didn’t know how to step up and lead. In meetings, she deferred to senior people out of sheer habit, even when the responsibility was hers as project manager. We worked to help her define her role and to acquire the project management skills to master the position. As a leader, you foster change that may push people into new territory. Be sensitive and be prepared to intervene and help insure their success.

As people take charge, they might charge right in someone else’s face. Look out for turf battles, injured egos, feelings of exclusion, and other potential hot spots. When war looks likely, step in and help the participants negotiate a settlement. Get them together, help them find common goals (or remind them of the team’s common goals) and then give them the responsibility for working out their differences. Be available as a resource, but get them in the habit of behaving like mature adults. Once you’ve tapped their motivation, it’s up to you to help them grow to work as a strong team that produces solid, substantial results.

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How Leaders Use Questions


 
QuestionDo you have anything to share regarding the subject of asking the right questions? Someone once said “Forget the answers; focus on asking the right questions.”

 
AnswerI’ll always remember the mid-1980s commercials featuring Lee Iacocca, then considered one of America’s finest business leaders, banging his fist on his board table and making tough proclamations. But consider the power of well-crafted questions. Statements invite agreement or disagreement. Commands invite rebellion or submission. How are questions different? Simple: Questions engage people. Questions can persuade an audience, align an organization, set direction, or focus attention on the things that enable people to learn.

The Socratic method

On a high school debate team, persuasion happens through fortified logic supported by facts and figures. Most companies work this way, too. You just lay out your logic, present supporting data, and voila—full buy-in is a cinch! … Not. That’s because we’re trained to argue when presented with someone else’s logic. As parents of teenagers can attest, the first reaction to being told what to do is to attack any logic, explanation, or data that isn’t what they want to hear.

Questions provoke answers, however. Ask a teenager “Where are you going?” and you will get an answer. (Most likely, “Out.”) What they don’t do is argue with the question or its assumptions. This is the basis for the Socratic method.

Rather than stating your logic, ask a series of questions chosen to lead your listeners to deduce the logic on their own. This questioning will take longer than lecturing, but you’ll save time in the long run. Your listeners will reach their own conclusion based on your questions. They’ll buy into a conclusion they’ve reached much faster than they will buy in to a conclusion that you just state.

To design your questions, first map out the logic that leads to your conclusion. Be thorough! Since you can’t control peoples’ answers, your data and logic must be airtight. (Otherwise be willing to be convinced when you get an answer you hadn’t considered.)

Here’s an example of the Socratic method in action: Imagine you’re trying to change your culture to judge people based on results, rather than hours worked. You could say this:

“What we really care about is producing business results. Working smarter rather than harder can sometimes produce results. We must reward people who get their results quicker by giving them a bonus based on what they produce, rather than the hours they work.”

You can imagine the response: “Sure we will, Pollyanna. And as long as people are working smart, let’s have them work smart for sixty hours a week.”

Here’s how you might present the same logic as a chain of questions. It takes longer, but it keeps the listener engaged in understanding rather than arguing:

Q: Do we want the business to meet and exceed its goals?

A: Of course.

Q: If we’ve met our goals, who should be eligible for bonuses?

A: Everyone who contributed significantly to meeting the goals.

Q: So what matters is that bonuses be related to each person’s contribution toward the goals?

A: Yes.

Q: What if someone figures out a way to work smarter, and reach goals with less work?

A: That would be great!

Q: And that would be as valuable as taking longer and doing it less efficiently?

A: Of course.

Q: So then how we should base our bonus structure?

A: Well… it should be based on working smarter and achieving results.

Using “how” and “why”

One of the biggest challenges in leading an organization is linking big-picture strategy to everyone’s daily actions. It’s all well and good to announce a sweeping vision like, “Our mission is to ensure the health and safety of everyone who uses HealthCo’s products,” but the next day, your facilities person still has to grab a plunger to clear out a clogged toilet. Guess what? She isn’t thinking about the company vision. And once the toilet’s working again, she probably still hasn’t made the connection between what she does and the company’s grand mission. Your job is to help her connect, and you can do it with questions.

In your conversations, ask, “How?” to help people move from high-level goals to specifics. “We want to build the world’s best widgets.” “How?” “Well, first we’ll look up widget in a dictionary. Then, we’ll…”

Ask, “How?” enough and you can go from leadership goals all the way down to the paper clips needed to reach the goals. In fact, most layers of management essentially take their own goals, ask, “How can we reach these?” and use the answers as goals for their direct reports.

Asking “Why?” or “What do we achieve?” does the opposite; it moves from specifics to reasons. We can ask our facilities person, “Why are you fixing the toilet?”

A: “Because people need working facilities.”

Q: “What will having working facilities achieve?”

A: “People can take care of themselves and concentrate on their work.”

Q: “And why do they need to concentrate on their work?”

A: “So they can do good work.”

Q: “And why do they need to do good work?”

A: “To ensure the health and safety of everyone who uses our products.”

Each “Why?” moves to more basic goals and causes. You know your organization is tightly focused when “Why?” eventually leads to the company’s vision, values, or purpose. It’s rare that everyone can link their job to the mission, but boy, is it worth shooting for—it energizes and inspires a workforce even more than stock options in an Internet company.

Create culture using driving questions

Linking jobs to mission sets organizational direction. But questions also drive personal behavior. If your people ask the right questions relentlessly, you can create a powerful culture.

Take Winters Plumbing of Belmont, Massachusetts. The founders have the audacious vision of a billion-dollar plumbing empire. They ask daily, “How can we so satisfy our customers so that they make us the world’s greatest residential plumber?” The answers have led them to reinvent how plumbers are hired and trained, how they dress, what they drive, and how they are paid. Winters just opened a $50,000 training center to help their plumbers keep getting better.

The driving question filters down to individual plumbers. A non-Winters plumber might ask, “How can I stop this leaky sink as quickly as possible?” They’ll fix a sink. But a Winters plumber will ask, “How can I give this customer a great overall experience?” They’ll arrive well groomed, in a freshly laundered uniform, fix the sink, and even vacuum the area, leaving it better than when they arrived. The right driving question makes all the difference.

As Marilee Goldberg, author of The Art of the Question (Wiley 1997), points out, some questions put us in a judgment mindset, while others stimulate creativity and problem solving.

When things go wrong, you can ask, “What happened and whose fault was it?” The answer may produce great diagnosis, along with a culture of blame and a reluctance to take risks.

Asking instead, “What was the root cause and how can we prevent it in the future?” may produce great diagnosis and encourage brainstorming about prevention.

Be careful to revisit your questions from time to time. A real estate developer I worked with surpassed her dreams and built a $20 million empire, but she was heading towards an early grave from overwork. Every morning, she asked, “How can I make more money today?” Good question for amassing $20 million. Bad question for building a satisfying life once the money’s in the bank.

We live in the so-called “information age,” with a virtual epidemic of people asking for data that won’t impact their actions one bit. They just like having data; it makes them feel secure.

If this describes you, resist! Think before asking. Know how you’ll use the information and whether it’s even the right question. I’ve taken dozens of customer satisfaction surveys that asked, “Did your problem get solved?” An important question, to be sure. But they didn’t ask, “Did your problem get solved after four hours on the phone with poorly trained customer service people who made you want to run screaming into the night?” In fact, the December 2003 Harvard Business Review presents excellent research showing that simply asking, “Would you recommend us to a friend? Why or why not?” could generate better information than a ten-page survey.

We’ve barely scratched the surface of how you can use questions as a powerful leadership tool. Questions can also be used to communicate beliefs, set cultural norms, and push the edges of people’s thinking. But for now, may I offer some questions that will help you make this concept real?

  • What are your current goals?
  • How must your organization act to reach those goals?
  • How can you use questions to persuade, align, create culture, and directly measure the world to help you reach those goals faster?

Answer well.

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Is Equity-Based Compensation a Good Thing?

QuestionDo you think an equity-based compensation plan is a good way to motivate employees?

 

AnswerMy first instinct was to write, “Yes, of course.” Halfway through my third rewrite, however, I discovered it’s a wickedly complex question. Yes, equity motivates, but the question is what does it motivate? It has to motivate the right behavior for the right reason to be effective. And even when equity does what you want, its hidden gotchas can still cause a train wreck.

What do you hope equity will motivate people to do? You might find easier ways to get the same results.

One popular reason for giving equity is “We want people thinking like owners.” But think again. Most employees don’t want to think like owners; otherwise, they’d be out there starting companies. Besides, one thing owner’s think is, “I will get a huge percentage of the company’s value when it’s worth something.” I have yet to meet an owner who wants their employees thinking that.

We say, “think like an owner” when we mean, “be cost-conscious.” And equity is supposed to do that? I’ve watched company owners take a salary of $200,000 and spend a week and $10,000 worth of management time deciding whether to buy a $500 laser printer for their product development group. When even owners don’t think like owners when it comes to cutting costs, it’s foolish to ask it of employees.

Besides, owning stock doesn’t necessarily lead to frugality. Even in startups, the small expenditures are peanuts. Employees reason (often correctly) that the big expenses—rent, executive salaries, property, plant, and equipment—will make or break a company. And those decisions are big enough that cost is considered as a matter of course.

If the real goal is frugality, skip the stock. Offer people a budget and give them a percentage of any money left in their budget at year’s end. I guarantee you’ll have cost consciousness oozing from the company’s collective pores.

Perhaps “think like owners” means we want employees to get the big picture, use good judgment, and keep the company’s best interest foremost. A laudable goal, but again unrelated to stock. Lack of big-picture thinking is often a leadership void. If you want holistic thinking, share the big picture with people about ten thousand times, coach them to live it every waking minute, and add “gets the big picture and acts on it” to the yearly performance evaluation on which their bonus is based.

Of course, stock is also used to make up for being woefully underpaid and overworked. It motivates until burnout occurs, at which point nothing can rekindle motivation. Given overseas job migration and record joblessness, unemployment fears probably keep people working 100-hour weeks as well as equity could. And if you don’t like to rely on economic bad times to retain people, spark commitment by aligning the culture and work with the people’s values. Equity is optional.

When equity is justified

A closely related goal may justify equity: retaining employees and creating long-term commitment to the company’s success. Stock does this well, especially if they think it will be worth a lot of money someday. Of course, providing meaningful jobs well matched to individual strengths also keeps people around.

You might also give stock to employees so they share in the long-term value they create. If this is your motive, more power to you! You’re a rare breed. Stock is a great way to do this, and I’ve even known private companies to spread the wealth with simulated “phantom stock” granted to employees.

You want people owning stock for the right reasons—but stock motivates different people for different reasons. If someone wants stock in order to get rich in three years, will they make good long-term decisions for your company? Coming from the start-up world, high-six-figure executive motivation puzzles me. Many of these folks jump companies for higher salaries. In start-up land, executives join because they’re passionate about the opportunity and idea. They get $70,000 for thousand-hour weeks, and bend over backwards to make the company successful. It’s beyond me why a big company would pay upper execs ten times that for employment based on money and not a passionate commitment to the company.

You want people emotionally invested in the company’s success. You can get that investment by giving them meaningful work in service of a worthwhile goal. Hire people who believe in what you’re doing and match them to jobs. If you want to reward their commitment, then give them stock, but make it crystal clear you’re rewarding their innate involvement, not trying to buy it.

Although you can’t expect stock to give people an owner’s attitude, some people really do think like owners once they own stock. They take pride in the company and commit 100 percent. They save money, talk up the company, bring in great employees, and sacrifice to help it succeed. If stock motivates someone to do the Right Thing because they identify with the business, give them that stock today!

Of course, some people think equity will give them control. They believe it will give them a voice. If that’s someone’s motivation, think twice. Other than institutional investors and founders, no one will have enough stock to wield power. Besides, if someone wants control and can’t get it by presenting a lucid case through normal channels, do you really want them trying to exert control through shareholder meetings?

Avoiding the stock gotchas

So stock is a great motivator if it makes employees act like owners, rewards emotional commitment, or shares the long-term wealth. But even in those happy circumstances, granting stock is fraught with peril. In many cases, stock recipients have no idea how to value it and have expectations far out of line with reality.

Stock can stop motivating when reality sets in. We hear “stock” and think, “this is it, baby—billionaire in three months!” If you’re using stock to motivate sacrifice, you better make sure it’ll justify that sacrifice. In twelve start-ups over the last twenty-five years, I’ve seen just how worthless stock can be. If someone waits too long and sees the pot of gold evaporate as the company tanks, equity-based motivation turns to equity-fueled cynicism.

In pre-public companies, stock can be granted, but it is worthless without an IPO or acquisition. I owned stock in a private company for almost twenty years before it was finally worth one-tenth of what I’d originally hoped. Even if a private company gets acquired or reaches the IPO stage, major shareholders may make out OK, but little shareholders can get screwed. It doesn’t do wonders for morale. Resumes begin circulating.

Stock has a place in motivating employees, but check out alternatives carefully.

When the money does come through, jealousy can rear its ugly head. For some weird reason, the further people are above the “game over” amount, the more they care about who has what. Those who’ve stuck it out through thick and thin resent making far less than the founder when a company goes public.

If a company is planning an IPO or acquisition, they’ll lose the “you’ll get rich from our stock” effect once they’re on the other side. In that case, motivation based on something other than stock had better be in place.

Public company gotchas

Gotchas aren’t just for private companies. Big public companies have plenty of gotchas, too. There’s rarely a link between someone’s work and share price. Stock makes a nice bonus for people, but it doesn’t affect their performance because no one can figure out how to have an impact. So stock is a nice reward while the share price rises. When the price falls, though, the company has to resort to motivating with good old-fashioned salary.

Warren Buffett doesn’t believe in linking market price to performance. He won’t give options to top managers. He says a manager can do nothing and stock prices will still rise at a company’s return-on-equity, as long as the company can reinvest in its existing business. Executive options become worth millions, even though the recipients are just taking up space. Buffett instead gives managers ample yearly bonuses, contingent upon their producing actual results above ROE.

Even though top managers are given tons of stock, ostensibly to align their interests with the shareholders, the reality is that large and small shareholders don’t have aligned interests. The top company executive who holds ten million shares of stock would sure like the stock to be worth $10 per share, but still scores a home run even if the price drops down to $1. The smaller shareholder with 10,000 shares, however, cares a lot more about that price. Will the top manager do what it takes to make the smaller shareholder rich?

Vesting also makes people do crazy things. Companies don’t give stock all at once, they “vest” it over time to ensure people will stick around. The gotcha is that it works. They’ll grant 5,000 shares over five years, and the employee gets 1,000 shares each year. Disgruntled employees in a successful company end up with the perverse incentive to stick around until their next vesting date. They happily poison morale, radiate misery, and doom projects while waiting for their stock to vest. In this scenario stock has motivated retention too well; a little less retention would be a good thing.

So where does all this leave us? It leaves us realizing that stock is complex. It motivates, but often for bad reasons. Even when the reasons are right, hidden gotchas can turn it into a negative depending on later events. Stock has a place in motivating employees, but check out alternatives carefully. You may find other motivators work just as well and leave everyone happier in the long run.

Stever Robbins is founder and president of LeadershipDecisionworks, Inc., a national consulting firm that helps corporate companies develop far-reaching leadership and organizational strategies to sustain growth and productivity over time. You can find more of his articles at http://www.SteverRobbins.com.

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Managing Execs Who Didn’t Get the Promotion


 
QuestionThe managing director heads an organization with three vice presidents under him. For the last two years the company has been run this way and has been successful in turning around.

With reorganization on the agenda, it is proposed that one of the vice presidents be appointed as the CEO. This has led to resentment among the other team members. The fallout has been demotivation horizontally and vertically. What could be a “win-win” solution for this issue?

 
AnswerEgo, ego—who’s got the ego? Power, control, ego, and pride seem to account for the lion’s share of business behavior. Emotions at the top are propagated throughout the ranks; problems below may simply reflect problems at the top. So let’s start at the top in fixing the situation.

It sounds like what you really want is a healthy company. A healthy company needs a healthy executive team, and we all know what that looks like: The CEO has the respect and cooperation of the team. The team works well together, with each member bringing their top strengths and competencies to their jobs.

You need to align your executives behind a common vision of what a healthy executive team is. Gather your quarrelsome veeps for a heart-to-heart behind closed doors. They need to clear the air and then align behind a team they can all fully support.

Make sure everyone understands the common goal

Your executives must agree on the goal that’s really before them: creating a leadership structure that lets the turnaround continue and flourish. They’ll be tempted to include a goal like, “reach an accommodation where we three get what we want.” While that’s win-win for the individuals involved, it neglects the fourth player: the greater life form known as The Company. The company’s health affects everyone else working there. Keeping the company well fed and happy is more important than the personal whims of the vice presidents.

In the book Good to Great (HarperCollins, 2001), Jim Collins’s research shows that business leaders build the greatest companies when they put company interests ahead of personal interests. If each VP defines winning as “I get to be CEO,” then win-win is impossible. But since your VPs are surely great CEO material, they all know that a healthy company is the goal, not personal status and power. So make sure they abandon the goal of win-win and instead shoot for healthy leadership structure.

Your executives should keep one thing in mind: If the CEO slot hasn’t actually been awarded yet, their behavior now is part of their audition. If they’re tanking company morale because it looks like they won’t get the job, they’re demonstrating their unfitness for the position.

Introduce the brutal truth

The brutal truth, part one: When three people vie for the top spot, two won’t get it. Period.

The brutal truth, part two: The execs must work as a team and support each other. If they won’t, some of them will have to go—and it won’t be the CEO. All three were happy being VPs when they joined; it’s their elevation of one to CEO that’s causing the problem. The passed-over execs need to find a way to support the new corporate structure or leave. There’s no place in an executive suite for members who won’t do their job.
(Oh, yes… If they leave, don’t give them severance! By punting on the hard work of forging a strong team, they’re not earning their salary, much less anything more. You don’t want to send the message that divisiveness is a great way to collect a golden parachute.)

If they decide they want to stay and forge a strong team, it’s time to help them redesign their attitude.

Clear the air of emotional crud

Your executives may spend their time posturing rather than facing the tough emotions that underlie the situation. They need to confront and resolve the real emotional issues in order for the team to function.

Sometimes, just the chance to voice disappointment is enough. Emotions are often most troublesome when they don’t get to run their course. We may consider some emotions (discouragement, worthlessness) so mortifying that we never learn to acknowledge and move past them. But blocking an emotion before listening to it rarely lets us move on gracefully.

Ask your execs to use their feelings to get to their underlying motivations. This can get into sensitive stuff, so they can do this privately and just bring the result to the meeting. Have them recognize and acknowledge their feelings about the situation. Then have them ask, “What is this emotion trying to tell me?” They can follow this thread to find the real issue underlying the bad morale. That issue can then be brought to the group for discussion.


Emotional rescue

This section is based on my experience with emotions, not on any therapeutic or counseling models. I’m assuming your morale problems come from “everyday” emotional reactions. Severe emotional issues may require therapy. Here are some examples on how I might respond to these emotions.

I feel jealous. Jealousy means someone else has something that you want. Wallow in it for a few minutes, and then realize that someone else’s good fortune isn’t your misfortune. Behind jealousy is “I’m not getting what I deserve.” Sadly, that might be true. Welcome to reality—life isn’t fair. Maybe you deserved the CEO spot, maybe not. Either way, jealousy isn’t healthy for you or the team. You were happy as a VP before. Be happy now. If you can’t, consider therapy or coaching. The issue for the group: how to make sure that each person feels he or she is getting the rewards he or she deserves.

I feel betrayed. Betrayal means someone didn’t fulfill a promise. Who promised what? Be precise. If the board promised you’d be CEO and they didn’t follow through, you may have a legitimate complaint. If a board member mentioned you were in the running, you may have read a promise into that. Talk through the promise and subsequent events with your alleged betrayer and clear the air. Often, however, betrayal is a neat smokescreen for emotions like discouragement or worthlessness, which may be more awkward to confront.

I feel discouraged/small/worthless. Feeling discouraged means you aren’t getting results, and you’re internalizing the cause. Does being passed over for CEO mean you’ve hit your competence limit? Not at all! Promotions are only vaguely related to competence, even in the best of times. We’re raised to believe that every little thing that does (or doesn’t) happen to us directly reflects our ability as human beings. The real world is more complex and usually a lot more arbitrary. If three equal candidates compete for one job, two must be passed over. It’s not about competence; it’s about only having one job opening. The issue for the group: how to identify the executives’ competencies and meld them into their jobs.

I feel contempt. Contempt comes from believing that someone is incompetent in an area you’re super-competent. If you think the new CEO is an incompetent boob, you won’t buy in to the direction, strategy, or tactics he or she is setting. It’s time for persuasion! The issue for the group: Make sure the strategy reflects the entire team’s expertise and buy-in. Spend some time airing doubts, questions, and concerns. Create something that you can believe in. If you can’t, though, it’s time for separation. An executive’s job is to help a company succeed. While the current CEO’s plans may not guarantee success, executive friction, in-fighting, and sabotage will virtually guarantee failure.

I feel hopeless. Hopelessness just means you’ve stopped anticipating future success. So start now! Create a rich image for yourself of how you can make your current position a job that really lets you shine. The issue for the group is how to make that happen.

I feel anger. Anger means you feel threatened. It often comes from fear: fear of survival, of being unworthy, of loss, etc. Dig around for the underlying fear. You can handle some fears on your own. If you feel your survival is threatened, a little financial planning may make it obvious that a $200,000 salary is a tad above the poverty line. Some fears can be brought to the group. If you fear you’ll lose respect because you weren’t promoted, the issue for the group would be: How can you be sure you are still portrayed and treated respectfully?

I want more money, status, and control. Who doesn’t? If you can’t marry into it and didn’t get this promotion, stop griping and start building. Complete the turnaround and help grow the business. Growth brings more money, status, and control automatically. If that’s not enough, reopen compensation negotiations. If you’re only in it for the cash, it’s worth rethinking the fit between you and the company. The past few years have given us dozens of examples where executives who care only about the dollars can kill the business faster than any competitor.

Create a team they can align behind

Once level heads have prevailed, everyone has to ask the hard questions: Can I support the new CEO’s plans and strategies, and can I commit wholeheartedly to my current position as I do so?

If anyone answers “no,” it’s time to start negotiating graceful exits. At the end of the day, an executive who can’t get behind the company must be traded in for a better model. They’ll make decisions for their own best interests, and not for the business’s long-term benefit. “It’s all about me” behavior can be fine at manager or director levels but, especially during troubled times, it can tear your company apart at the leadership level.

Your situation is a tough one. The vertical morale problems will probably be OK once the top levels get sorted out. But this is a case where it’s not about what’s rational; it’s all about emotion. The top team has to settle its issues and back the CEO to heal any rifts in the company. The CEO has been chosen. Strong emotions are natural, but the solution is to use them to identify issues that can be addressed, and then move on. Whining changes nothing, and certainly doesn’t build a healthy company. It’s time for the team to buy in or say “bye-bye.”

© 2004 by Stever Robbins. All rights reserved in all media.

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Is Belief Crucial To Success?

QuestionDo I have to believe in what I am doing in order to be successful at it?

 
AnswerThe power of belief is the stuff of legend. In The Wizard of Oz, Dorothy must defeat the Wicked Witch of the West to build enough belief so the magic ruby slippers will send her home. But in real life, belief involves both more and less than Dorothy endured. Depending on what you’re doing, belief may be optional. But even then, belief makes life much easier. And if you’re leading an organization, belief is one of your most powerful tools.

When you believe, it comes out in your body language, tone of voice, and facial expressions. Even great liars can’t fake it for very long; they always give it away somehow. Poker players call this a “tell.” It’s how you know someone’s bluffing. They may shift in their seat, play with their ring, or otherwise reveal a lack of sincerity.

You’ve seen it in personal life. When my significant other invites me to the ballet, I say, “yes” in the interest of domestic harmony. But the insincerity of that “yes” is loud and clear. When we go out to an event we’ll both enjoy, though, we both know it, and it strengthens the relationship.

It’s the same in business. When people don’t believe, their relationships fade a bit. A mid-size company had employees who had only contempt for the CEO and his business practices. Watching them give job interviews was a hoot. Candidates asked, “How do you like it here?” They replied, forced through a fake smile, “It’s a great place to work. I love it so much.” They gave conflicting signals, and the interviewees knew something wasn’t right.

Usually, other people notice the lack of belief but don’t consciously know how to interpret it. They may think you don’t trust them, or you’re distracted, or the deal at hand is a fraud, or that you’re just distant. But however you slice it, they won’t feel a strong connection, because you’ll be holding back.

If success demands good relationships with customers, vendors, and employees, a lack of belief can be a problem.

Belief brings commitment and persistence

Is there anything you love so much you’d do it every day and enjoy it every time? I’ll bet it’s something you believe in. When we believe in a vision, we have the energy to keep pursuing it. We do what it takes to help bring the vision to life.

If your company is treading water, creativity and persistence may be optional, but for growing companies and companies in competitive environments, innovation and problem solving are keys to success. When you believe in a possibility of achieving something, you’ll bring your full creativity to bear and will pursue it relentlessly. When things go wrong, you’ll be out in front with new ideas, schemes to hatch, plans to make, and alternatives to pursue.

A nonprofit’s board met for a day to brainstorm strategy. Their organization wasn’t doing as well as they wanted, and they needed some serious survival plans. People sat around coming up with a vague thought here and there, but the conversation went nowhere. Finally, a member spoke up: “I just don’t believe in the goals we’ve chosen.” After lively discussion, the group chose new goals that everyone believed in. And suddenly, there weren’t enough flip charts to hold all the new ideas.

When you doubt the organization or its goals, it’s an ongoing struggle to stay motivated. You think, “This must get done, even though I don’t believe it’s the right thing to do, or a worthwhile thing to do.” Naturally, you’ll disengage and just go through the motions—what psychologists call “cognitive dissonance.” Much of your energy goes to fighting the tension between “must do” and “don’t believe” instead of going directly to finish the task.

When you’re completely aligned, you’ll be at your best, body and soul. If it ends up that you don’t reach the goal, it won’t be for lack of trying!

Belief impacts morale—especially for leaders

The biggest issue with belief is morale. Most of us just aren’t very happy when doing something we don’t believe in. We might resign ourselves to it, but futile resignation isn’t exactly a fun place to live day by day. Furthermore, it’s probably not going to bring out your best.

Psychologist Marty Seligman relates in his book Authentic Happiness (Simon & Schuster 2002) that we’re happiest when using our personal strengths to overcome challenges, all while doing something we believe makes a difference. Did you catch that last part? People are happiest in a job they find worthwhile. In fact, people often work harder for fewer rewards for causes linked to deep belief.

If you’re in a leadership position, it isn’t just your morale that will tank; everyone who works for you will feel it, too. A leader whose heart isn’t in it is deadly to a group. Even the group members who want to commit will feel like they’re committing to a phony cause.

People watch leaders to know how to behave. They don’t listen to their leaders; they watch. If you’re listless, if you’re holding back, if you’re putting in 50 percent effort, they’ll know, even if you don’t. Your behavior will signal everyone around you to disengage.

In coaching, this comes up over and over. An executive wonders why their team isn’t performing. I’ll ask, “What would a high-performing team look like?” They’ll tell me, showing all the enthusiasm of a slug on a salt lick. When I point out the discrepancy, we suddenly recognize that the team is performing—exactly to the belief level of the executive. Change the executive and the team changes as well.

After all, if you don’t believe, how will you be able to recruit and lead a team who does?

Sometimes, you don’t need belief to succeed

So sometimes, believing is critical to success. But plenty of jobs don’t depend on forming deep relationships, working with commitment and creativity, or leading people. If you’re in a transaction-oriented environment, belief is probably optional. And let’s face it; front-line retail jobs rarely require belief. Those jobs have massive turnover, and no one expects spiritual engagement from a fast-food checkout person.

But I’ve been talking only about belief, when you also asked about success.

Many people think success means making a lot of money, getting a lot of status, and having a lot of power. It turns out they’re wrong. Studies on success show that above subsistence level, more external “stuff” doesn’t mean more happiness. People who feel unsuccessful keep finding new ways to feel that way on different playing fields. “I don’t have the money for a new TV” becomes “I’m not getting a high-enough return on my investments.”

The people who really feel successful get their success as much from the process as the end results. Yes, they may want money, power, and status. But they get it in ways they enjoy, so they feel successful all along the way. Really thoughtful people use a “balanced scorecard” approach, and consider friendships, community, family, and, yes, doing something they believe in as essential ingredients in a good life.

Warren Buffett, history’s most successful investor, says he invests because he loves it. Even as a kid, he counted vending machine bottle caps to understand what was selling. His love led to persistence, skill, and finally, billions. He lives a modest lifestyle with his wife in the house they bought forty years ago. His joy comes from living, not having. He could have power, status, and huge skyscrapers bearing his name. But he wouldn’t enjoy that. For him, success is eating at McDonald’s and drinking Cherry Coke—well within the means of us non-billionaires. And, of course, investing, which he’d be doing it even if it didn’t pay.

So can you make money without believing in what you’re doing? Sure. In relationships, creativity, and culture building, belief helps. But either way, only you can answer the real question: Do you need belief to feel successful? And if the answer is “yes,” what are you waiting for?

© 2004 by Stever Robbins. All rights reserved in all media.

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Why Diversity Is an Opportunity

QuestionHow should we think about the importance of diversity, and how best to understand and value cultural differences?

AnswerDiversity, the misunderstood child of the Age of Aquarius and Political Correctness, is an incredibly powerful tool for an organization. Diversity brings thoughts, feelings, and cultural knowledge that benefits decision making, marketing, operations, culture-building, hiring, firing—just about everything a business does. But its true power comes out only when diversity starts at the top and pervades the business. Alas, most businesses score dismally when it comes to understanding and using difference.

In my experience, many diversity programs are really anti-harassment programs. Someone says something offensive about a different race, gender, religion, geographic origin, or sexual orientation. The diversity police jump in and mandate “diversity training.” It’s a good thing they jump in—inaction sends the wrong message and can bring big lawsuits—but the motivation and the training many times boils down to, “Don’t say these things because people get upset.” In really enlightened companies, diversity training happens before it’s needed, so that first incident can be avoided, too.

Don’t get me wrong; diversity training can produce some effect. The true bigots who don’t intend to change at least know now which conversations to save for behind closed doors. People who are ignorant but care will be able to change a bit. But don’t expect much benefit beyond a decline in harassment.

What is diversity?

Diversity takes many forms. We mostly notice and legislate the visible stuff: people have different skin color, talk with different accents, wear different clothes, have different (dis)abilities, are different ages, have same-sex partners, practice different religions, and use different hands when they write. Most discrimination targets the visible stuff, and many anti-harassment programs help people understand that despite surface differences, deep down all people are worthwhile and valuable.

Surface diversity is what we deal with when we wish to avoid problems. We teach people to value the person within. But it’s the diversity within that brings great benefits. Inner diversity includes the Psych 101 stuff—different personality and work styles, brain dominance, etc. More subtly, it includes different thinking styles and different fundamental assumptions about the way the world works.

It’s easy to assume outer diversity signals inner diversity and vice versa. Not necessarily. A professor once remarked within my earshot, “Never again will most of these students be somewhere with such diversity of race and geographic origin. And never again will they be somewhere with such uniformity of thought and attitude.”

Inner diversity gives the biggest bang for your buck. Personality and behavior style profiles are widely used to help groups identify and talk about inner differences. Not only can the distinctions help explain why people clash, but used in team building, they can help you balance the skills needed to finish a project. For example, one profile distinguishes “people people” from those who are task and process oriented. If you were designing a customer service call center, you would involve both profile types so your systems are efficient but also give a good interpersonal experience.

Profiles can also help match people with jobs. Using profiles, some companies discover all top performers share common attributes. With that knowledge, they can do a better job matching. If Myers-Briggs ESTJs make the best salespeople for your organization, your chronically dissatisfied engineer whose profile is ESTJ may become a huge resource if given a chance in sales.

Cultural differences and deep learning

Though personality diversity is valuable for team building and job matching, even different personalities from the same culture will share a common set of cultural assumptions. The invisible diversities of culture, religion, and value systems are where you can reap real business benefit.

Cultural differences are where you discover the most basic assumptions that you’ve never even questioned. This causes problems; questioning deep assumptions can feel very threatening. So threatening, in fact, that reactions are defensive bordering on violent. But if you can manage the emotion and create a safe space to play “what if,” you may find your thinking changes dramatically.

A reader wrote in last month, “Americans work 50 percent more per week than people in my country and take four weeks fewer vacation, yet they don’t get more done than we did in my country.” America has cultural assumptions about working a lot and measuring it by face time. A foreigner can point out that there’s another way. An American company that listens and learns might be able to offer six weeks of vacation and short hours to attract outstanding employees. (And I know of at least one company that has done this.)

The Dalai Lama points out in his book The Art of Happiness that Eastern cultures believe in reincarnation. As such, they approach even daily tasks very differently. So I tried it (believing, that is, not reincarnating). Believing in future lives removes a lot of my daily stress in this one and also gives me a much longer-term time horizon. Suddenly, consuming my grandchildren’s oil seems like a bigger deal, because those grandchildren might be me, reincarnated!

A company that explores a reincarnation belief might end up taking a long-term view on their products. Seventh Generation does just that. They produce environmentally friendly household products. Their cultural source isn’t reincarnation, however. The name refers to the Iroquois Confederacy practice of considering consequences seven generations out.

Cultural differences can hint at new markets. Gloria Estefan recognized that the American music business is highly English-centric and has built her own business empire in America’s Latin and Spanish-speaking populations—populations almost invisible in mainstream media. The wildly popular reality TV show, “Queer Eye for the Straight Guy,” has helped the mainstream world enjoy “gay sensibility,” with USA Today reporting (March 3, 2004) that sales for products mentioned on the show soar as much as 300 percent.

Challenging an assumption doesn’t automatically point to opportunity, but it’s a start. A European colleague proposed hiring me to speak in his country. I asked, “Where should I stay? What are the good areas of town?” He was amused. “A very American question!” he proclaimed. “Have you ever considered a town might have only good areas?” Um, no. I never had. Even before our current fear-filled time, “bad areas of town” were a given. Knowing it’s possible prompts me to ask how to make it happen. Is there a business there? I don’t know. But an urban planning or civil engineering firm might find a few trips overseas could trigger some great ideas.

Some of the ways to extract diversity’s benefits:

  • Identify previously overlooked cultural markets.
  • Create new products for existing markets.
  • Change corporate culture to attract a different employee mix.
  • Form relationships and making inroads internationally.
  • Get things done in better ways.
  • “Comfy” diversity programs held for compliance reasons that skirt the real issues waste time and money. Your leadership challenge is to draw out the differences and help the group safely explore what those differences suggest about the business. You might find new opportunity, but either way, it’s simply the right thing to do in an increasingly diverse workforce. It helps people feel valued and more worthwhile, and at the end of the day, why do we even have business if not to have more worthwhile, valuable lives? That’s my underlying assumption, and if it isn’t yours, your first diversity assignment is to try it on for size.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Minimizing the Risks of Leadership

    Question A leader can be brought down by a single follower’s actions. How can a leader reduce the risk?

     
    Answer We dream great dreams and set goals so huge we need organizations to achieve them. Where people organize, leaders emerge. We want to be those leaders.

    Leaders become the focus of an organization’s results. When things go right, leaders get the credit, glory, and money. Jack Welch receives the praise, but his accomplishments took 305,000 employees twenty years to produce.

    When things go wrong, leaders can take the fall. The Middle East peace process is regularly derailed by disgruntled people largely acting alone, and it sets back the efforts—and eventually credibility—of the leaders by decades.

    Good decisions minimize risk

    One way to decrease downside risk is by helping your people make good decisions about what and what not to do. Sales programs teach that decisions are made with emotion. Logic is only used to justify the decision. So you’ll have to work with the emotions of your organization. (By the way, this is why I believe the current compliance fad won’t stem unethical business behavior. Compliance is about setting up and following rules. Rules are left-brain, logical thinking. Without addressing the underlying emotional drives, the pressure to win by any means possible will eventually resurface.)

    People take emotional cues by watching their leaders. They don’t listen to speeches. They don’t read laminated wallet-cards espousing values. They learn how to act by watching you, especially when you’re off-balance and your guard is down.

    So first off, give your own values a good spring cleaning. The last few years have shown us business leaders who have acted immorally, unethically, and sometimes illegally to succeed in business. If you set a bad example, people will follow, you’ll get into trouble, and frankly, you’ll deserve it.

    Do you charge occasional personal expenses to the business? Do you develop a blind spot when your company violates a little regulation here or there? “After all,” you’ll say at your arraignment, “it’s no big deal. Everyone does it.” Beware! Your organization will be watching and magnifying the values you demonstrate. So clean up your act now. You don’t want John Grisham turning your story into a best-selling novel.

    You want your company infused with clear, consistent values that people can use to make decisions. Johnson & Johnson’s credo clearly spells out J&J’s values: customer well-being, employee well-being, community well-being, and shareholder well-being. In that order. It’s so clear that every employee can use the credo to know when to act, and when to stop. Given the credo, J&J’s famous Tylenol recall makes complete sense.

    Propagate values via stories

    People learn values through stories. The way a story’s hero behaves tells listeners what values are Good. The Evil Villain demonstrates Bad Values.

    Businesses develop myths that illustrate their values. Nordstrom’s devotion to their customer return policy shines in the story of an employee giving a customer a refund for returning tires, even though Nordstrom’s is a clothing store. A FedEx employee made good on the overnight promise by renting a helicopter in a storm to deliver a single package on time. These are the legends that convey the important values.

    Telling stories isn’t enough. Watch for people who embody good, values-based decisions and give them public recognition. Celebrate not only their results, but the values they’ve shown while getting the results.

    On the other side, come down quick and hard when someone knowingly crosses the line. If it’s bad, it’s a firing offense. And don’t reward the right outcome when it’s reached by doing the wrong thing. If a salesperson makes quota by lying to customers, don’t say, “Shame shame” and still pay their bonus. That’s a mixed message, and a mixed message sends no message. Your salesperson—and everyone else—will notice the bonus and ignore the shame. Only pay them for the sales they brought in ethically. If they quit, celebrate; that’s one unethical salesperson who won’t be landing you in jail. If they shape up, celebrate; you’ve made a difference. Either way, you’ve sent a powerful message that doing things right is important.

    Discuss decisions to surface values

    Of course, you’d rather just hire good people to begin with, people who act with integrity once they’re on board. You can’t just ask someone in a job interview what their values are and expect an accurate answer. Most people don’t know their values. But decisions are where values kick into action. So ask candidates open-ended questions about past decisions (recent past behavior predicts future behavior fairly well). Their answers will imply values. If they don’t have relevant past experience, hypothetical questions are next-best. “There’s a regulation that is keeping you from doing your job. Everyone knows the regulation is there for historical reasons only, breaking it won’t hurt anyone, and it will result in great profits for the firm. What do you do? How do you justify your decision to your manager?”

    These are process questions; they ask for reflection on how things get done. Encourage regular process discussions. They get people used to thinking about what’s OK and what’s not. If business is fast-paced or requires big risks, openly questioning how business is happening make it more likely to bring outside-the-bounds schemes to light early.

    Ignoring process and focusing solely on outcomes is dangerous. It’s one way to encourage deliberate tomfoolery. In reports of Enron’s collapse, Jeff Skilling never told employees to act unethically. He simply demanded extreme results and made it clear any behavior was acceptable to produce them. In the recent Abu Ghraib prison scandal, the alleged command to “soften up” prisoners for interrogation turned into torture. A simple process comment could have avoided the scandals: “By the way, here’s a copy of the Geneva Convention. Stay within these bounds.”

    Your goal is to get people feeling accountable for their own actions and making value-aligned judgments. Trader Nick Leeson brought down Barings Bank through ongoing fraud. In his book, he’s amazed that his bosses didn’t stop him. Yes, their oversight was shoddy. But their preparation was even worse. Those bosses never cultivated Leeson’s feeling of personal accountability for his actions. Even after serving prison time and writing his book, he was still looking to them to be his conscience.

    You grow personal accountability by treating people as adults. Discuss their decisions frankly. Make them understand you’re counting on their good judgment. Give them authority, but only when you’re confident they can use it responsibly. If things go wrong, hold them accountable for recovery and learning from the mistakes. And beware of micro-management! Telling people every detail of how things must get done lets them run on automatic, rather than take responsibility for making the right choices.

    If you haven’t the luxury of being sure of people before handing them the reins, try surprise “decision audits” from time to time. Drop by a project, ask about recent decisions, and discuss how those decisions were made. Don’t micro-manage, but simply take in information to understand how values are playing out. Have your managers hold similar audits, and as long as they’re taken seriously, you’ll build a culture that expresses your values.

    Ultimately, that’s the best you can do. A leader will always be responsible for the sins of the followers. Alas, that’s the nature of the job. We can tell people the rules, but we minimize our risk through values as well as rules. By modeling clear values, discussing them, and incorporating them into the way decisions get made, we can make it much more likely our organization will do the right things.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Titles Don’t Make Leaders

    QuestionAll of the talk about “leadership” often ignores the fact that leadership is powerful at any and all levels—and that you do not need to be heading up an organization to be an effective leader. Some of the most effective business people that I know are in roles that are not supervisory. But they can move teams and individuals better than some (most) managers—precisely because they know when it’s appropriate to lead and when it’s appropriate to follow. Many so-called “leaders” have not mastered this! How would you respond?

    Answer

    “Lead, follow, or get out of the way.”—Anonymous

    If you have ever been on a team with more than one self-styled leader, you have seen dysfunction at its finest. In-fighting, lack of agreement, sneakiness, and outright sabotage cause things to crash and burn. But is anyone surprised? If you’re a “leader” on a team, asking how you can lead or follow, you may have already failed. “Lead or follow” makes it sound like the two are mutually exclusive. Not so. The confusion comes because we don’t know what it means to lead.

    “Too many cooks spoil the broth.” It happens mainly when everyone is trying to tell everyone else what to do. That isn’t leading; that’s micromanaging, and it’s not part of the leader’s job.

    A leader’s job is to ensure the success of the organization—no matter who reports to whom in any given group. At every moment she should be asking, “Is what I’m doing helping the group to succeed?” Sometimes we think we are helping, but we are just raising the group’s blood pressure with our behavior. You might even ask the group, in addition to yourself. If the answer is yes, you are doing the right thing; keep doing it. If the answer is no, stop! Decide you’ll start being part of the solution, and find a way to bring your basic leadership skills to the fore.

    Setting the course

    Your basic job is setting direction, not giving directions. If it’s your organization you are working with, by all means make sure to assert yourself in determining the highest-level goals of the group. But if you are in a group where it’s not your responsibility to set direction, then don’t. Only do it if the team has no charter and the team has not previously agreed on direction.

    The group was presumably assembled for a reason—that’s the charter. Help remind the group why it exists, but don’t go changing its reason. If the basic charter must change, that’s the job of the group’s sponsor. Of course, in the extremely unlikely event you run across the group with no clear charter and no clear owner, consider it an invite for a land grab. Cram your direction down the team’s throat, and enlarge your empire just a bit more.

    Ducks in a row

    Another aspect of your job is aligning teams. Usually you align your own team, but nothing says you can’t spread the love when working with others. Once the goals are clear, help everyone match their part of the job. Offer your help to the group, but don’t force yourself on them. If you see someone screwing up big time, ask them questions to explore the link between their actions and their goals. Be humble! Ask with genuine curiosity, “Could you help me understand the link between the insanity you’re engaged in and what you believe to be the goal?”

    Sometimes you’ll learn the insanity makes sense, and you’re wrong. They’re doing something you never thought of. Other times, you will find you must ask further questions to help them understand where their plans need shoring up. If they remain dead set on the wrong course, it’s your call: Let them learn or make a stink. In my experience, if someone is smart, it’s usually safest to give them the benefit of the doubt. They may surprise you. If you decide to battle, think carefully. Choose battles wisely, as they’re a poor use of time and, often, issues that seem earth-shattering now just aren’t in the long run.

    Is this leading or following? You are certainly following the group charter. You are certainly helping group members figure out how to support the group. And as long as you are committed to the success of the group, you are leading. Even if you aren’t the one giving directions.

    Support your mates

    The other leadership skill you can bring to any group is support. Toss out the image of leader as someone in the 37th floor office, aloof from the teeming masses. When work is getting done, the leader is the least important team member. Your job is to make it easy for everyone else to get their jobs done. If that means taking out the trash and picking up low fat, low carb, organic pizza for the team so they can work straight through, then so be it. And you can really go the extra mile and (don’t faint) support a team even if it isn’t yours! If that’s what is needed to help the business succeed, go for it. It’s a much needed, often hyped, but rarely practiced virtue called teamwork.
    Is taking out the trash leading or following? It doesn’t matter. It’s getting the job done.

    So you like control. Get over it. When you’re in a team, don’t ask whether or not you’re leading it; ask whether or not you’re contributing to its success. Stop being dazzled by your own brilliance. Spend your time helping people know where they are going, link their actions to the goals, and support them as they get there. You’ll be perceived as a leader, regardless of title. The team will succeed, the business will succeed, and you can say, “I helped.”

    “But wait,” you say, “how will I make sure I’m making a difference that matters if I’m just taking out the trash?” That’s the point. Sometimes, taking out the trash is the most powerful way to lead. Remember, two billion years from now, we’ll all be a frozen hunk of ice, so don’t sweat the small stuff, and fighting over leading a team is small stuff.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    The “Pull Leadership” Manifesto

    Eighteen months after starting this column, business leadership still hasn’t reached perfection. Haven’t they been reading? Why is good leadership still so rare?

    Maybe it’s because we use a whacked-out definition of leadership. “Leader” has become code for “rich guy with an impressive title who orders others around.” But leading by giving orders left and right with no accountability doesn’t work. We’re living in a world of low loyalty, high mobility, and extreme uncertainty. “Push” leadership will push people right out the door. We need leaders who inspire others to follow, who engender loyalty. We need leaders who practice “pull” leadership.

    Pull leaders don’t give orders; they create social systems that inspire people to join

    They do it using principles that many people in official leadership positions wouldn’t follow if their lives depended on it.

    Pull leaders take responsibility for the success of their organization and their people

    Responsibility isn’t given; it’s taken. The loss of faith in American business starting earlier this decade has been driven by a batch of CEOs who have chosen not to take responsibility for the consequences of their actions, even when the responsibility was required by law. Pull leaders take responsibility voluntarily, even when it’s optional. You want to change how your company does business, but you’re too junior to have an effect? So what! A corporate trainer saw students struggle with the company’s product, so he wrote up the shortcomings, proposed solutions, and sent the CEO a weekly dispatch. He took responsibility for leading a product quality effort, despite being a twenty-three-year-old new hire.

    Pull leaders believe that success of the organization is their responsibility, no matter what their job titles are. They don’t have to do all the work themselves, but they have to make it possible for everyone else to succeed. They lose sleep worrying if they’ve done enough for their people to be great in their jobs. They hope they’ve provided the right tools and training. They ask constantly how they can create a culture that helps others achieve.

    Because organizational success isn’t enough for them, pull leaders also take responsibility for helping their people succeed as individuals. They learn enough to encourage and support each person reach their goals, even goals that aren’t necessarily about work. Think about it for a minute. If you dream of attending a Red Sox game in box seats and your boss arranges it as a holiday present, wouldn’t you be inclined to be more loyal than if your boss gave out the usual all-expenses-paid trip to the annual cow tipping contest?

    Pull leaders work to become attractive to others

    In taking responsibility, pull leaders realize their greatest tool is themselves. So they work hard at perfecting that tool! You’d think Michelle LaBrosse of Cheetah Learning would be relaxing on a tropical island after building a highly successful multimillion-dollar business in less than five years. Nope. She reads constantly, attends top-level executive education programs, and is constantly asking how she can get better. Her people love her and she has no problem finding employees.

    Becoming attractive isn’t just a matter of reading up on business. Pull leaders work on their interpersonal skills. They get their own lives in order, knowing full well that if they aren’t successful in their own lives, they don’t have the emotional well to draw from to be there for their people. Much to my surprise, in one Harvard Business School panel discussion, several highly successful CEOs mentioned that they meditate for fifteen to twenty minutes a day. They also advocated being socially involved and giving back to the community. By working to become better people, they became better leaders as well.

    Pull leaders align and inspire with values

    Values are the second most powerful force for bringing people together to achieve great things. Pull leaders know their own values, and demonstrate them when they act. And I’m not talking about impressive balcony speeches on “quality” or “competitiveness” or “valuing people.” Politicians give those speeches and aren’t exactly at the top of most people’s most-respected list. What matters to pull leaders are their values in action. They examine their own actions honestly and without judgment, discover what values they embody, and either change their behavior or choose to stand for the values they already embody.

    The Elements of Pull Leadership

    The most powerful values message is sent when the pull leader is clearly taking a risk to stay true to his or her values. An engineer cared enough about quality to stand up in a department meeting and tell the development team that the decision to ship a low-quality product to meet a deadline was a betrayal of their commitment to quality. Risky? Sure. He could have gotten fired. But once word spread, he received great underground support as a steward of closely-held values.

    Pull leaders are stewards of their organizations and employees

    Stewardship is a key element of pull leaders. A steward is a caretaker of another’s property. A pull leader takes care of their organization and employees, without stepping over the line into behaving like the owner—even if they own 100 percent of the stock. Stewardship recognizes that organizations are created and maintained by everyone who works there. No matter who owns the stock, if everyone quits, there’s nothing left but an empty room.

    In stewardship, a pull leader exhibits humility and appreciation for the organization they’ve started. Robert Cavett, founder of the several-thousand-person National Speakers Association, arrived at his annual conference banquet without his ticket. The new NSA member at the door refused him entrance. Rather than make a fuss with a melodramatic “Do you know who I am?” he returned to his room to get his ticket. His graceful handling of the situation turned the door guard into a lifelong devotee when she later found out (much to her horror) that she had turned away the organization’s founder.

    Stewards don’t own the organization, nor do they own its results. Part of their humility is giving credit where credit is due: to the people in the organization who made success possible. You won’t find a pull leader trumpeting his own horn, but you will find him highlighting the hard work and dedication of his team.

    Giving recognition is just one way pull leaders take care of their people. Did you catch that four-letter word? Yes, care. It’s a concept we don’t hear much about in business. Emotions are considered somehow undiscussable. Get over it, and start caring. Good stewards want people to succeed easily, not struggle. And they demonstrate their care however they can, maybe just with a birthday card or present. Maybe in much bigger ways. The head of a large nonprofit was also on the board of a local hospital. Employees needing medical care found themselves in a private room, receiving the best medical care available, and get well flowers by their bedside. He was a lousy leader in other areas, but people forgave his shortcomings and remained fiercely loyal when he showed he cared.

    Pull leaders architect their social and organizational space

    Pull leaders don’t just let space and culture happen. They actively shape the environment in which people act. The most obvious shaping is physical. They decide if an office will be all cubicles, all offices, or a mix of both. They choose whether to kept the walls a pleasant beige—a color that offends no one and everyone at the same time—or take a risk with artwork, edgy furniture, and exposed brickwork in a loft. They pay attention to whether the space promotes the kind of interaction people need to be successful. For engineers, it may mean large open areas for collaborative brainstorming. For personal financial planners, it may mean quiet offices where they can meet their clients in private. Internet bubble companies were famous for foosball tables in funky spaces that attracted the best and brightest employees available. The bubble burst, but the principle remains: space matters. It powerfully shapes culture, and pull leaders use it deliberately.

    Actually, I’ve lied just a bit: Pull leaders shape the cultural space as well as the physical space. A critical part of culture is how decisions get made. If a pull leader truly believes in people, there’s no better way to show it than to let those people take the lead in shaping the organization. Let them design the environment, set space requirements, and create the work world that will best lead them to success.

    This is where we find the fundamental paradox of pull leadership: People most want to follow leaders who don’t order them around, but rather give them the freedom and opportunity to be an active part in shaping their own lives.

    Pull leadership isn’t easy

    Not many leaders practice pull leadership because, at its heart, it’s about recognizing that the leader isn’t perfect, and that an organization’s power comes from everyone who comprises it. This flies in the face of America’s deepest cultural image: the Wild West pioneer, staking out uncharted territory and holding it single-handedly. But rugged individualism is nothing more than a romantic myth in a world as complex as ours. If you doubt it, try living with a broken water main or no power for a week.

    We can still look to the pioneer for inspiration, however. The pioneer’s greatest quality is the courage to face the unknown—and that we still need in great measure. Developing pull leadership skills demands as much courage as that pioneer had, only this time the territory is mental. Develop the courage to admit you don’t have the answers; the courage to admit your success depends more on others than on what you can do yourself; the courage to trust them; the courage to stand for your values even when it means making unpopular decisions; and the courage to rely on attraction rather than giving orders.

    None of this is easy. But it’s how the world works today, and the rewards of becoming a leader who can inspire will be well worth the journey.

    Acknowledgements: My thinking about “pull leadership” has been shaped in part by the work of Peter Senge’s systems thinking; Peter Block’s Stewardship: Choosing Service over Self-Interest; and Jim Collins’s Level 5 Leadership: The Triumph of Humility and Fierce Resolve.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    The Leadership Attitude

    Question Most people are not in official positions of leadership and yet we wish to do all we can to help the organization succeed. Bringing leadership skills to the table would benefit all. Since we aren’t responsible for setting the “vision” for the company, where do we fit in? Should we just be extensions of the real leader or is vision something beyond our concern? Should we just focus on issues at our level and perhaps one level above? I loved your example of the fellow who found fault with his company’s product and worked to change it, but I think where I’ve worked that kind of behavior would just get you fired. Is there something a bit more tamed down that you could offer?

    AnswerYou caught me. Sure, you can lead from anywhere in an organization; it’s probably the most common way organizations are led. (Sadly, many CEOs aren’t perceived as leaders by their own organizations.) With command-and-control leadership, it’s all about giving orders, so you need the title. But in most companies, you can be a powerful leader anywhere in an organization by adapting the “pull leadership” principles of responsibility, stewardship, and values.

    Pull leaders take responsibility for an organization and the people who make it up

    The key to leadership at any level is writing a new job description: My job is making the company, and its people, successful.

    Taking responsibility for success is first on your agenda. Don’t confuse responsibility with authority! Responsibility is totally different; it’s an attitude. Want proof? Just watch Ken Lay, who had absolute authority at Enron, abused it, and wholly declines to take responsibility. You can do better than that. Mentally, decide to start acting as a leader rather than waiting for permission or direction.

    Believe it or not, this can be leadership’s greatest challenge. The CEO of a company where I was President said (yelled, actually) that I was acting too much like a consultant. After two days in denial, I admitted it was true and asked: “What would I do differently if I owned this company?” The answer flashed up in an instant: fire an incompetent staffer and build a “quick and dirty” system to move us forward. The attitude made all the difference.

    Acquire the attitude by asking what you’d do if you were in charge. Imagine yourself in the corner office, writing out paychecks and company expenditures from your personal bank account. With an attitude of responsibility, you’ll be asking if you’re getting your money’s worth? Is the company working on the right projects? Is the culture functional? Just taking the attitude of “I can be responsible for the group’s success” will start to pervade your presence.

    If you’re going to take responsibility for the organization, you must take responsibility for the people as well. This is super important if you’re leading from below. A CEO can grind people down and no one calls her on it. She can’t be fired. You can. But you won’t, if you’re taking responsibility for the success of the people, as well as the organization. Decide you’ll start looking out for your co-workers, your boss, and yourself.

    Pull leaders are stewards for their organizations and people

    Here’s where responsibility becomes action. Take care of your organization. Unlike a CEO or President, you can’t set company direction. But you can take the direction top management sets and make it your job to turn that direction into reality.

    Start figuring out how your business works. Read business books. Talk to people from other functions in your spare time. Learn what they do and why. You’ll get a sense for how it needs to be nudged going forward. As the low person on the totem pole, start by making suggestions here and there and offering to help. Do a small project on your own time that benefits the company in a visible way. If people know you’re genuinely curious and concerned about helping things get better, they’ll be inclined to work with you. More importantly, they’ll start looking to you as someone who drives success.

    Become steward of your group

    Every team you’re on is a chance to be a steward. The teams have a charter or a goal they’re supposed to reach. You can’t set the goal, but you can make sure you understand it and then become the “go-to guy” for keeping things moving. If the team stalls, figure out why and offer to help the team leader restart it. Some people just attend to their own work, and they’re viewed (rightly) as good technical contributors who must be managed to be valuable.

    Sample Values to Consider When Matching Yourself to Your Organization

    A sales team was not making sales. The more time went by, the more sales weren’t happening. One member of the team finally interviewed everyone on the team and realized that half the team was stalled waiting for input from the other half, while the other half was stalled waiting for input from the first half! He got everyone in a room, had them exchange information, and three weeks later, calls were again being made and the pipeline was starting to fill.

    If you attend to everyone’s work, and help the entire team be successful, you’re acting as a leader in a tangible way.

    Become steward of your co-workers

    It’s not enough to care about the group. Your co-workers’ success is important, even if you don’t like them! What are their hot buttons? What are their strengths? When do they best shine in their jobs? Once you know, start watching out for them. Do you hear of a project perfectly suited for a teammate’s career aspirations? Help them apply and become a champion for them. If they’re running into problems, show concern. Share ideas for how they can overcome their obstacles.

    Keep people going by helping them make their job part of a larger success. After all, group goals only matter if they further the company’s overall goals. Keep the connection in mind, and help others “get” the connection. Even a janitor enables a company’s success by freeing people to work without the distraction of maintaining their space. There’s pride to be taken; help them take it!

    When you help people find their pride and become more successful, they’ll start supporting you in return. Over time, you’ll find more people taking you seriously. You’ll have the support to make audacious suggestions, have people nod in agreement, and get the attention of the people who can make your ideas happen.

    Remember that the boss and the boss’s boss are important co-workers! Know their motivations, hot buttons, and goals. Read your company’s annual report. Be able to talk their language. When your ideas start making it higher in the organization, you want them to be hearing their own success in your words. Without this groundwork, you risk triggering territory wars — not a pleasant prospect.

    If you keep a strong link to the company’s success and the success of the people involved, you may find yourself with the authority to match your responsibility sooner than you think.

    Lead by living the company’s values

    You’ll succeed as a leader only if you’re a living example of your values. What causes do you champion? How do you behave with others? What decisions do you make? Now ask yourself what values your answers demonstrate. If those values don’t align with your organization, change yourself, change organizations, or tone down your leadership aspirations. Values, if clear and consistent in behavior, are a powerful glue that holds an organization together.

    It may be tricky to identify your organization’s true values. Values are often unstated, and when they are discussed, the “espoused values” may not match how people really behave. The important values in the workplace often cluster around people, product, and organizational health. See the sidebar for sample values to consider when matching yourself to your organization.

    Ethical values are the easiest to identify, make the most powerful statement, and carry the greatest risk. At Stanford Graduate School of Business last week, incoming MBAs were discussing their experiences with ethical issues on the job. Two of the group had taken major ethical stands at their companies as junior employees. One had championed workplace safety, while the other had asked her company to forgo investing in an ethically dubious company. Fortunately, both had been successful in their causes.

    That isn’t always true. “Whistle-blowers” may get tremendous respect from our private selves, but they’re rarely appreciated by society at large or in the organization whose secrets they reveal. There’s a fine line between championing values by living them and stepping over the line and “betraying” your company. Oddly, people react more intensely to an employee “betraying” their company than a company betraying its employees (or society!). I don’t know when companies became more important to us, emotionally, than our people and communities, but that’s how we react.

    You have to decide where your line is in stepping up with your values. Personally, I’ve taken several ethical stands in my career that haven’t won me brownie points with management. Those stands have, however, led me to be perceived as a powerful leader by the people around me. Was it worth it? Yes. I’m proud of the person I’ve become. But in terms of career growth at those companies? Well… I’m not working there any more.

    Leadership isn’t about titles. It’s about behavior. If you live your values, take care of your organization and its people, and step up to the plate with responsibility, you’ll be a leader in the true sense of the word. Your title won’t matter. Your influence, the respect you garner, and the success you bring will be the true proof of your leadership.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Tips for Mastering E-mail Overload

    Being at or near the the top of your organization, everyone wants a piece of you. So they send you e-mail. It makes you feel important. Don’t you love it? Really? Then, please take some of mine! Over 100 real e-mails come in each day. At three minutes apiece, it will take five hours just to read and respond. Let’s not even think about the messages that take six minutes of work to deal with. Shudder. I’m buried in e-mail and chances are, you’re not far behind. For whatever reason, everyone feels compelled to keep you “in the loop.”

    Fortunately, being buried alive under electronic missives forced me to develop coping strategies. Let me share some of the nonobvious ones with you. Together, maybe we can start a revolution.

    The problem is that readers now bear the burden

    Before e-mail, senders shouldered the burden of mail. Writing, stamping, and mailing a letter was a lot of work. Plus, each new addressee meant more postage, so we thought hard about whom to send things to. (Is it worth spending thirty-two cents for Loren to read this letter? Nah….)

    E-mail bludgeoned that system in no time. With free sending to an infinite number of people now a reality, every little thought and impulse becomes instant communication. Our most pathetic meanderings become deep thoughts that we happily blast to six dozen colleagues who surely can’t wait. On the receiving end, we collect these gems of wisdom from the dozens around us. The result: Inbox overload.

    (“But my incoming e-mail is important,” you cry. Don’t fool yourself. Time how long you spend at your inbox. Multiply by your per-minute wage(*) to find out just how much money you spend on e-mail. If you can justify that expense, far out—you’re one of the lucky ones. But for many, incoming e-mail is a money suck. Bonus challenge: do this calculation companywide.)

    (*) Divide your yearly salary by 120,000 to get your per-minute wage.

    Taming e-mail means training the senders to put the burden of quality back on themselves.

    How you can send better e-mail

    What’s the best way to train everyone around you to better e-mail habits? You guessed it: You go first. First, you say, “In order for me to make you more productive, I’m going to adopt this new policy to lighten your load…” Demonstrate a policy for a month, and if people like it, ask them to start doing it too.

    • Use a subject line to summarize, not describe.

    People scan their inbox by subject. Make your subject rich enough that your readers can decide whether it’s relevant. The best way to do this is to summarize your message in your subject.

    BAD SUBJECT:

    GOOD SUBJECT:

    Subject: Deadline discussion              

    Subject: Recommend we ship product April 25th

    • Give your reader full context at the start of your message.

    Too many messages forwarded to you start with an answer—”Yes! I agree. Apples are definitely the answer”—without offering context. We must read seven included messages, notice that we were copied, and try to figure out what apples are the answer to. Even worse, we don’t really know if we should care. Oops! We just noticed there are ten messages about apples. One of the others says “Apples are definitely not the answer.” And another says, “Didn’t you get my message about apples?” But which message was sent first? And which was in response to which? ARGH!

    It’s very, very difficult to get to the core of the issue.

    You’re probably sending e-mail because you’re deep in thought about something. Your reader is too, only they’re deep in thought about something else. Even worse, in a multi-person conversation, messages and replies may arrive out of order. And no, it doesn’t help to include the entire past conversation when you reply; it’s rude to force someone else to wade through ten screens of messages because you’re too lazy to give them context. So, start off your messages with enough context to orient your reader.

    BAD E-MAIL:

    GOOD E-MAIL:

    To: Billy Franklin

    From: Robert Payne

    Subject: Re: Re: Re: Please bring contributions to the charity drive

    Yes, apples are definitely the answer.

    To: Billy Franklin

    From: Robert Payne

    Subject: Re: Re: Re: Please bring contributions to the charity drive.

    You asked if we want apple pie. Yes, apples are definitely the answer.

    • When you copy lots of people (a heinous practice that should be used sparingly), mark out why each person should care.

    Just because you send a message to six poor coworkers doesn’t mean all six know what to do when they get it. Ask yourself why you’re sending to each recipient, and let them know at the start of the message what they should do with it. Big surprise, this also forces you to consider why you’re including each person.

    BAD CC:

    GOOD CC:

    To: Abby Gail, Bill Fold, Cindy Rella

    Subject: Web site design draft is done

    The Web site draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.

    To: Abby Gail, Bill Fold, Cindy Rella

    Subject: Web site design draft is done

    AG: DECISION NEEDED. Get marketing to approve the draft

    BF: PLEASE VERIFY. Does the slogan capture our branding?

    CR: FYI, if we need a redesign, your project will slip.

    The Web site draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.

    • Use separate messages rather than bcc (blind carbon copy).

    If you bcc someone “just to be safe,” think again. Ask yourself what you want the “copied” person to know, and send a separate message if needed.Yes, it’s more work for you, but if we all do it, it’s less overload.

    BAD BCC:

    GOOD BCC:

    To: Fred

    Bcc: Chris

    Please attend the conference today at 2:00 p.m.

    To: Fred

    Please attend the conference today at 2:00 p.m.

    To: Chris

    Please reserve the conference room for me and Fred today at 2:00 p.m.

    • Make action requests clear.

    If you want things to get done, say so. Clearly. There’s nothing more frustrating as a reader than getting copied on an e-mail and finding out three weeks later that someone expected you to pick up the project and run with it. Summarize action items at the end of a message so everyone can read them at one glance.

    • Separate topics into separate e-mails … up to a point.

    If someone sends a message addressing a dozen topics, some of which you can respond to now and some of which you can’t, send a dozen responses—one for each topic. That way, each thread can proceed unencumbered by the others.
    Do this when mixing controversy with mundania. That way, the mundane topics can be taken care of quietly, while the flame wars can happen separately.

    BAD MIXING OF ITEMS:

    GOOD MIXING OF ITEMS:

    We need to gather all the articles by February 1st.

    Speaking of which, I was thinking … do you think we should fire Sandy?

    Message #1: We need to gather all the articles by February 1st.

    Message #2: Sandy’s missed a lot of deadlines recently. Do you think termination is in order?

    • Combine separate points into one message.

    Sometimes the problem is the opposite—sending 500 tiny messages a day will overload someone, even if the intent is to reduce this by creating separate threads. If you are holding a dozen open conversations with one person, the slowness of typing is probably substantial overhead. Jot down all your main points on a piece of (gasp) paper, pick up the phone, and call the person to discuss those points. I guarantee you’ll save a ton of time.

    • Edit forwarded messages.

    For goodness sake, if someone sends you a message, don’t forward it along without editing it. Make it appropriate for the ultimate recipient and make sure it doesn’t get the original sender in trouble.

    BAD FORWARDING:

    GOOD FORWARDING:

    To: Bill

    Sue’s idea, described below, is great.

    From: Sue

    Hey, Abner:

    Let’s take the new design and add sparkles around the border. Bill probably won’t mind; his design sense is so garish he’ll approve anything.

    To: Bill

    Sue’s idea, described below, is great.

    From: Sue

    Hey, Abner:

    Let’s take the new design and add sparkles around the border…

    • When scheduling a call or conference, include the topic in the invitation. It helps people prioritize and manage their calendar more effectively.

    BAD E-MAIL:

    GOOD E-MAIL:

    Subject: Conference call Wednesday at 3:00 p.m.

    Subject: Conference call Wednesday at 3:00 p.m. to review demo presentation.

    • Make your e-mail one page or less.

    Make sure the meat of your e-mail is visible in the preview pane of your recipient’s mailer. That means the first two paragraphs should have the meat. Many people never read past the first screen, and very few read past the third.

    • Understand how people prefer to be reached, and how quickly they respond.


    Some people are so buried under e-mail that they can’t reply quickly. If something is important, use the phone or make a follow-up phone call. Do it politely; a delay may not be personal. It might be that someone’s overloaded. If you have time-sensitive information, don’t assume people have read the e-mail you sent three hours ago rescheduling the meeting that takes place in five minutes. Pick up the phone and call.

    How to read and receive e-mail

    Setting a good example only goes so far. You also have to train others explicitly. Explain to them that you’re putting some systems in place to help you manage your e-mail overload. Ask for their help, and know that they’re secretly envying your strength of character.

    • Check e-mail at defined times each day.

    We hate telemarketers during dinner, so why do we tolerate e-mail when we’re trying to get something useful done? Turn off your e-mail “autocheck” and only check e-mail two or three times a day, by hand. Let people know that if they need to reach you instantly, e-mail isn’t the way. When it’s e-mail processing time, however, shut the office door, turn off the phone, and blast through the messages.

    • Use a paper “response list” to triage messages before you do any follow-up.

    The solution to e-mail overload is pencil and paper? Who knew? Grab a legal pad and label it “Response list.” Run through your incoming e-mails. For each, note on the paper what you have to do or whom you have to call. Resist the temptation to respond immediately. If there’s important reference information in the e-mail, drag it to your Reference folder. Otherwise, delete it. Zip down your entire list of e-mails to generate your response list. Then, zip down your response list and actually do the follow-up.

    • Charge people for sending you messages.

    One CEO I’ve worked with charges staff members five dollars from their budget for each e-mail she receives. Amazingly, her overload has gone down, the relevance of e-mails has gone up, and the senders are happy, too, because the added thought often results in them solving more problems on their own.

    • Train people to be relevant.

    If you are constantly copied on things, begin replying to e-mails that aren’t relevant with the single word: “Relevant?” Of course, you explain that this is a favor to them. Now, they can learn what is and isn’t relevant to you. Beforehand, tell them the goal is to calibrate relevance, not to criticize or put them down and encourage them to send you relevancy challenges as well. Pretty soon, you’ll be so well trained you’ll be positively productive!

    • Answer briefly.

    When someone sends you a ten page missive, reply with three words. “Yup, great idea.” You’ll quickly train people not to expect huge answers from you, and you can then proceed to answer at your leisure in whatever format works best for you. If your e-mail volume starts getting very high, you’ll have no choice.

    • Send out delayed responses.

    Type your response directly, but schedule it to be sent out in a few days. This works great for conversations that are nice but not terribly urgent. By inserting a delay in each go-around, you both get to breathe easier.
    (In Outlook, choose Options when composing a message and select Do not deliver before. In Eudora, hold down the Shift key as you click Send.)

    • Ignore it.

    Yes, ignore e-mail. If something’s important, you’ll hear about it again. Trust me. And people will gradually be trained to pick up the phone or drop by if they have something to say. After all, if it’s not important enough for them to tear their gaze away from the hypnotic world of Microsoft Windows, it’s certainly not important enough for you to take the time to read.

    Your only solution is to take action

    Yeah, yeah, you have a million reasons why these ideas can never work in your workplace. Hogwash. I use every one of them and can bring at least a semblance of order to my inbox. So choose a technique and start applying it. While you practice, I’ll be on vacation, accumulating a 2,000 message backlog for when I get home. If you want to know how well I cope, just send along an e-mail and ask….

    © 2004 by Stever Robbins. All rights reserved in all media.

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    The Keys to Building Trust

    Question
    Which comes first: truth or transparency?

    AnswerUh, oh. Is that politics in the air? I’m guessing you either want to trust someone else or you want them to trust you. Either way, transparency plays a powerful role. It’s just part of the Trust Equation, though. So let’s really dig into the nature of trust.

    At its heart, being trustworthy means being consistent in motives and accountable for actions. If you trust me to listen attentively and hear your side of an issue, it means you’ll expect me to value your opinion when I act.


    How is trust lost?

    Losing trust is outrageously easy. Just let someone down once and kaboom, years of trust go down the drain. The CEO of a newly public company asked employees not to sell stock to keep the price stable. Then he turned around and sold more stock than all his employees owned put together. He lost trust, lost it big, and lost it permanently. He tried to recover, claiming (truthfully) he’d only sold a small fraction of his shares. But percentage ownership wasn’t the issue; he’d set up the expectation “we’ll all act together to keep the price strong” and then shattered that promise.


    How is trust gained?

    Trust isn’t subject to the whims of logic. Many people trust others from day one, with no real basis for that trust. (This is a good thing, by the way. It’s the basis of community!) We trust a new project manager to know how to balance resources, map out a plan, and monitor execution. When an employer hires us, we trust they’ll provide the salary, benefits, and job opportunity they offered. Trust starts out free.

    Others need to see behavior before starting to form trust. Norton is JoAnne’s new boss. JoAnne has been the victim of management incompetence too many times. She has to see Norton champion his team’s ideas two or three times before trusting that he cares as much about his team’s success as his own. Some people need consistent proof for weeks, months, or years, and still others are never convinced—they demand proof every time they work with someone.

    Businesses lose trust left and right

    Remember, we build trust when behavior matches expectations. As humans, we might expect our organizations to take care of us. We might expect managers to be stewards of companies, and companies to be stewards of employees, customers, and communities. In reality, most companies and managers don’t behave that way. What do most businesses do consistently? Act for the shareholders. It’s the law. Sometimes they act for “productivity,” “growth,” “profit,” “the bottom line,” “share price,” “efficiency,” and lots of other measures that might not directly promote the well-being of employees, customers, communities, and suppliers. Then when paychecks are cut to bolster the quarterly financials, a move that helps the financial interests of shareholders, employees might be excused for losing a little trust in their employer’s stated position that “Our employees are our greatest assets!”

    Trust can also take a hit when the CEO pulls into the corporate parking lot driving a car that costs more than most employees make in a decade, even as the company calls for cost controls and outsources jobs. Other trust-destroying business tactics:

    • Layoffs, especially when preceded by promises that “we’ll never have layoffs.” The nail in the coffin is when the executives receive bonuses that year.
    • Ignoring problems. When things are going wrong, it’s tempting not to tell people. After all, managers are supposed to support morale. It’s true, to some extent. But when everyone knows things are troubled, saying otherwise makes management seem either clueless or false. Both break trust.
    • Keeping people in the dark during uncertainty. “We’ll tell people when we know what’s happening” is the usual excuse. That’s nice. And while waiting for certainty, everyone around us is losing faith. The trustworthy approach is to admit and discuss the uncertainty. At least the words will match the actions.

    Winning trust with honesty

    Fortunately, you can win trust. And you put your finger on the best way: transparency. Transparency just means you tell the truth in a way that people can verify. Say what’s true and honest, then let people check it out for themselves. Did you make a mistake? Admit it and people will still trust you. Cover it up, especially when everyone knows you did it, and you’ll destroy any chance that people will believe your word is good.

    A multimillion-dollar acquisition was minutes from closing when the lead negotiator upped his asking price by $10,000—a pittance—because he thought he had the other party over a barrel and wanted to prove his power. Surprise! The other side had an alternative offer he hadn’t known about, and the deal fell through. The negotiator steadfastly insisted it wasn’t his fault. He didn’t just destroy the deal; he destroyed his internal credibility by denying his part.

    This works in the other direction, as well. Starbucks is pricey, and they claim the money filters all the way back to supporting the farmers who grow their coffee. By hiring independent auditors to follow the money through the supply chain, they open up to great scandal if their claims aren’t true. But if the money is going where they claim, the transparency builds that much more confidence.

    So which comes first, trust or transparency? Even though some people trust by default, ultimately, transparency is needed for trust to endure. So why not start now? By telling the truth and giving people the means to know for themselves, you can build the foundation for a strong relationship when times get stormy. If you wait to be transparent until the trust is in place, you may wait a very long time.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Defeating Overwhelm

    My name is Stever Robbins, and I’m here to confess: I’m an overwhelm wimp.

    Give me more than three things to handle at once and pop, my head explodes. It’s not just me—everyone seems to be suffering from daily overwhelm. At best, we flounder. At worst, we shut down entirely. You can’t be effective running ragged, living surgically connected to your cell phone, and cutting short every meeting because you’re way too on-the-run. If being the center of attention makes you feel important, go for it. Personally, I’d rather be sane.

    I’ll warn you in advance: this article is about what’s good for you, not what’s good for business. How can you take care of yourself amidst the chaos?

    Surviving in the moment

    When overwhelm crashes down, your emergency rip cord is to physically take a break. Grab something to eat, walk around the block, and get away! Breathe deeply, with a long, slow exhale. And lean forward. I don’t know why, but leaning into overwhelm makes it less overwhelming.

    Once you’ve calmed a bit, consider taking longer-term steps to recover your life. Overwhelm comes from too much, too fast. The solution is learning to say “no,” keeping firm boundaries, and going easy on yourself when you are not superman or woman.

    If you choose sanity, step one is changing your thinking. Rather than worshipping productivity and efficiency, remember that there’s more to life than living it efficiently. There’s family, quality of life, joy, love, spirituality, and community, for starters.

    Some of the following anti-overwhelm suggestions will be heretical. They’ll actually suggest that you reduce your productivity. After all, do you want to be highly productive, or do you want to have a life? You can’t do both.

    The root problem is that our tools have become too good. We’ve made our lives so very efficient with our cell phones, PDAs, and e-mail. But does your Palm Pilot make you more efficient? If so, just wait. Expectations will expand to include your increased productivity. You’ll quietly lose your relaxation and recharge time, sacrificed to the Gods of efficiency.

    Remind yourself on a regular basis that while a Blackberry tempts you with “efficient” e-mail handling, resist! It slowly infiltrates your life, demanding you to respond to e-mail at any time of day or night. Take it on faith that labor-savings devices demand that you labor more.

    “But,” you cry, “I can multitask, getting more done quickly!” Multitasking is a myth. At least, quality multitasking is a myth. If you have several simple, brainless tasks, maybe you can do a couple at once. But if you need reflection or depth, forget it. Attention Deficit Disorder is a problem for people precisely because much of modern life really does demand more than ten seconds of sustained attention. Multitasking is a chance to accomplish many things poorly, all at once. It takes nine months to make a baby, and it takes focused concentration to make great breakthroughs.

    In the people realm, multitasking can be deadly. Consider this: Effective leaders connect with their followers. When someone comes to you for direction and motivation, talking while checking your e-mail won’t inspire loyalty and commitment. If you’re not committed enough to give someone your full attention, why should they be committed to you?

    The emergency solution

    Our whole economy seems “just-in-time,” with lag times and delays removed. Here is one illustration. Recent banking deregulation allows checks to clear instantly, eliminating the “float” that provided many businesses with a few additional days of wiggle room to finance cash flow. Now, everyone must be that much more vigilant about their cash.

    Just-in-time brings its own problems, too. Problems can happen, just-in-time. When one piece of our tightly coupled, precision system falters, the entire thing can come tumbling down. We risk utter collapse if we stop if even for a minute. Not exactly a recipe for sanity.

    So make use of it: Become emergency driven. If the overwhelm is too great, rather than trying to avoid emergencies, orient your life around them. Ignore your inbox. Choose what you’ll let go, and then let go of it utterly and completely. What’s important will resurface as emergencies. Trust me, there will be some Type-A person in the next cubicle who will raise the alarm when a discarded initiative becomes critical. Then you can step in, do the work, and be a hero for saving the day. Sure, you can get promoted by doing it right the first time (assuming you work where such things are noticed), but you just may save your personal life by not doing it until it’s important.

    It’s always possible that you have enough time to do everything, but just aren’t organized. I’ve spent four decades searching for the perfect organization system. The closest I’ve found is David Allen’s Getting Things Done: The Art of Stress-Free Productivity. He lays out a system that empties your inbox daily, turning items into “To-Do’s” and ensuring things get done. Of course, he doesn’t have much to say about what you do when you commit to too much that it takes a full workday just to process your inbox.

    That’s because, as with technology, better organization will often result in temporary savings followed by increased expectations. This, you can control. Get yourself organized—but don’t tell anyone. Scatter books around your office and season the scene with old folders with papers spilling out of them. Then empty your real inbox (hidden in the corner behind the potted palm) daily, and enjoy an organized life.

    Just enough

    You’ll probably notice that many of my suggestions can result in slower career growth, less productivity, decreased efficiency. That’s right. In fact, here is the most powerful strategy of all: Settle for just enough. Unless you’re living in a really different world from me, you can’t have it all. You have limited time and attention. You can’t spend it all trying for “the most” in every category. Figure out what “enough” is and make that your target.

    Just enough applies to money, too. If you’re driven by money, decide in advance when you can ease up. A real estate investor I know never set an “enough” goal for herself. The last time I saw her, she had been a millionaire for twenty years, and worth over $50 million. Was she enjoying life? Hardly. By not deciding what was enough, she was pushing herself as hard as if she were still working on her first million.

    Just enough applies to title and status, as well. An executive vice president of a several-hundred-person company decided that she hated her job. So she decided to downshift to a director-level position that gave her just enough status. It worked like a charm. She later downshifted again, spending a year climbing Mount Kilimanjaro and leading safaris in Africa. “Just enough” gave her the freedom to create a much richer life.

    Just enough information

    This is big. In our Brave New Economy, information is plentiful, cheap, and usually irrelevant. Lots of information is useless; the right information is invaluable. In preparation for a client meeting, someone will often circulate a dozen pages of client “data dump” the night before. Overwhelming, certainly. But is it worth reading? Who knows?

    Don’t just accept information. Start by choosing some good questions, ask them, and collect just enough information to get a good enough answer. You’re not shooting for a perfect decision every time; you want just enough good decisions so you still reach your goal.

    Your intuition may be helpful in defining this elusive “enough.” The COO of a company may find she can begin to make the right decision most of the time with just 30 percent of the information she normally would collect.

    Scheduled maintenance

    One thing you should have “just enough” of is work itself! In the book The Power of Full Engagement, author Tony Schwartz points out that regulating your energy is key to being productive. That means taking frequent work breaks to rest, relax, and recover. The same holds true writ large; schedule vacations throughout the year, and make sure you take them. When on vacation, leave your Internet connection and cell phone at home. Never, ever call into the office.

    The last way to reduce overwhelm is to make frequent use of “no.” Say it when someone tries to obligate you for something you don’t have time for. Say “no” when your boss sets targets that can’t be reached without burnout. Say “no” when someone wants your feedback for the tenth time on the same memo—tell them, “it’s GOOD ENOUGH.”

    “No” is hard for most of us to say. We like to feel appreciated and useful to others. But far better to say “no” many times and concentrate on a few great wins than to say “yes” after “yes” after “yes” and deliver poor results.

    If saying “no” doesn’t work, take a drastic course: Let go. Stop caring. If your environment is demanding too much of you, let go of it. (And if you’re a leader, don’t put your people in the position of having to make this choice!) In a choice between sanity and emotional buy-in, choose sanity.

    Detaching doesn’t have to mean that you do less work. In fact, if you detach in just the right way, you can start delegating out work you previously guarded with your life. Find someone who can do the work better, then let them go at it. The key to delegation, however, is striking the balance between sharing the burden and caring enough to make sure things get done.

    At the end of the day, it’s not like there’s much choice. You will reduce your overwhelm. Either you’ll do it voluntarily and deliberately, or you’ll do it when you collapse with a nervous breakdown. You owe it to yourself to take control of your own life and make the hard choices now, when they’re uncomfortable, but doable. Something’s got to give. Don’t let it be you.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Prepare Your Own Succession

    QuestionMost founders of a successful family business sell their business to an outside third party. The 39 percent of family businesses passed to a second generation fail. Why don’t these owners plan better for one of the most important events of their lives?

    Answer
    If only it were just family businesses that didn’t plan well for the future. Most businesses woefully neglect the long term. And it’s not just the top executives who fail at farsightedness—few of us anywhere plan ahead. Before we jump into succession planning, there are some intriguing things to know about how we factor time into our decision making.

    Think about some future plans you have. Notice how far out “the future” is for you. Are your plans for fifty years from now? Next week? Tomorrow? We all have certain time frames we naturally use when making decisions or thinking about the future. Those time frames drastically affect your decisions.

    I awoke at sunrise on a Caribbean cruise and strolled up to the deck to behold row upon row of beach chairs, each with cup holder and ashtray. My first thought: “Great! Everything I need for a tan. Then perhaps a martini, and maybe a cigar. It’s the good life!” But if I took a thirty-year time horizon I might view this deck set-up as skin cancer, liver failure, or an emphysema station. Maybe it’s time to visit the casino, where I’ll lose 52 percent of my money on average at the blackjack table over the long term. The same situation looks very different depending on your time horizon.

    Time Frame Exercise:
    1. Think of a decision you’ve recently made.
    How far out did you project the consequences when making that decision?
    2. Now change the time frame. Make it shorter. Make it longer (even past the end of your life). Notice how that changes your mind.

    Your decisions, your planning, and even how you look back and learn (or don’t) from the past are all affected by your time frame habits. If your time frame is brief, you probably spend a lot of your life in perpetual emergencies and fire-fighting, since, in a brief time frame, consequences of short-term emergencies are more real than the far-off consequences of creating permanent solutions. One of my best friends has such a short time horizon that he can be leaving for an appointment, spot the daily newspaper as he’s putting on his shoes, and spend twenty minutes reading it before realizing he’s just missed his appointment.

    Being overwhelmed has driven us to ever-shorter time horizons. With more to do than we can even think about, we attend to the most urgent. That usually means the immediate emergencies. In a world demanding ever-faster results, we compress our time horizons more and more.

    Rarer, but just as dysfunctional, is the opposite: a naturally long time horizon. Thinking ahead thirty years is great for insuring long-term success, but you’ve got to solve all the problems between here and there for it to matter. The Perfect Ten Year Plan is useless if you go bankrupt in the first year by not managing the day-to-day cash flow.

    We are scared to plan for succession

    Most people just don’t have a time horizon long enough to think about succession. If they do look ahead, they don’t like what they see: the day when they’re no longer here. And it’s not just in work; my estate planner tells me most people procrastinate writing their will for years. We avoid it, because in American culture, we’re just not taught to deal with our own mortality. (He’s been nagging me for a couple of years to get my estate plans in order. And I’ll do it—as soon as I’m done writing this article.)

    Aside from mortality, there’s ego at stake. Does a founder really want to admit the company can survive without him? Come to think of it, does a founder really want to admit a legacy so fragile that it can’t survive without him? Quite a conundrum. It’s much easier to ignore succession altogether and concentrate on the next six months.

    You might be thinking that it’s a leader’s job to do that planning, for the health of the business. Think again—and look in the mirror. It’s everyone’s job to do that planning. None of us want to admit that our companies/teams/families/communities can survive without us. But they can. It’s up to us to make sure that when we leave—and we will leave someday—the transition goes smoothly.

    Start planning for succession long, long before you move on. Consider your first job responsibility to be training someone else to take over what you’re doing, so you can put your mind to learning the job above you before you’re promoted. Then when promotion time comes, you can step up with confidence that you have a head start and that your current job is in good hands.

    Creating your succession plan

    You can’t groom heirs unless you know what you’re grooming them for. Start by identifying all the responsibilities of your current job. Requests are your key to identifying your responsibilities. List all the requests anyone makes of you—customers, suppliers, bosses, employees, the public, even yourself. Each of those requests is a responsibility. Also, list all the requests you make of others. Ask yourself why you make each request. Your answers will be another list of responsibilities.
    Now you have it: your real job description (formal job descriptions rarely reflect reality). For each responsibility, list the skills you use to meet the challenge. List the mindsets and attitudes you have, and any specific knowledge you use to fulfill that request.

    Now you have a blueprint for bringing a successor—or several—up to speed. You use your real job description to identify who has many of the attributes needed to take over. Discuss the real job description with them, and get their input. Their ideas may differ on how the job can be done. Those differences might suggest alternate skills or approaches that can broaden how you do the job. More alternatives can also broaden the pool of potential successors.
    Once you’ve chosen your people, start developing them. In their semi-annual learning and development review (of course you have semi-annual learning and development reviews, even if it’s not mandated by the company), help them choose assignments and experiences that will develop the skills you’ve identified to allow them to step into your shoes.

    Juggle many replacements

    There’s no reason to settle for a single successor. You can develop several people at once, especially since you can’t count on everyone staying put until you move on. One Fortune 500 company builds succession planning into every job above a certain level. They look for inside and outside candidates, and strive for a 3:1 ratio—three replacements in the pipeline for every job.

    Furthermore, don’t assume you’ll be replaced by a single person. When you move on, your responsibilities may be distributed throughout a group, or may be taken over by a team. We all fantasize about being so valuable it’ll take a team to replace us; indulge the fantasy. You can develop some skills in some group members, and other skills in others. Of course, you’ll need to insure the team can work together when it’s time.

    One caveat to choosing multiple replacements: Manage the situation delicately. If you tell five people that they’ll all be your replacement, you’ve just introduced competition that might cause four to quit when the fifth gets promoted someday. Simply help them develop, and make it clear to folks that the best way to succeed at any level is ongoing achievement and growth; specific jobs aren’t guaranteed.

    Once you’ve got your succession plan under way, start working on your boss’s…with you as the successor. Profile your boss’s job and voila! You have your own development plan. It won’t guarantee you get the job, but you’ll be better and more effective as you move forward, and you’ll have a whole cadre of people able to step into your job when you move up to Chairman.

    © 2005 by Stever Robbins. All rights reserved in all media.

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    Truth and Trust: They Go Together

    QuestionWe’ve lost trust. How do I regain the trust of my employees after six rounds of layoffs? How does my organization regain the trust of the community after we dumped toxic waste and covered it up? How does my management team regain trust of each other after a nasty political battle?

    AnswerDo you trust me? Good. The truth is, you can’t regain trust. Period. You doubt? Think hard about the times you’ve been betrayed. Did the villain ever find their way back into your heart? If you’re like the thousands I’ve asked, the answer is never. Trust can be gained once and lost once. Once lost, it’s lost forever.

    So let’s ask how we can keep trust from the start. It’s really quite easy; if you want to be trusted, simply be trustworthy. The pressures will be great to act otherwise, and if you succumb, well, you’ll lose trust and you’ll never get it back.


    Tell the truth

    I’ve heard countless discussions about how customers, suppliers, employees, shareholders, or communities can’t be told the truth. Maybe we believe that they can’t handle the truth, or that the truth will make us look bad, or maybe we don’t want to take responsibility for the consequences. So we “position” our statement. We “frame it” carefully. We “massage it.” We use careful “spin.” In other words, we lie.

    Little white lies can work—they help life run smoothly. But bigger lies compound. We end up committing beyond our own moral comfort. This action is recognized in a social psychology principle called “commitment and consistency.” That is, once we have taken a position, we are motivated by various pressures to behave consistently with that position, even if it is eventually proven wrong. Our ethical standards slip a bit more each time we hold on to our original stand. Pretty soon, our relationship with the truth is arms-length at best. (For more on commitment and consistency, see the wonderful book Influence: The Psychology of Persuasion, by Robert Cialdini.)

    When people find out you’ve been lying to them, they know your words can’t be trusted. If it’s your spouse, they may give you a second chance. If it’s your community, they may tell you they’re giving you a second chance, but don’t count on it.

    Of course, there can be genuine reasons you can’t tell the truth. Sometimes you’re legally bound to remain silent. Sometimes you’re negotiating and can’t reveal your position. In those cases consider saying, “I can’t discuss that.” People won’t like it, but they won’t feel betrayed when the outcome is revealed.

    Keep promises

    Keeping promises is an especially powerful form of telling the truth. If you say you’ll do something, do it. If you promise you’ll show up, be there. If you say you’ll deliver high quality, don’t skimp. We all know business people who eagerly promise anything to a customer or colleague rather than face their disappointment. They rarely remember what was promised, which is just as well because they couldn’t have delivered. Over time, their credibility drops so far that no one in their company believes a word they say.

    Your marketing material makes promises, by the way. As a response to the low-carb craze, some cereal companies made “low-sugar” cereals. Read the label carefully and you’ll discover they have as many carbs as high-sugar cereals. If you’re targeting health-conscious consumers, don’t promise them health and then deliver junk food. Keep your promises and you’ll keep trust.

    Their interests before yours

    One powerful way to sustain trust is to put the interests of others ahead of your own. When people know you’re looking out for them, they’ll believe in your intentions even when you have hard news to deliver or need them to put in heroic efforts.

    In the book Good to Great, Jim Collins introduces the “Level 5 leader” who puts the needs of the organization ahead of his or her own ego. Such leaders really inspire us to give our all because they demonstrate by example that with personal sacrifice we can achieve greater success as a group.

    Putting others first means knowing their goals and concerns, and helping them. Is a colleague a passionate baseball fan? Give them your Red Sox tickets some afternoon, for no reason at all. Is that the game where the Red Sox win the World Series? Even better! You’ll suffer real pain at giving up your tickets. Public sacrifice, if it’s real and visible, builds huge credibility when it’s in the service of others. And the sacrifice must be real. Reducing your bonus from $2 million to $1.75 million just doesn’t count.


    Behave ethically

    At its core, people trust you when they know you’re safe to deal with. They observe how you treat them and others. Do the right thing in all your dealings and people will get it. They’ll know you’re trustworthy.

    If you get a reputation for taking advantage of others, however, even people whom you have treated well can start to doubt. One CEO wrote articles trumpeting his ethical behavior. Employees knew otherwise; they’d seen him cheat distributors and shirk on his commitments to his partners. So the more the CEO crowed, the more the grapevine passed anonymous notes highlighting his lies.

    Changing players to gain trust

    Trust isn’t one-way, of course—trust happens between two people, or between a person and an organization. You can trust a person while distrusting their organization. I love my trusted bank manager; she fixes my problems even when I feel like the bank is hell-bent on alienating me at every opportunity. (They charge how much for a bounced check?)

    You can trust an organization while distrusting its people. Think politics. We can trust our country’s integrity even when individual politicians make our stomachs crawl.

    In business, one bad manager rarely destroys trust in the entire company. But several bad managers, armed with policies that clearly treat people as disposable implements, can destroy trust in an entire organization.

    At that point, bringing in a new management team that takes clear, visible action might have a chance of rebuilding trust. These actions will be hampered because employees have learned to distrust the organization as a whole. But at least the new leaders will have a chance to gain one-on-one trust and translate that into the organizational changes needed to build trust throughout.

    Is this really necessary?

    I must confess that this article has been hard to write. “Do the right thing,” “Treat people with respect,” “Don’t lie.” Do these things really need to be said to adults? Apparently so. As businesspeople, we’re not trustworthy.

    The June 2002 Conference Board Commissions on Public Trust and Private Enterprise Report found that somewhere between 37 percent and 76 percent of employees “observed misconduct they believe could result in significant loss of public trust if it were to become known.” Of course, the employees are the public, so public trust is losing on an ongoing basis.

    It’s up to us to fix the situation. We need to regain the public’s trust, which means we need to regain our trust in each other. And it will only happen if we become the most trustworthy people we can become.

    Your action challenge this week

    Pay attention to how often you tell the truth, how often you make decisions as if other people (customers, employees, suppliers) don’t matter, and how often you put the well-being of others ahead of your own. Then ask yourself: Am I someone I would trust?

    © 2005 by Stever Robbins. All rights reserved in all media.

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    The Path to Critical Thinking

    Question

    Can you write a refresher on critical thinking?

    Answer
    We business leaders so like to believe that we can think well, but we don’t. Only one in seven even reaches the top 10 percent of quality thinkers.1
    The rest of us haven’t even read a book on critical thinking, much less practiced. We could fill a book on the topic, but instead, let’s indulge in the highlights of what makes for good critical thinking about decisions.

    What’s logic got to do with it?

    Nothing! We don’t use logic to decide, or even to think. And a good thing, too, or the advertising industry would be dead in the water. Unfortunately, all of our decisions come from emotion. Emotional Intelligence guru Daniel Goleman explains that our brain’s decision-making center is directly connected to emotions, then to logic. So, as any good salesman will tell you, we decide with emotion and justify (read: fool ourselves) with logic.

    Purely emotional decision making is bad news. When insecurity, ego, and panic drive decisions, companies become toxic and may even die. Just look at all the corporate meltdowns over the last five years to quickly understand where emotional decision making can lead.

    Critical thinking starts with logic. Logic is the unnatural act of knowing which facts you’re putting together to reach your conclusions, and how. We’re hard-wired to assume that if two things happen together, one causes the other. This lets us leap quickly to very wrong conclusions. Early studies showed that increasing light levels in factories increased productivity. Therefore, more light means more productivity? Wrong! The workers knew a study was being done, and they responded to any change by working harder, since they knew they were being measured—the Hawthorne Effect.

    We also sloppily reverse cause and effect. We notice all our high performers have coffee at mid-morning, and conclude that coffee causes high performance. Maybe. Maybe not. Maybe high performers work so late and are so sleep deprived that they need coffee to wake up. Unless you want a hyper-wired workforce, it’s worth figuring out what really causes what.

    There are many excellent books on logic. One of my favorites is the most-excellent and most-expensive Minto Pyramid Principle by Barbara Minto. It’s about logic in writing, but you can use it for any decision you want to think through in detail.

    The trap of assuming

    You can think critically without knowing where the facts stop and your own neurotic assumptions begin. We aren’t built to identify our own assumptions without lots of practice, yet the wrong assumptions are fatal.

    When we don’t know something, we assume. That’s a fancy way of saying, “we make stuff up.” And often, we don’t realize we’re doing it. When our best performers leave, our first (and perhaps only) response is to offer them more pay, without realizing that other motivations like job satisfaction or recognition for accomplishments might be more important.

    Finding and busting “conventional wisdom” can be the key to an empire. For decades, the standard video rental store model assumed that people wanted instant gratification and, to get it, they were willing to drive to a store, pay a rental fee for a few days’ access, and then drive back to the store in a few days to return the movie. Thousands of big and small video rental parlors popped up across the country using this model. But Reed Hastings challenged those assumptions. He calculated that people would trade instant gratification for delayed, and would pay a monthly fee if they could have movies mailed to them, which they could keep as long as they liked. The result? Netflix. Estimated 2005 revenue: $700 million.

    Assumptions can also cripple us. A CEO confided that he never hires someone who backs into a parking space. His logic (and I use the term loosely): The person will use time at the start of the day so they can leave more quickly at the end of the day. He assumes face time equals results. In whose world? Many people tell me they get more done in an hour at home than in eight hours in an interruption-prone office. How many great employees will he miss because he’s not examining his assumptions?

    Some assumptions run so deep they’re hard to question. Many managers can’t imagine letting people work fewer hours for the same pay. “If they go home earlier, we have to pay them less.” Why? “Hours = productivity” is true of assembly lines, but not knowledge work. Research shows that it’s not how much you work, but the quality of the work time that drives results.2 But in most workplaces, hours count as much as results.

    Next time you’re grappling with a problem, spend time brainstorming your assumptions. Get others involved—it’s easier to uncover assumptions with an outside perspective. Then question the heck out of each one. You may find that one changed assumption is the difference between doing good and doing great.


    The truth will set you free (statistics notwithstanding)

    Have you ever noticed how terrified we are of the truth? We’re desperately afraid that the truth will reveal us as incompetent. Our situation really is hopeless. We really aren’t as great as we pretend. So we cling to our beliefs no matter how hard the truth tries to break free.

    Guess what, recording industry: Electronic downloads have changed the nature of your business. Start asking how you’ll add value in a world where finding, packaging, and distributing sound is a commodity. Hey, ailing airlines: Oil’s expensive, customers won’t pay much, and you have huge capital costs. That hasn’t stopped Southwest, Jet Blue, and others from making a fortune.

    Nothing tells the truth like solid data and the guts to accept it. But it’s difficult in practice. When was the last time you identified and collected data that contradicted your beliefs? If you found it, did you cheerfully change your belief, or did you explain away the data in a way that let you keep your comfortable pre-conceptions?

    Here is a great exercise for your group or company. Have your general managers list your industry’s Unquestioned Truths, which they then must prove with data. When a Fortune 500 CEO recently ran this exercise, Surprise! Some “absolute truths” were absolutely false. Now he can do business his competitors think is nuts. Analysts will say he’s off his rocker, until his deeper knowledge of truth starts making a small fortune.

    One caveat: Be picky about where you get your data. The Internet can be especially dangerous. The miracle of technology lets one bad piece of data spread far and wide, and eventually be accepted as truth.

    Help! I’ve been framed!

    Not only may your data be disguised, but the whole problem itself may be disguised! It seems obvious: we’re losing money, we need to cut costs. Not so fast! How you “frame” a situation—your explanation—has great power. Remember assumptions? Frames are big ol’ collections of assumptions that you adopt lock, stock, and barrel. They become the map you use to explore a situation.

    You’re negotiating an acquisition. You’re chomping at the bit. It’s WAR!! Competition is all. The frame is combat!

    Or, you’re negotiating an acquisition. You’re on a journey with the other party to find and split the value buried at the X. You still track your gains and gather intelligence, but the emphasis is on mutual outcomes, not “winning.”

    In a zero-sum one-time negotiation, a combat frame may be the best tool. But in a negotiation where you’re free to develop creative solutions that can involve outside factors, the journey frame could work best. “Instead of $100K, why don’t you pay $75K and let us share your booth at Comdex?”

    Frames have great power! Presented with a potential solution to a problem and told, “This course of action has a 20 percent failure rate,” few managers would approve. When that same solution is presented as having an 80 percent success rate, the same manager is going to consider it more deeply—even though a 20 percent failure rate means the same thing as an 80 percent success rate! The frame changes the decision.

    Are you brave in the face of failure? Most people aren’t. I recommend the responsibility frame: “What aren’t we doing what we should?” The responsibility frame sends you searching for the elements of success.

    The beauty is that no one frame is right, just different. The danger is when we adopt a frame without questioning it. You’ll do best by trying several different frames for a situation and exploring each to extract the gems.

    People are our greatest asset. Really

    Critical thinking isn’t just about what happens in our own brains. When you’re thinking critically in business, bring in other people! We don’t consider the people impact in our decisions often enough. In fact, we pooh-pooh the “soft stuff.” We feel safe with factors we can calculate on our HP-12B. But in truth, business is about people. Multibillion-dollar mergers fail due to culture clash.

    Customers, suppliers, partners, employees. They’re as much a part of your business as that sparkly new PC you use to play Solitaire. How will your decisions change their lives? Imagine being them and let your imagination change your decisions.

    The Gallup organization estimates that 70 percent of America’s workers are disengaged, and disengaged workers are dramatically less productive, creative, and committed than engaged workers. Yet few strategy meetings ask, “How can we engage our employees more?” It’s as if we say people are our greatest asset—but we don’t really believe it. If you want to improve your critical thinking, get other points of view.

    A stitch in time saves nine

    Of course you know you should think about the consequences of your actions. But with information overload, quarterly earnings pressure, sixty-hour weeks…who has the time? We don’t think much beyond the end of our nose.

    But technology leverages the effects of our decisions throughout the organization and even across the globe. So good thinking demands that you consider consequences over many timeframes. Think out a month, a year, a decade, many decades. That tanning booth looks great when you consider how you’ll look in a week, but is it worth looking like a leather overcoat ten years from now?

    Long-term junkies like me are great at creating ten-year plans, but managing next month’s cash flow? Not likely. Short-term junkies are more common; they’re the ones who discount to make this quarter’s numbers, while tanking the company in the process. You can do better by considering multiple timeframes.

    I could go on, but there’s plenty here to chew on. Think about a decision you’re making, and pull in the rigor:

    1. Make sure you understand the logic behind your decision.
    2. Identify your assumptions and double-check them.
    3. Collect the data that will support or disprove your assumptions.
    4. Deliberately consider the situation from multiple frames.
    5. Remember the people!
    6. Think short and long term.

    Good luck.

    © 2005 by Stever Robbins. All rights reserved in all media.

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    Linking Vision, Strategy, and Tactics

    You’re so proud of your new vision statement. It sounds nice. Inspiring, even. But the vision is useless unless it can direct action.

    Your vision lays out a destination; your destination guides your strategy; and strategy chooses action. It’s action that leads to success. In those moments of action, having clear direction is crucial for building momentum. If your organization is like most, you spent weeks debating every word crafting your vision, mission, strategy, and goals. But no matter how lofty, if they aren’t created in a way that provides direction, those statements are little more than high-priced indulgences.

    Every company means something different by the words “vision” and “strategy.” One person insists that “Provide our customers the highest possible quality widgets” is a vision. A friend takes one look and assures him, “That’s a strategy.” Here are some useful definitions that will help you decide if you’ve set a direction that can truly get traction.

    Envisioning the future

    Vision is timeless. It’s based on who/what you want to do. It’s why you’ve got an organization in the first place. It must be specific enough that everyone can use it to decide if their work is moving the company forward. Progress towards the vision must be measurable. A vision is independent of specific competition, and while it may mention the customer, it must guide even someone who doesn’t know the customers’ mind. The best visions imply whom the company serves, what it provides, and what distinguishes it from other companies providing the same products and services. Vision sets the broad direction. It says, “Go west, young man.”

    Wrong: We will provide exceptional products and services that our customers value.

    This vision requires knowing the customers’ mind in order to understand what the company provides. It doesn’t distinguish what is unique about the company, since presumably everyone in the market produces something customers value.

    Right: We will help boat owners everywhere navigate new seas with geographically based directional products and services.

    This vision tells us the market, the product (navigation products and services), the distinguisher (geographically based), and the progress measurement (delight).

    The strategy thing

    Strategy links the destination (vision) with current reality. Strategy applies to the whole company, and answers the question “How will we reach our vision, given current market conditions, competitive scenario, regulatory environment, etc.?” Strategy is narrower than vision, but broad enough to guide companywide organization structure, hiring, capabilities that must be developed, and so on. Strategy says, “We’re going west, but we ran into this grand canyon. We can go around to the north or south. Let’s choose south.”

    For example, a company may have a vision to “provide scientifically proven technology to solve the medical needs of consumers and hospitals.” In the 1950s, the strategy may be doing in-house research, hiring and developing scientists, and a compensation program based on discovery. In the 1990s, the same company may have a strategy of acquiring small drug-making companies and buying and protecting patents from other companies. Both strategies will reach the vision, but they are appropriate for different competitive environments, and they have different organization structures, different financing options, and different operational characteristics.

    You know you have a strategy if you chose your current path from many alternatives, all of which would have reached your vision, each of which would have required hiring different people and building different systems. If you didn’t consider many alternatives, or you didn’t choose your alternative considering your competition, your vision, and your current market conditions, then you probably have a tactic, not a strategy. If you can execute your strategy with your current people, reward systems, and organization structure, then it’s not a strategy, it’s a tactic.

    The tactics

    Tactics are limited in scope, typically just to a part of the company. They’re shorter term than a strategy. They involve executing given the existing capabilities and resources of the company. Unlike strategy, tactics generally work within the current organization structure, rather than changing the organization. Tactics say, “We’re on the south path. Let’s travel two miles today.” Your tactics probably won’t work unless they’re generated from a strategy that lays out a consistent philosophy for how your company will compete/win/attract customers in today’s market.

    My article on giving your organization serious traction

    “Flashpoints” are those moments in time when traction and momentum are built. For example, a flashpoint in creating a quality-driven organization might be when the CEO refuses to ship a poor-quality product, even though it will hurt quarterly numbers. Flashpoints always happen during a tactical action. That’s why you need a vision and strategy—without them, people at the flashpoint won’t have the guidance to ensure they can move the company forward in that moment of traction.

    Your strategy also helps you find flashpoints. If your strategy involves locking up important distributor relationships, your flashpoints will involve reputation and relationship building, creating the perception of value to the distributors, and establishing negotiating leverage to capture an exclusive relationship. If your strategy is to be a low-cost provider, your flashpoints might be times when opportunities for efficiencies arise, or incidents where you can encourage a “continuous improvement” mindset in your team.

    At the end of the day, your vision and strategy only exist to drive tactics. And often, the most significant tactics are those flashpoints whose effects are far-reaching. When your vision sets direction and your strategy ties it to your current situation, they provide a compass for everyone in your organization to follow for years to come.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Give Your Organization Serious Traction

    When we’re getting traction on something new, we typically have a week’s worth of work to do, and an hour to do it. The International Labor Organization says Americans win the prize for the most overworked people in the world.1 We’re productive, not because we work well (Europe matches our hourly efficiency) but because . . . we just work more hours. That means we’re working hard, but not smart. By working smart, we can still produce and also have a life.2 The challenge is pouring time and energy strictly into what really matters by exploiting your moments of truth.

    Begin at the end

    Most of our time at work is wasted. Only some of what we do moves the business forward. The rest is plain, old-fashioned bureaucracy. But you can’t know what moves the business forward unless you know where “forward” is.

    In your search for moments that matter, keep your highest end goal—your vision—constantly in mind. Think golf—the secret to a good golf game (so they tell me) is not aiming at the ball; it’s aiming past the ball. Be guided by the direction, not the specific next step. We often get caught up in aiming at the ball. For example, many executives aim for shareholder wealth. Bad idea. Shareholders get wealthy when customers pay good money for products that solve real problems. Aim for that. Your vision proclaims how you plan to satisfy customers. Do that well and the money will follow.

    The measurement moments

    Some of your most important moments are when you have the chance to gather key information. A trip to a competitor’s plant, for example, can be an excellent opportunity to spot best practices and gather competitive intelligence. For a financial analyst, the critical moment may be the chance to hear a CEO speak on his or her company’s future plans.

    You need to know what information is critical and also how you’ll use it when you get it.

    As you prepare for measurement moments, know what information you’ll ignore. Then ignore it. We’re so awash in information that it’s tempting to collect it believing that any knowledge is useful. Nothing could be less true. Lots of access to the wrong information obscures what really matters. Financial markets are a great example. Tracking a company’s stock price—a common pastime—is often a source of bad information. The stock’s daily rise and fall promotes emotional decisions that are better made with careful thought and deliberation.

    You need to know what information is critical and also how you’ll use it when you get it. Then when your Moment arrives, you’ll know what to look for, you can go for it, and then spring into action. I’ve seen marketing departments get a critical chance to talk to customers. They wanted information about a customer’s buying behavior, but didn’t think about how their questions would gather that information. So they asked about brand recognition instead. Is brand recognition important? Probably so. But they missed the chance to gather and use the information that was really critical.

    The decision moments

    Often, a decision will be a Moment of Truth. In the moment that something triggers the need for a decision, you must to be ready to move.

    Decisions are rich events. Your values get expressed through your decisions. Decisions communicate your priorities to everyone (including you!). Depending on who’s involved, the decision can also be building political capital among those who take part.

    Taking the best advantage of a moment of decision demands that you have the information you need for the decision, the people involved, and the means to communicate and act on the decision. You also need to know when to trigger the decision.

    Shell Oil’s famous scenario planning of the early 1980s is a great example of identifying and acting on moments of truth. One of Shell’s scenarios was exploring the fall of the Soviet Union. Early on, they identified Mikhail Gorbachev as a pivotal player in the USSR’s future. When he rose to power that triggered Shell to act on its scenario to prepare for the opening of the country. Thinking through their strategic decisions ahead of time gave them a huge lead when the time came to make those decisions.

    Your critical decisions will change over time, which makes preparation an ongoing project. A young software company was deciding how to spend far-higher-than-expected profits. One manager asked if higher sales figures came from growing market share or from losing share in a market that was growing overall. Alas, the marketing manager hadn’t prepared that information. Product plans were made without that information, and the company didn’t get traction in the evolving market. If you’re going to be prepared for your decision “moments of truth,” know what information you’ll need to make the decisions and arrange to have it at your fingertips.


    Future moments

    Shell’s scenario group wasn’t just finding triggers; at a deeper level, they were finding issues with long lead times and addressing them soon enough to do something smart. Do you know what you need in place this time next year? Five years from now? Two weeks from now? Sometimes you need concentrated efforts now to prepare for crucial events much later.

    Relationship building is a long-lead-time activity that can be crucial. If you’re going to be entering a new market in a year, now is the time to start getting to know the key influencers, industry reporters, and main distributors. When the time comes to enter the market, you’ll be able to jump right in with credibility, having already started building the relationships you need.

    SoftSoap’s rise to market dominance is a great example of a long-term moment. The SoftSoap creators realized that competitive products would need plastic pumps for the liquid soap. So SoftSoap bought up the world’s supply of plastic pumps, forcing competitors to wait a year until more pumps could be made. By imagining the future and understanding the long-lead-time issues, a single purchase event became the moment that gave them a year’s head start in their market.

    As important as it may seem to create that great new logo for the product, don’t do it!

    Infrastructure investments are moments that lock in commitments that can make or break your future. A CEO recently confided that his company can enter a new market and hit 26 percent profit margins within three months. Unfortunately, the company overinvested in too-large plants early in the game—assets that are such a drag the company may still fail. When you have a moment of decision or implementation with huge long-term consequences, it’s worth the time to focus on making the right decision.

    Look across all business areas

    When you’re searching for your most important moments, remember to consider the entire business. We often think first of areas we know well, and forget others. But the best leverage points rarely cluster in one functional place. Sometimes you may focus efforts on finishing development for a trade show. Then, emphasis shifts to landing a key distribution contract. Next, your most important moment may be when your first reviewer receives and uses your product. Your job is aligning all your efforts behind each moment so you squeeze every bit of value from your significant events and decisions.

    Moments that don’t matter

    Your goal here is really to tease out the moments when your actions really matter, and concentrate on those. That’s only half the battle, however. The biggest challenge can be in dropping efforts on the moments that don’t matter.

    Human beings have a weird habit of creating projects and initiatives that never die. Once something is under way, we want to keep it alive no matter how useless it is. Resist! As important as it may seem to create that great new logo for the product, don’t do it! Face facts: The logo won’t make or break a product launch. A product that doesn’t solve the problem, will. Be ruthless about putting limited resources—including your time—into only those moments linked directly to success.

    Concentrate on high-leverage moments

    Remember our goal is achieving more by doing less. You may identify more moments of truth than you possibly have time to pursue. Choose between them by putting your efforts where the leverage is greatest, where you get the biggest bang for the buck.

    Leverage is simply the biggest return for your effort. If you have three public events you can speak at, one to a group of customers, one to a group of the most influential industry distributors, and one to your local bridge club, chances are that the distributors will be your best bet. Why? Because if ten distributors are impressed, they can help you reach thousands of others.

    At the end of the day, results matter—not efforts. When an important initiative isn’t gaining traction, or when you’re starting something new, the secret lies in “micro-focusing” on the moments that make a difference. If you know where you’re going, you can put your effort into just the measurements, decisions, and long-term important initiatives that will let you move ahead with results and not merely hard work.

    © 2004 by Stever Robbins. All rights reserved in all media.

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    Making it Right with Wronged Employees

    QuestionAn executive team laid off a group of employees here in Canada in order to outsource to an Asian country. They can’t find talent in the new country, work has stalled, and management tries to cajole laid-off employees (all talented, experienced peak performers) to return. The laid-off employees demand a written apology from the management and request that some executives be fired.

    My question: Should upper management issue an apology and suck it up and try to get their best talent back?

    AnswerThis is a Moment of Truth for your upper management. What they do will send a clear message to the company. Before we explore what to do, let’s explore how management arrived at this difficult place.

    The employee point of view

    You’re a talented, experienced peak performer. You’ve been working hard and keeping a project progressing smoothly. One day, you get a notice that—through no fault of your own—you’re laid off because someone wants to move your group to another location.

    Do you jump with joy, exuberant at the gloriously superb business decision made by upper management? Doubtful. You probably feel upset, resentful, unappreciated. You might even feel personally affronted, as if you were being treated like an interchangeable cog in a machine. The message you received: You’re not unique, you’re not valuable, and you’re quite replaceable (or even . . . “fungible”).

    The management point of view

    You have a group that’s doing great. It is full of talented people, making progress. A business issue comes up. Perhaps you want to locate that group nearer a supplier. Or maybe you want the project to take place at a cheaper facility. Possibly, you’re just empire building and want to consolidate your empire. You decide to disband the existing group and reform it in a new location. It should be a simple matter, you think, to find people to run the group in the new location.

    • • • •

    Managers are thinking of the business. They’re thinking tasks, processes, locations, efficiency. They’re thinking everything but people. The employees, being people, are taking the move personally. Whether or not it’s meant personally, that’s how it’s coming across. (Note: when someone’s project is canceled or they’re laid off, they always take it personally. Trust me.)

    If a highly visible manager made this decision, the company is also making a statement that it cares more about efficiency, consolidation, etc. than people. True or not, the loud-and-clear message is that employment is about transactions, not about loyalty or commitment. The laid-off employees got that message loud and clear, and their return is a clear negotiation.

    And what are they asking? They don’t want more money, bonuses, or vacation time. They want an apology. Apologies are what people want when they feel they’ve been wronged. We can debate whether or not the layoffs were wrong, but the feelings they evoked are real. If the employees feel wronged and an apology will fix it, my advice is to apologize and get on with life.

    Apologies aren’t fatal.

    Maybe the executives think it unfair to apologize when they don’t think they were wrong. That’s not the issue. The employees thought it unfair to be laid off for doing a good job. This isn’t about fair; it’s about feelings. Apologies will fix the feelings. Has anyone (think: significant other) ever wanted your apology when you knew you were right? You refused, and maybe even won the argument. You got to be RIGHT. And did it strengthen the relationship? Of course not. Would saying “I’m sorry” and letting go of being RIGHT have fixed the relationship? Of course.

    Maybe the executives fear an apology because deep down, they feel they screwed up and don’t want to admit it. In this case, it sounds like they were wrong and badly bungled a situation. All I can say is, “Get over it.” Have them hire a coach or, if it’s really deep-seated, a therapist. If they can’t admit their mistakes, they can’t learn, and that will eventually doom the business.

    Maybe the execs fear that apologies will undermine their leadership. They may believe that leaders must appear infallible, that apologies are admissions of failure and must be avoided at all costs.

    Nonsense! If a leader screws up, it’s no secret. Everyone knows. The secret is that screwing up and handling the recovery well can actually strengthen a leadership relationship. A good recovery acknowledges the problem, addresses feelings, and gives reason to believe the future will be better: “I really screwed up by thinking I should consolidate the group on the West Coast. I didn’t value the people in the existing group, and I didn’t honor their contribution. I’m very sorry. In the future, I will do my best to make decisions taking the people into account, and not just the business.”

    Firing might be the solution

    The employees want someone fired. If all they want is revenge, don’t do it. Firing for revenge sets an ugly precedent—almost as ugly as disbanding a group of high performers without preparing for the consequences. But might there be other reasons for this (admittedly extreme) request?

    Consider: The executives laid off people whom you characterize as talented, experienced peak performers who were doing their job well. Yet they didn’t make sure that they could replace those people, and obviously, the way they were laid off left the employees angry and resentful. In short, the executives failed miserably at their own jobs.

    To me, an outside observer, the message is that it’s perfectly OK to lay off peak performers who are doing their job. Yet it’s not OK to fire executives who don’t do their jobs. In this case, keeping the executives sends a clear message that worker excellence is valued less than executive incompetence, and firing incompetence is generally regarded as a good idea.

    So you need to decide: In your company, should business needs trump individual emotional needs? With the original layoffs, the answer was clearly Business Wins. If you want to be consistent, analyze the situation without regard to the people. You have a stalled project that can be resurrected with an apology and a firing. What’s the project worth to the company? What’s the executive worth to the company? Abandon the one with least value.

    You can always decide that taking people into account makes sense. Personally, I put human needs above business needs, and I’ve found that it builds incredibly loyal, dedicated teams. Either way, consistency is important. If you take people into account when the people are executives, and take business into account when the people are of lower status, you’re really just engaging in nepotism and privilege. Many, many businesses run that way, but it isn’t going to build a committed, loyal, inclusive culture. If you want a strong company, choose your standards and make them consistent throughout.

    Strengthening the group

    It seems that everyone in this situation is framing this as a conflict. Yet at the end of the day, everyone shares a common goal: to build a successful company that can keep everyone employed and happy. It’s important to get the group back together and moving forward. After apologies and re-hirings, why not use this as an opportunity to reorient the group around the common goal?

    This is an emotionally charged situation that has brought up many issues including politics, business decisions and their impact on people, and whether layoffs and firings are the best solution to business and interpersonal problems. Consider getting everyone in a room (perhaps with a professional facilitator, if feelings still run hot), with one agenda: uncover learnings for everyone involved about how better decisions can be made, how feelings can be managed, and how executives and employees can better understand each other’s point of view. Learn from your successes as well as your failures—go beyond this layoff/rehiring situation as a source for learning and also consider similar decisions that went smoothly.

    At the end of the day, your question is about people, not policy. If the original layoffs had been planned with attention to the feelings and needs of the people as well as the business, life would be a lot easier right now. As it is, there is emotional cleanup that must happen before the organizational cleanup begins. An apology is a small price to pay. Firing is a high price, but your organization has already said by example that business needs trump individual needs. If an executive’s continued employment is all that’s standing in the way of resurrecting a necessary project, it may be time to relocate that executive, even if she’s a talented, experienced peak performer.

    © 2005 by Stever Robbins. All rights reserved in all media.

    Stever Robbins is founder and president of LeadershipDecisionworks, a consulting firm that helps companies develop leadership and organizational strategies to sustain growth and productivity over time. You can find more of his articles at http://www.SteverRobbins.com. He is the author of It Takes a Lot More than Attitude to Lead a Stellar Organization.

    See other stories in this series.

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    Minimize Secrecy, Maximize Knowledge

    People have lots of reasons for hoarding information, mostly bad ones. But sometimes it’s good to keep quiet. After all, you want information to get where it’s needed, in a way that serves everyone involved.
    Our daily job as managers is simple. We observe, taking in information. We think about it, make decisions, and then act.1 In the past, observation created a bottleneck. Information was hard to find, hard to duplicate, and it traveled slowly—often by ship, train, or horseback.
    Information was also scarce, and that made it valuable. Power was gained by hoarding information and being shrouded in mystery. That was then, this is now. Hoarding information used to be a show of power, now it’s just annoying. The bottleneck has moved, and with it, the dynamics of who wins and who loses.
    Most of us are flooded with too much information. What we need is time and space to think and act. Now, power comes to those who can harness information by getting it to the right people at the right time, so they can move the organization forward.

    Which brings us to confidentiality. Imagine a Powerful Executive Team (PET) that keeps things confidential unless there’s a need to know. The PET graces employees with the nuggets of wisdom needed to do their job. This scheme demands that the PET know enough about their employees to judge who needs what information and when. If the PET is hiring right—that is, hiring people smarter than they are—then they can’t predict who will need what. Innovation and creativity often come from someone using information in novel ways. The information-hoarding PET may strut around feeling powerful, but with China, Singapore, and Silicon Valley nipping at its heels, its days are numbered.
    A better, twenty-first century strategy is making information part of your business infrastructure. Let go of information-as-power, and instead embrace information-as-lifeblood. You must channel it well, but if you make the right information pervasive, you’re building for strength.

    Spread knowledge about strategy to set direction

    Our brains are learning machines. If you imagine a goal, gather feedback, and allow flexible action, then performance improves almost without effort.2 Business is made of people—make goals and feedback the most important information to share.
    Your goals are your vision, mission, and the subgoals they create. Everyone in your organization should know your vision and mission—your C-level team, VPs, managers, and line workers. The vision and mission become the ultimate “why” of everyone’s job. By knowing the larger vision, people know what they’re working toward. They can feel proud to be part of something large, even if their job is small.
    And of course your vision and mission are goals to achieve. “We improve the quality of healthcare by providing doctors, nurses, and hospitals scientifically proven medical devices” is one company’s vision. You can bet every researcher, salesperson, manager, and customer service person can use the vision to decide daily if they are advancing the company. If not, they can make course corrections on the fly.

    Strategy helps people link their job to the vision. One financial services company’s strategy is to be a “trusted friend” to its customers. If everyone at the company lives and breathes this, they’ll work to establish relationships rather than cutting customer calls short to meet call-length quotas.
    “But wait,” you say, “you can’t have call reps on the phone for hours gabbing with customers!” Quite right. That’s where feedback comes in. People need to know their performance metrics (with as little delay as possible!) and how they link to the goals, so they can make their own corrections.
    When personal finance software maker Intuit was small, Monday morning was time for the Metrics Meeting. Every department presented their critical measurements to the assembled crowd. Everyone was welcome, and when everyone knew sales, support call volumes, etc., the staff could brainstorm when something drifted off track.
    Your most global measurements are your financial statements. If all employees know your business model and can read the financial statements, they can make informed judgment calls. Your call center customer reps quickly decide: “It’s not worth spending all day with a customer whose lifetime value is $500. My job is to resolve or let the customer go.” Or, if you are a fractional jet ownership company where customer lifetime value is in the millions, your reps can decide to hand-hold a single customer for the better part of their natural life.
    (It may take tweaking to discover the best level of information sharing, but the rewards are great. For teaching people to link financials to their job, Profitability Business Simulations (www.profitability.com) has one of the best programs I’ve ever found.)

    Spread knowledge about the organization to build efficient operations

    It always amazes me how few people in business—other than the managers who institute a reorganization—understand their organization’s structure and processes. Yet that understanding is critical to making things happen.
    The larger your business, the smaller the jobs. In a fifty-person company, one person might handle accounts receivable and be an account manager. Since they deal with customers as an account manager, they can mention receivables issues as part of that relationship. In a 5,000-person company, however, receivables may take four full-time people, each doing just part of the job.
    In a really specific job, people lose the big picture. They don’t know where work comes from or where it goes next. And they rarely know why it matters.

    So give them that knowledge! Make sure everyone knows where they are in the business, and why what they do matters. Then when they meet others in the process they can devise ways of making things run more smoothly. And besides, it helps people feel more meaning in their jobs. Gallup surveys say roughly 70 percent of workers are disengaged from their jobs. Do you doubt it? If your job were double-checking line 4 of form X3/J eight hours a day, you wouldn’t be champing at the bit, either. Help people know their contribution is meaningful by spreading the word about how everything works. Tell them. Show them. Remind them.

    Not only must people know what they do, they must know what they don’t do. Don’t waste time and money duplicating effort. Let everyone know where responsibilities begin and end. If marketing chooses final product features, make sure product development knows so the groups don’t step on each others’ toes. While boundaries are easily set early on, make sure they’re emphasized at all times to keep a lid on turf battles.

    Spread your reasoning to improve morale and buy-in

    Everyone agrees salaries should be kept confidential. Why? Obviously, because people will compare. If they feel underpaid, they’ll complain, hurt morale, and maybe leave. Ditto for promotions.
    If people think you promote and pay unfairly, everyone will assume you have the worst possible motives. The gossip mill will kick into overdrive, and morale will kick into underdrive. Help people understand why decisions are made and you can head off the worst of the problems.
    Transparency can be risky! If salary information creates conflict, maybe the managers aren’t paying fairly. Maybe they really need an engineer when engineers are in great demand, so the company will pay the new engineer more than current engineers. Market reality? Yes. Fair? Of course not. In companies where salaries are public, these issues surface and get discussed. But these discussions should be based on sharing the real reasons and criteria behind salaries. People may not agree with the logic, but the undercurrent of betrayal and intrigue can vanish. It’s a tricky discussion. So much so that W. Edwards Deming, father of the quality movement, believes there should be no pay for performance, only flat salaries.
    Personally, I like public salary data. It makes life harder for me, and that’s a good thing. I’m forced to justify salaries and make my expectations and pay policies crystal clear to everyone I hire. You may decide differently. Just make sure people understand the “why” behind your policy and they’ll be more likely to agree.

    Spread reasoning about promotions to improve morale

    Keeping promotions confidential may also be a disaster waiting to happen. When an individual gets promoted, everyone who wanted the job gets upset. They take that person’s promotion as a personal insult.
    In an ideal world, everyone knows what’s expected of them. They knew where they still need to develop, and what the criteria are for the next promotion. But what happens when many people are qualified for one job? Face reality: We only choose one person over another because someone must be promoted. Bring up the possibility before it happens and you might head off a rebellion. If you wait until the promotion is announced, your hands are tied and everyone else has an unpleasant shock.
    We don’t live in an ideal world. Sometimes we offer a promotion to keep an essential employee. Or a merger eliminates a redundant product line, and we must promote that project’s members to entice them to stay. Depending on your culture, these situations may be discussable, or not. The key is to share the reasoning and gain buy-in on the process behind promotions before promotions happen.

    Share knowledge about critical events to preserve trust

    Some business events change everyone’s lives. Layoffs, mergers, acquisitions, and C-level changes make an entire organization’s life uncertain. Uncertainty breeds fear. Fear breeds suspicion—and people will be suspicious of you, of “them,” and of everyone they suspect of being a mastermind behind the disruptive event.
    Share knowledge about such events long before the rumor mill takes over. The rumor mill makes circumstances more dire than they really are. The rumor mill reinforces people’s wildest nightmares, and ensures any momentary comfort is properly interrupted by fear, uncertainty, and doubt. “Sure, management says your group will survive, but I hear AcquisitionCo already has a competing group. But you’ll survive the cut. Probably…”
    Open discussion can head off the worst fears. Sometimes, details must be kept confidential. Sometimes, you actually don’t have the answers. Say so. “We are in merger talks with XYZ Co. We don’t yet know which groups will stay and which will go.” As long as you’re telling the truth, people will trust you. They’ll still be stressed out over the uncertainty, but you can offer them the certainty of knowing where you are. And that will preserve trust.

    Keep a firm knowledge boundary at the company walls

    Though information is your company’s lifeblood, you need to keep it inside your walls. Information about critical customers, mergers, and reorgs can jeopardize success if leaked to competitors or the media. Steep your culture in information sharing, and have people place a premium on confidentiality. Tell everyone what must be kept secret, and make sure they know what that means. Yes, it’s breaking confidentiality to tell your best friend, even if he crosses his heart and swears not to tell.

    Information keeps people going. It helps people do their jobs, it feeds morale, and it lets everyone bring their full creativity towards common goals, rather than acting randomly. Share strategy, the “hows” and “whys” of how the organization works, and address uncertainty around major events. The goal is always to get everyone thinking together around creating the best results. Confidentiality has a place, but the question “what should be kept confidential?” has an important complement: “what must we share to become a breakthrough organization?”

    © 2005 by Stever Robbins. All rights reserved in all media.

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    Productivity Means Working Smarter, Not Longer

    Workers in the United States put in more hours at work and take fewer vacation days than those in most industrialized countries. But the U.S isn’t the most productive country in the world. When it comes to full productivity, according to an article in The Economist, France wins, working only forty hours a week with lots of vacation. Conversations with clients and friends suggest we’re working hard, but, well, stupidly. We’re busy, but our important priorities are falling by the wayside as we work hard when we should be working smart.
    Working smart means getting the same results in less time. To do that, you must change how you work. You’ll get the most by changing your speed, increasing focus, and organizing to do things in parallel.

    Start with your eyes open

    Before you read on, I must warn you: Working smart is risky. If you work smart, you’ll have more free time. That means more leisure, shorter work hours, or . . . more work. If you use the free time to take on more commitments, you’re just as busy as before, but now you are so tightly scheduled that a slip in one project can cascade to many more projects. Happiness happens when productivity enables a higher-quality life, not frantic overachievement.
    Right now, we get more productive by working longer. But how about working faster? To work faster, you’ll have to get into the zone. In the zone, you’re running a marathon. You bring your full focus to one task and build momentum until you’re producing results like nobody’s business.
    Key to entering the zone is eliminating distraction. Your major distractions—let me guess—are e-mail, telephone, visitors, and yourself. One of my clients, a high-tech CEO, blocks out four hours each day for focus time. He closes his door, forwards the phone to voice-mail, and starts working to build up his rhythm. He rarely works the entire four hours, but by having the time blocked out, he’s sure to get a couple of hours of solid work under his belt. And without distractions, he can spend time doing big-picture thinking, instead of being pulled into details. After five years, he considers this one of the best habits he’s ever developed.
    Your biggest distractions will come from you, though. You’ll multitask. And sadly, you’ll believe you’re getting more done as you do. Face reality: People are less productive when multitasking, and that’s been shown in many studies over the last few years—check out “Juggling Too Many Tasks Could Make You Stupid” by Sue Shellenbarger in the Wall Street Journal, March 1, 2003. We feel busy, but most of that busy-ness is spent switching from task to task, not making forward progress on any one task.

    Increase focus

    If you’re like me, you hardly ever procrastinate—except for the really important stuff. The rubber bands get dutifully sorted by size, but that client proposal? Not so much. Another way to work smarter is by distinguishing busy from productive. Oh, we’re busy, and we feel productive, but we’re only productive if we’re producing the results that are most important to moving the company forward.
    E-mail is a great way to waste time feeling productive. And we get so much of it, so surely those two hours a day reading and replying is time well spent. But if you spend two hours of an eight-hour workday on e-mail, that’s 25 percent of your time. Unless that 25 percent of your time is producing at least 25 percent of your total income, it’s a low-value-added activity, no matter how many one-shot, ad hoc contracts you get that way.
    The same applies to any activity. The 80/20 rule says that 80 percent of your results come from just 20 percent of your efforts. Companies find most profits come from a few customers. And you’ll find most of your output comes from a few of your tasks. So what? Well, look at the math. If you double the time you spend on real-output-producing activities and stop doing the others, you’ll double your output and spend 60 percent less time! If you started with a ten-hour workday, you’ll get twice as much done, working just four hours.
    Consider Nancy. Nancy is a self-employed sales trainer. In a typical day, she might write her electronic newsletter, deliver a one-hour training, make a dozen prospect calls, categorize her receipts, and straighten her office. These all must get done, yet only delivering the training and making prospect calls directly bring in business. Nancy’s hidden productivity opportunity comes in making more prospecting calls, and spending less time categorizing receipts. In fact, she can hire a bookkeeper for a year with the extra money she makes from one additional sale.
    Once you’re concentrating on your high-output work, you can get another boost by streamlining. If Nancy gets 10 percent better at prospecting, that adds more to her bottom line than anything she can do in other areas.

    Say no

    My favorite 80/20 principle is saying “no.” Most of us take on more than we can handle. Then our companies lay off 30 percent of the work force and expect the same output from the survivors. Our overwork gets compounded by dumb high-level decision making.
    If you’re working at capacity, say “no” to that new client. If someone proposes a project that will fall in 80 percent-work-for-20 percent-results category, just say “no.” Face facts, my friend: There’s a limit to how much you can do. You can manage that limit and do things well, or you can ignore the limit and do a lousy job on everything. The choice is yours.

    Work in parallel, but don’t multitask

    When you multitask, you do many things at once. Bad idea. But you can find ways to arrange work so many things are happening at once. Good idea. If you are collaborating on a report and writing a marketing plan, you could write the plan and then work on the report. But look closely! Your colleague must review the report. So first draft your report and send it to your colleague. While she’s reviewing, you get to work on the marketing plan. Work moves forward on both at the same time.
    While we all work this way to some degree, a little thought can find golden opportunities for parallelism. Delegation is a great tool here. When you delegate a task, it keeps moving while you’re working on something else. Just make sure you are delegating to someone with the time, tools, and resources to do the job. Otherwise, you’ll find the task coming back to bite you.
    Another great source of time delays is when something’s being produced or shipped. Will your prospectus be going to the printer? Great! Use that time to hammer through your high-leverage tasks. The product is en route to your customer? That means more time for you to do other things. But if you putter around with low-priority tasks until you ship last minute via Federal Express, you lose the chance to work in parallel.

    Combine and think

    You can get very creative in how you use these principles. A partner in a new private equity firm wanted to buy and run a company. He realized he would say “no” 99 percent of the time, and “yes” only once or twice. To speed things along, he got very clear on the criteria to disqualify a deal as quickly as possible. He said “no” a whole lot. His ability to quickly weed out the duds ultimately led to a deal that’s showing gains of $170 million in thirteen months. If he hadn’t streamlined his low-leverage activity (saying “no”) so he could reach his high-leverage “yes,” he would likely have invested in one of his earlier, not-so-great deals.
    Have you noticed a pattern? Working faster, identifying your 80/20 opportunities, and using opportunities for parallelism all take thought and planning before you reap the rewards.
    So your highest-leverage activity is taking regular time to reexamine and tweak how you work. This year, I’m spending a half-day every two weeks to build a life and business that are productive. And to me, productivity means producing maximum happiness for me, my family, and friends. I entreat you to do the same. Give it a shot. You’ll be happier, you’ll get more done, and you’ll get to see your kids for dinner. And that’s what I call working smart.

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    Understand What Motivates Your Boss

    Letters from last month’s column Productivity Means Working Smarter, Not Longer have been gratifying and surprising. Most unexpected was a theme I heard over and over: “My manager won’t let me work smart. What do I do?” That’s a real problem. Let’s start by facing reality: In larger companies, your personal success doesn’t necessarily depend on doing what’s best for business.
    Long-time readers will know your bosses should be setting direction, giving feedback, and helping you tap your internal motivation—but most don’t. So take charge of yourself, face the reality of organizational life, and do what it takes to get your needs met.

    You’re there for the cash

    Why do you go to work? If you’re one of the lucky few, your work ignites your passion. It challenges you. It lets you accomplish what you find most worthwhile, provides community, and helps you contribute in a meaningful way. You’d keep working even if you won the lottery. Chances are, that’s not you. Even if your job does some of that, you wouldn’t do it if it weren’t for the paycheck. That’s fine. Almost everyone works for the money. So face that. Roll it around in your brain for a few minutes. Repeat after me: At the end of the day, even if you enjoy your job, you’re there to get paid. So “working smart” means working in whatever way gets you paid.
    Understand first that people decide what you get paid.
    You’ve heard managers say they’ll heap riches on those who do a good job. Ignore their words; watch their actions. Who do they really reward? Why? Mostly, we reward those who meet our needs, first and foremost. If you know what your managers really want, you can meet their needs while meeting the needs of the business. The late Harvard psychology professor David McClelland had an easy framework you can use.
    McClelland said motivation comes in three flavors: power, affiliation, and achievement. Power People want things to happen their way. Affiliation People want to be popular and liked. And Achievement People want results. We’re all part power, part affiliation, and part achievement.
    Take Mary. Mary wakes up thinking, “What can I do today?” Her day isn’t complete unless she finishes something, preferably working at least a few hours with others. She tells her employees the outcomes she wants and lets them figure out the “how.” That makes Mary about 60 percent achievement, 30 percent affiliation, and 10 percent power.
    Interestingly, we are taught that American business is all about achievement; it’s all that matters. When we talk “productivity,” “efficiency,” “goal-setting,” we’re swimming in achievement language. We set achievement goals and base bonuses on achievement measures. But guess what—people don’t actually behave that way, as your letters clearly show. They’re also driven by power and affiliation. “Working smart” means getting results, but even more, it means satisfying your boss’s needs for power and affiliation as well.

    Manage your boss’s real needs

    If your boss wants you to get results, my advice on “working smart” holds. Get stuff done. Measure what you get done. Discuss the measures with your boss. Do, do, do. Your boss will be thrilled that by working smart, you can get more stuff done in less time. Then go home early, and have a life.
    If your bosses want power, they want things done their way. Like bureaucrats, Power bosses often work this way. Following procedure and doing things the right way is more important than doing the right things.
    Your job for a Power boss is helping her empire-build and/or helping her get things done her way. Be careful, though. Your boss may be bad at figuring out what needs to be done. So even if she’s getting her way, her way just might hurt the business.
    You often find this power game happening when a new executive arrives to take over the show. They axe old projects and start their own. But if the outgoing exec was doing great, maybe no changes need to be made. To an incoming Power Person, this won’t do. They must change things simply to have the organization reflect their desires.
    An affiliation-oriented boss wants to be homecoming king. He wants to be liked. Your job becomes helping smooth out relationships, being friendly with your boss, and helping him manage the people relationships. Emotional intelligence helps you meet the needs of an Affiliation boss.
    When you hear “we’re one, big happy family,” that’s affiliation talking. Affiliation puts relationships first. I like that; relationships bind organizations together. But affiliation can go too far. Keeping incompetents in powerful positions just because they’re friends may honor relationships but tank the company. Even though your boss may not value it as much, make sure the work still gets done so you have someplace to work come next year.

    Work smart by balancing all needs

    All this comes back to working smart. If you’re trying to work smart and your boss says sorting paper clips is more important than crafting a distribution strategy, you need to know what’s happening inside your boss’s head and find the real motivation. Is your boss usually an achievement junkie? Then maybe she has a real reason paper clips are important. Talk to your boss. Make sure you both understand and agree on priorities, based on what it will take to get the job done.
    If you have a Power boss, she may be more concerned with having you sort paper clips her way than doing your job your way. You need to choose to own the business priorities yourself. Figure out those priorities and ask your boss how you can meet them. Since your boss needs to dictate the “how,” you choose the right “what.”
    The affiliation-oriented boss may have relationship concerns. “We can’t alienate our existing distributors. They’ve been with us for years! Joe and I go golfing every Wednesday.” Here, you must factor the relationships into account. Approach your boss with a positive attitude and make sure you approach your distribution with the relationship goals in mind as well.

    Line up your compensation

    Even though you’ll meet your boss’s motivational style, you still need to get paid. Socially, we rarely acknowledge power and affiliation goals out loud. Those goals are considered unprofessional, even though they drive so many of us. So you need to frame your job in terms of achievement goals that will get you paid, while making it clear that you’ll meet your boss’s power and affiliation needs along the way. Trust me—as long as you’re helping a power-oriented boss expand their empire, you’ll be able to find a meeting of the minds about what you need to do to get paid and move ahead.
    Notice that I’ve said very little about meeting the organization’s needs. That’s because only an executive who understands the link between their own needs and the organization’s needs will value your attempts to do the right thing for the business. In the final analysis, it isn’t between you and the company; it’s between you and the people who will promote and pay you.
    That group consists of more than just your boss. Your boss’s boss and other senior managers may be watching. Your Power boss may report to an Achievement executive. If your efforts are visible to the exec, helping your boss achieve in a way that her boss recognizes might be your best strategy.

    You can’t have it all

    At this point, you might be thinking that with all this strategizing about satisfying the three needs of management, it will be a miracle if you can juggle it all. Welcome to organizational life. If you have family or community needs, you can toss those into the mix. (This balancing act drives some people to self-employment. It was sure a factor when I set out on my own.)
    The bad news is that you can’t satisfy your needs, your boss’s, and your organization’s. After all, it’s in the organization’s best interest for you to forgo a raise while working an extra ten hours a week. You’ll almost certainly need to sacrifice something. But the good news is that it’s your choice. Choose wisely

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    Thinking Outside Your Beliefs

    I’ll bet I know why you’re reading this: You want the secret of success. And today, I plan to deliver. But the secret isn’t what you think. It’s not a practice, business model, or trend. Those are all just by-products of the real secret. All the “best practices” in the world won’t bring you results unless you understand what really drives success. What is it? Simple: belief.
    Beliefs are where it all starts—they determine everything. Beliefs about what’s possible guide the goals you’ll set. Beliefs about human nature guide whom you hire, how you pay them, and how you promote them. Beliefs about the future have an impact on your strategy. In short, your beliefs become policies that become results. As much as we love to think we’re logical, beliefs don’t come from logic. Beliefs aren’t about what’s true; they’re about what we happen to absorb from family, friends, and culture. When I was seven, I was happily singing away when my dad told me to plan on a different career choice. Wham! For thirty years I believed I couldn’t sing. (Six months with a voice teacher revealed a very nice singing voice, thank you very much. Who knew? Not my dad.)
    So-called conventional wisdom is just beliefs. Everyone knows this is true, and no one questions it. Growth is good. Sure it is. I always love hearing Warren Buffett discuss See’s Candies, a business that funded some of his early acquisitions. Warren is keenly aware that See’s has a natural limit to how big it can get without hurting its business. So he lets it stay small (small by his standards). As the second richest man in the world, his beliefs about growth catch my eye.
    (Note the hidden belief there? Do you believe being rich means someone is smarter, or that their opinions are worth listening to? That’s just a belief. It could be wrong.)
    Beliefs are sticky. Once you have a belief, you’ll interpret the world to match the belief. You’ll throw away or discount evidence against the belief. Just listen to any political debate. When data supports a point of view, the proponents leap. When data doesn’t, they try to discredit the data. It’s the belief driving, not reality.

    Drive your business by driving your beliefs

    If beliefs drive everything else, you owe it to yourself to know your own beliefs and choose them carefully. You just need to decide what to believe and then use the real belief-creating methods to drive the belief home. Oddly, you don’t have to choose beliefs that correspond to reality. You can choose any beliefs at all, as long as they drive you to create the world you want to create. For example, you can believe people basically want to show up and do a good job. If you do, you’ll create structures and systems that support people doing so. In turn, people will show up and do a good job. The belief becomes a self-fulfilling prophecy.
    Next time you study the people you admire, ignore the details of what they think made the difference in their success. Instead, listen for their beliefs. When you see a company succeed by having dual career tracks for managers and scientists, the key isn’t so much the specific program. Try on the belief that there are multiple forms of excellence and you should offer multiple forms of success to celebrate them all. That underlying belief may well lead to more innovation than just dual career tracks.

    Old beliefs get in the way

    Even if you identify great new beliefs, your existing beliefs will fight back. You might decide to believe that organic, self-funded growth is the healthiest. Yet your dot-com-fueled fantasies of Google’s IPO keep insisting at the back of your mind that high-growth, high-profile is the path to a great company. Your old beliefs put up a formidable roadblock to the new.
    When you start fighting yourself or saying, “Yes, but . . . ,” congratulate yourself! You’ve found a limiting belief. If you preface it by saying, “Of course, it’s human nature that . . .” or “Everybody knows . . . ,” then you know you’ve found a really powerful one.
    So kill it. Mull your conventional wisdom over in your mind, and start taunting it. “Nyah nyah nyah nyah nyah. You’re a limiting belief. Get lost!” If you have fun with your belief, you actually weaken its hold. Slowly start playing “what if” and make them wilder and wilder. You’ll find yourself slipping outside the box of your own thinking.
    Want some good ones to start with? Try challenging some of my favorite conventional wisdoms:
    growth is good

    • the goal of business is to make money for shareholders
    • quarterly results matter
    • the size of my office matters
    • pay should be related to performance

    people are our most important asset (if you’re in Houston, air conditioning is your most important asset, and don’t you forget it!)
    Use emotion and selective attention to solidify the new belief. Remember that logic is the quickest way not to change a belief. Beliefs, like significant others, are impervious to logic. So go straight for emotion.
    Contemplate something you believe is true. Notice the emotions you feel, “rightness,” or a confidence. And now hold that feeling while you start repeating your new belief to yourself. You literally want to start transferring your feelings of certainty to the new belief.
    But feeling isn’t enough! You also have to train yourself to filter reality, just like your current beliefs filter reality. So start reviewing in your mind every example you can think of where your new belief held. If you’re adopting the belief, “we can find ways to partner with competitors,” start searching for every example you can find where competitors have partnered. For examples, read Co-opetition. Meditate on Microsoft buying a hundred-million-dollar chunk of Apple as the latter struggled for growth. Think about research joint ventures like the MIT Media Lab, where all partners pony up the bucks, and all share the results.
    When you come across a counter-example, simply ignore it. “Gee,” you think, “my dad did business with a competitor and got wiped out.” Forget Dad’s two decades of bankruptcy and depression. Just focus on the times when partnering worked. Remember, you’re building a castle in the sky here. This isn’t about accuracy, it’s about training your emotions to act differently.
    It’s OK to have an unreal belief—your current beliefs are just as unreal, only in the other direction. Remember: Beliefs just act as filters that help you direct behavior; they’re not about what’s real. You’re adopting beliefs because they will lead you to do different things, build different structures, and get different results than your current beliefs.
    Regardless of belief, you still need a high-quality decision-making process. Making decisions should include a thoughtful phase where you leave beliefs behind and bring in data, real-world considerations, and lots of alternative viewpoints. That’s when you have the chance to avoid Dad’s fate, while still getting the benefits from “co-opetitive” innovations. You take reality into account in your decision-making process, not in your underlying beliefs.
    There is a lot more to beliefs. They form the box that everyone seems to want to think outside of. They turn into organizational behavior, and they also have a deep impact on your own actions, your feelings, your family, and your culture. They’re one of the most powerful forces I know, and we’ve just scratched the surface here. I will be discussing beliefs on my blog and in my newsletter in weeks to come. Because the more you design your beliefs, the more you can create the results that you want in the world. Or at least, that’s my belief

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    Setting Strategic Direction: Vision, Strategy, and Tactics

    Defining and Using The Three Tools of Leadership

    You’re so proud of your new vision statement. It sounds nice. Inspiring, even. But the vision is useless unless it can direct action.

    Your vision lays out a destination; your destination guides your strategy; and strategy chooses action. It’s action that leads to success. In those moments of action, having clear direction is crucial for building momentum. If your organization is like most, you spent weeks debating every word crafting your vision, mission, strategy, and goals. But no matter how lofty, if they aren’t created in a way that provides direction, those statements are little more than high-priced indulgences.

    Every company means something different by the words “vision” and “strategy.” One person insists that “Provide our customers the highest possible quality widgets” is a vision. A friend takes one look and assures him, “That’s a strategy.” Here are some useful definitions that will help you decide if you’ve set a direction that can truly get traction.

    Envisioning the future

    Vision is timeless. It’s based on who/what you want to do. It’s why you’ve got an organization in the first place. It must be specific enough that everyone can use it to decide if their work is moving the company forward. Progress towards the vision must be measurable. A vision is independent of specific competition, and while it may mention the customer, it must guide even someone who doesn’t know the customers’ mind. The best visions imply whom the company serves, what it provides, and what distinguishes it from other companies providing the same products and services. Vision sets the broad direction. It says, “Go west, young man.”

    Wrong: We will provide exceptional products and services that our customers value.

    This vision requires knowing the customers’ mind in order to understand what the company provides. It doesn’t distinguish what is unique about the company, since presumably everyone in the market produces something customers value.

    Right: We will help boat owners everywhere navigate new seas with geographically based directional products and services.

    This vision tells us the market, the product (navigation products and services), the distinguisher (geographically based), and the progress measurement (delight).

    Some organizations may call this a mission statement, rather than a vision. Or, they may have both a vision and a mission, with the vision expressing the ideal world or company, and the mission expressing the company’s purpose. For our purposes, they’re the same. A mission statement rounds out the vision. Together, they give timeless, overarching principles chosen by the company that express the company’s reason for being.

    The strategy thing

    Strategy links the destination (vision) with current reality. Strategy applies to the whole company, and answers the question “How will we reach our vision, given current market conditions, competitive scenario, regulatory environment, etc.?” Strategy is narrower than vision, but broad enough to guide companywide organization structure, hiring, capabilities that must be developed, and so on. Strategy says, “We’re going west, but we ran into this grand canyon. We can go around to the north or south. Let’s choose south.”

    For example, a company may have a vision to “provide scientifically proven technology to solve the medical needs of consumers and hospitals.” In the 1950s, the strategy may be doing in-house research, hiring and developing scientists, and a compensation program based on discovery. In the 1990s, the same company may have a strategy of acquiring small drug-making companies and buying and protecting patents from other companies. Both strategies will reach the vision, but they are appropriate for different competitive environments, and they have different organization structures, different financing options, and different operational characteristics.

    You know you have a strategy if you chose your current path from many alternatives, all of which would have reached your vision, each of which would have required hiring different people and building different systems. If you didn’t consider many alternatives, or you didn’t choose your alternative considering your competition, your vision, and your current market conditions, then you probably have a tactic, not a strategy. If you can execute your strategy with your current people, reward systems, and organization structure, then it’s not a strategy, it’s a tactic.

    The tactics

    Tactics are limited in scope, typically just to a part of the company. They’re shorter term than a strategy. They involve executing given the existing capabilities and resources of the company. Unlike strategy, tactics generally work within the current organization structure, rather than changing the organization. Tactics say, “We’re on the south path. Let’s travel two miles today.” Your tactics probably won’t work unless they’re generated from a strategy that lays out a consistent philosophy for how your company will compete/win/attract customers in today’s market.

    Your “moments of truth” are those moments in time when you build traction and momentum. For example, a moment of truth in creating a quality-driven organization might be when the CEO refuses to ship a poor-quality product, even though it will hurt quarterly numbers. Moments of truth always happen during a tactical action. That’s why you need a vision and strategy—without them, people won’t have the guidance to ensure they can move the company forward in that moment.

    Your strategy also helps you find your moments of truth. If your strategy involves locking up important distributor relationships, your moments will involve reputation and relationship building, creating the perception of value to the distributors, and establishing negotiating leverage to capture an exclusive relationship. If your strategy is to be a low-cost provider, moments of truth might be times when opportunities for efficiencies arise, or incidents where you can encourage a “continuous improvement” mindset in your team.

    At the end of the day, your vision and strategy only exist to drive tactics. And often, the most significant tactics are those moments of truth whose effects are far-reaching. When your vision sets direction and your strategy ties it to your current situation, they provide a compass for everyone in your organization to follow for years to come.

    Summary of Vision, Strategy, and Tactics

    Description Determines
    Vision Timeless. Internally generated. Specific enough to know what to say “No” to. Major markets.

    Major uniqueness/skill/advantage.

    Possible strategies.

    Strategy Specific to time, competitors, market conditions. Answers the question, “How do we achieve our vision in the current market, regulatory, and competitive environment?” Market segments to pursue.

    Which relationships to pursue (distributors, complementors, customers).

    Organization structure and priorities.

    Tactic Goal, typically < 1 year, to be achieved with existing resources, market structures, etc. Day-to-day actions to take.
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    Posted in Leadership | 1 Comment

    Public Speaking and Performing

    On rock ‘n roll, public speaking, acting, and the nature of story…

    Wow, what a pretentious title for this note. I hope it lives up to its promise.

    THE SCENE BEGINS IN AN OFF-BROADWAY MUSICAL:

    Last weekend, I saw Signs of Life, the Off-Broadway play about life in Terezin, the model concentration camp the Nazis created to show how well the Jews were being treated. My collaborator Joel Derfner composed the show. The acting and singing was excellent. It was very emotional, and left us in a state of profound … profundity. They announced an after-show talk, and my first thought was, “I hope the cast isn’t there.”

    My reaction surprised me. I usually love hanging out with creative types, and really love my actor friends. But in this case, despite the actors’ skill, I wanted to preserve the distance. What was up with that?

    CUT TO:

    I’ve done a lot of public speaking over the years. Whatever “it” is, I have it. Crowds respond to me. Recently, a speaker with a microphone was trying to get the attention of a room. I stood up, looked around, and said “let’s sit down now” in a slightly louder-than-normal voice. Everyone turned around and sat down. At one speech a few years ago, the tapes of my session sold out while the session was still in progress.

    Right now, I’m in my first show since forever. I’m an ensemble member with a full five or six speaking lines. Acting someone else’s line and characters is very different from public speaking. We’ll see how it goes.

    CUT TO:

    My friend Jamie Kent is building a career as a musician. He’s done a lot of theater and is now learning to perform as a musician in venues where some people are attentive fans, while others are drunken revelers. He and I spoke for a while today about the nature of being on stage. He’s found that doing theater is very different from performing music live, and life music seems different from public speaking. He’s still going up the learning curve. I’m watching.

    WHAT I’M LEARNING ABOUT STAGE

    Acting, public speaking, and performing music are all ways for one person to engage hundreds or thousands of others. There are critical differences that demand different skills in all three. Yet all three depend on the nature of the relationship between performer and audience.

    Stage is story.

    One-on-one conversation is easy. We adapt to each other and react to each other’s points. It’s conversation. When one person is engaging an audience, I find it helps me be more powerful to think in terms of story. There’s always a story.

    Actors. In acting, there’s a story being told. The actors are the medium. They’re an odd medium, since their skill is in knitting their own authentic emotions into building blocks for characters who they aren’t. The audience’s reaction is to the story, not the actors. The story is made more real through the skill of the actors, but the best actors are the ones who create a character so strong you forget the actor. Sean Penn in MILK was this amazing.

    The audience is voyeur, watching the story without being part. Though some stories occasionally break the fourth wall and a character talks directly to the audience, the characters don’t expect an answer, and the audience doesn’t expect to give one. Even the breaking of the fourth wall is, itself, part of the story. (If you’ve seen Avenue Q, you’ll recognize the awkwardness of what happens when the fourth wall breaks. We wonder: are we supposed to participate, or continue our part outside the production?)

    For the actor, the challenge is to create a character and story without directing it at the audience. The completeness of the character and the power of the direction is the compelling event that makes the audience want to watch. An actor uses their authenticity to create the character, but their job is to create a fiction with that authenticity.

    The actors in Signs of Life did such a good job that I didn’t want to meet them in person. The story was too powerful; I didn’t want to meet them not as their characters.

    Public speakers. Public speakers tell the story, and their role is narrator. Since they’re outside the story, the audience can interact with the narrator about the story. The audience is in conversation with the speaker about the story.

    For the speaker, the challenge is engaging in a conversation with the entire audience as a whole. The speaker must align themselves with the audience and share the audience’s discovery of the material the speaker is providing. Authenticity works well in public speaking, because people can often pick up when someone’s faking or restraining themselves, and people like to have conversations with people who are interesting and real.

    My “it” when public speaking is maybe a mild form of autism spectrum disorder that I’ve managed to turn into a huge asset (joking… I think): like many geeks, I can’t maintain a social facade. What you see is what you get. I suffer from involuntary authenticity.

    Leaders. Leaders also tell the story as narrator, but there’s an additional level: there’s the story of what it means to be together, sharing that story. When an audience gathers to be led by Lori Leader, Lori tells stories that bring up emotion in the followers. But the more powerful story is the story of why people are listening to Lori in the first place.

    Oprah might tell a story about an abused child. She’s narrator, aligned with the audience to discover truths about abuse. The larger story that many of her followers hold, however, is that by allowing Oprah to be their narrator, they will have richer, more fulfilling lives.

    For the leader, the challenge is working both of these messages at once. The leader must have a conversation with the audience about the material, just as a public speaker must. The leader also needs to have a separate conversation, about what that conversation means. “Join me to talk about race relations. [I'll narrate.] Just by being here, you’re showing your commitment to help change the world. [The conversation about the relationship.]”

    Musicians. For musician, the challenge is being both actor and speaker. The songs and what they mean to the audience are what forms the story. People see live music because they want to be in conversation with the musician, yet they want a conversation they know: the music that tells the story the audience wants to experience. Audiences can sometimes even get upset if the musician performs a song differently from how they performed it on their album. The audience wants the story (song) they know, plus the emotional connection they get with a narrator. The musician must create both the narrator relationship and provide the story to engage the audience.

    Jamie’s learning curve is likely related to the challenge of the duel relationship of actor and speaker/narrator. His pre-music performing experience was all as actor, and he’s just beginning to wrestle with the need to be with the audience even as he’s acting in the story of the music.

    SO WHERE DO WE GO FROM HERE?

    My larger story is that sometimes, my insights can help others get clarity on issues in their life. I’m hoping you find something useful, or at least entertaining, in these ideas. Let me know.

    I’m just playing with these ideas, as I delve into performing more than I’ve ever done. I’d be curious to know how you think about being on stage. What stories do you tell? How do you relate to your leaders, actors, teachers, and musicians?

    P.S. I’m available as a public speaker and performer, by the way… :-)

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    Posted in Misc, Psychology | 1 Comment

    Time after Time: Put Your Decision-Making Time Horizon to Work

    Put Your Decision-Making Time Horizon to Work

    Think about the future. Notice what kind of events you expect to happen in the future. Think about the projects you have going on. Think about the good things you expect to happen, and how you plan for them.

    You’ll notice that you have a preferred time horizon that you automatically use without thinking about it. For some people, considering “the long term” means thinking five months out. For other people, it means thinking ahead a hundred years… or a thousand years. I’m not talking about the time pressure from Wall Street or other managers; I’m talking about the mental timelines that all of us have, that we use to plan our lives.

    Your Time Horizon Matters

    The time horizon you use makes a huge difference in how you make decisions. If you naturally have a long time line, you may be able to create great long-term plans. You might not be so good at the short-term, however. Unfortunately, you have to pass through the short-term to get to the long-term, and if the short-term has some surprises, you can be caught unawares. I met a startup entrepreneur whose timeframe was years. He was mentally in a future where his company was already an industry leader. Unfortunately, he lived in that future and didn’t really pay much attention to the next six months. His company hit a few snags, and rather than focus in on the short term, he was so wedded to his long-term vision that he assumed “everything will work out.” It didn’t really penetrate that *he* was the one who had to make it work out.

    A purely short-term time horizon is great for day-to-day survival. A short-term calendar has its own problems. It’s easy to make decisions that seem great in the short-term, but lead to long-term ruin. A friend of mine thought his decisions through about three weeks out from the present. Three weeks is less than a credit card statement cycle, however. Each month he would run up more and more credit card debt, because his decisions about “can I afford this?” never really considered the need to pay back the credit card, four weeks in the future. It took him 15 years to pay down the credit card debt he accumulated in college.

    Use a Deliberate Time Horizon

    Next time you make a decision—about work, or family, or home life—consciously consider the same decision and its consequences on a 2-week, 6-month, and 5-year time horizon. You may find that different decisions work best with different time scales. That’s a good thing! It lets you understand the interplay between short and long-term consequences.

    My friend Michael Linenberger noticed that having a to-do list that’s so long your brain wants to explode also has a timeframe attached to it. Different items on your to-do list are associated with different time distances in the future. He’s designed a complete system to take advantage of how people think about time and activities to handle task management with no stress. His system meshes naturally with how people process near-future tasks differently from medium-future tasks, differently from far-future tasks. Today (immediate future), his book on the system is launching and I encourage you to check it out and buy a copy:
       http://masteryourworkday.com/

    Next week (medium future), try his system for a week. Just do it for a week and find out whether taking timeframes into account improves your ability to juggle the demands of a task-heavy workload. Then in six months, if it’s still working for you, start asking where else in your life you can take timeframes into account, so you make better decisions and build your life into more of what you want it to be.

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    Good customer service requires substance and style

    Good customer service requires more than just nice phone manners.

    I had a customer service need today. I called the company, whom we’ll call Canadian Mozy, and got a very nice young man named “Johnny.” He seemed to have a genuine American accent, clearly understood my issue, and was able to respond in complete sentences. That’s a good first start. Sometimes, I call a company and someone with a thick foreign accent answers, introducing himself as “Biff Johnson.” That’s a bad sign, especially if you recognize the accent and know that folks in that culture rarely have names like Biff. When a company’s first instruction to their phone reps is, “lie about your name,” you know you’re in for a real treat.

    A lot of companies know that having polite reps who tell the truth makes a good impression. Canadian Mozy certainly understood this.

    Johnny listened to my problem and explained, “we used to do what you’re asking for. We see we’ve done it for you several times. But our new policy is that we won’t do it any more.” Interestingly, I was asking for something that had no business implications for Canadian Mozy. It did not require them to spend a penny on my request. It did not expose them to any additional risk, nor did it obligate them to anything in the future. It was free for them to provide, they’d provided it before, and some random mid-level pinheaded bureaucrat decided to retract the policy.

    Politeness Wasn’t Enough

    Did I get good service? Johnny provided extremely polite service. He was gracious and dealt with my hissing, booing, and making funny noises into the phone with professional aplomb. But he was powerless to fix the situation.

    As a result, I’m pulling tens of thousands of dollars’ worth of business from Canadian Mozy and shifting it to other vendors. Though Canadian Mozy likes to trumpet themselves as a “partner” to the small businessperson, they aren’t. Their reps aren’t allowed to think for themselves, and the managers who set their policies don’t understand a whit about how to evaluate the actual business impact of a policy decision. They eliminated a policy that gave customers great value at no expense to themselves, and never thought about how customers might react.

    This brings me to the much misunderstood truth about customer service:

    • Good customer service requires good style. Your customer support reps must speak the language of your callers, shouldn’t tell obvious lies, and should be polite, courteous, and trained to deal with irate, irrational customers.
    • Good customer service also requires good execution. Your customer support reps must have the training to investigate someone’s problem, and the ability to do something about it, especially when the request is one you’ve honored in the past and which has no downside for you but tremendous upside for your customer.

    If you’re missing style or executions, customers get upset. In the language of kindergarten, good support comes down to this: be polite and keep your promises.

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    Posted in Business, Newsletter | 1 Comment

    The future of social media: pay content, gossip management

    Pay content and gossip management

    I’m Twittering today. And I’m Facebooking. And I’m blogging. And I’m writing my newsletter and my podcast. In pursuit of building my so-called personal brand, I’m getting my name out there and sharing my brilliance with the world. Once I get some decent lighting, 2010 will see me introduce a video blog as well. Yessiree, I’m building that brand right on up. Yup. Building that brand. Look at it go. Right on up there…

    What’s striking, however, is that none of this pays a cent. Not only does it not pay, but it conditions people to want my content for free. I had the audacity to pose a question to my Twitter subscribers last week, to get some suggestions for an upcoming episode. One happy person responded, “Dude, STOP ASKING US how to get stuff done and START TELLING US how to get it done!” I have hundreds of pages of free articles. I have written close to 500 pages of podcasts, all freely available, and apparently that’s not enough.

    The social media promise

    The theory is that social media lets people discuss my products and services without my intervention. I can now enter into a dialog with my customers, that will let me optimize my products, respond to my markets, and manage my reputation real time. The magically I’ll be successful and have a thriving business. That sounds really good on paper.

    Then I think for a moment. I’ve always been able to read reviews of my products. I’ve always been able to survey my customers. And if I’m at all smart about handling customer queries and support calls, I can even optimize my products and design in solutions for my customers based on their problems. In short, pretty much everything social media can do for me, I could do in a pre-social media world. So what’s the difference?

    The social media cost

    One big difference is the cost. Maintaining an ongoing social media presence is a huge use of time and effort. If I were a big company, I might hire someone full time to do nothing but tweet, twitter, Yelp, Blorp, and Blubber. But as a one-man shop, I have to do all this myself. Then I have to track the responses and figure out which channels are actually getting attention (that will change in six months, requiring another full round of marketing research), and then generate content content content.

    At some point, I’m apparently supposed to develop products and services, which is where I make the money. And by the way, those products and services better contain content I haven’t given away for free in the process of generating all this social media.

    My prediction

    Where will this go? Based on my own experience, I think social media will continue to be important as a channel for monitoring end consumer needs, wishes, and experiences using products. At the end of the day, it’s a giant gossip network, and your reputation is part of your brand, so you’ll have to manage it.

    When it comes to content from businesses to customers, I don’t think it’s sustainable. The free content generation will die down over time, unless there’s a clear return on investment to it. Quality content is hard to produce. Companies that can afford to hire someone to be a web presence will do so. They’ll be able to produce high-quality content on an ongoing basis.

    Small businesses and solopreneurs will gradually drop out of the fray, simply because the demands are too great and the returns too small. It takes good education and/or experience to be able to generate huge amounts of quality content, and those things are expensive. How much time should a smart, capable, good person with great writing skills spend giving away their knowledge for free without expecting a return? If there’s a demand for high-quality content (which there may not be), it will mainly be on a subscription model.

    The few who manage to attract large followings will do great, of course, but that’s always been the case. And attracting a large following seems to be a function of direct marketing skill, more than high quality content creation skill.

    Bottom line: in five years, by 2014, we’ll see the quality of free content dropping as the high-quality content creators turn their attention to activities that actually drive their business. Social media will remain important for reputation management, however, and as a tool for monitoring our customers and what they’re thinking.

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    Posted in Misc | 1 Comment

    One Price Doesn’t Fit All

    But offering lots of options can destroy the buying experience.

    I’m flying this morning. More accurately, I’m waiting in line after line after line at the airport. Once, I needed my boarding pass. Then I needed my boarding pass and driver’s license. Now, I need my credit card, too. Every line brings a new, extra charge. The check-in kiosk gleefully says it costs $15 for my first checked bag. At the gate, the little headphones cost me. On board, a pillow and blanket—once free free—now cost big bucks. And don’t get me started on the snacks.

    Every price tag becomes a separate purchase decision. Every purchase decision makes an impression. The airline has me asking “Is this worth it?” a dozen times during a single flight. And every extra decision risks my deciding “No.”

    Any good sales person knows you want your customers crying Yes, Yes, YES! As soon as I think No, they’ve lost me as a customer.

    If you offer options, do it at once.

    When you have lots of little add-ons that someone can choose up front, that’s fine. Call it “customization.” If I’m buying a new Mini Cooper, I get to run the Mini Cooper customizer. It becomes a game to choose the white racing stripes, chili pepper red paint job, fancy suspension, and cool hubcaps. Will I pay extra to customize? You bet. And since it’s a one-time fantasy fest, I only have to abandon common sense once to sign on the dotted line. Now I have my cool car with lots of options, and I love the chance to go into debt for life for my new tricked out Cooper. But only if it’s a single purchase decision, where the excitement happens all at once. One purchase, and I can enjoy my car forever.

    Don’t take away what used to be free.

    Of course, don’t customize add-ons that are expected as part of the base product. If I had to pay extra to make sure my Mini came with wheels, it would be annoying, not delightful. But since the car comes with wheels, all my attention is blissfully on my Speed Racer fantasies.

    For Goodness’ sake, never start charging for something that used to be bundled into the price. People hate losing things. When once my plane pillow and blanket were complimentary, charging extra for them stirs resentment.

    You might think airlines have to start charging for the extras or they’ll go out of business. Maybe. But maybe not. If they just tacked $50 onto the ticket prices and announced that they still give “free” blankets, pillows, and checked luggage, I suspect many people would be willing to purchase. All it takes is one nickel-and-dime experience to realize that a low price ticket might be a smokescreen for an expensive bundle of travel “add-ons.”

    If airlines want to offer variable pricing, they shouldn’t charge extra fees. Instead, they could frame the choice as a discount: you get $7 off your ticket if you decline a pillow and blanket. More people would take the blanket and pillow (people often just accept the defaults), so the revenues would be higher. Yet those who really care can still get the lower price. Furthermore, people would be imagining their flight with all the goodies, and would be inclined to forgo the discount since it would seem like losing that amenity—and remember, people hate to lose extras.

    How many purchase decisions do your customers make?

    What’s your product or service? Do you offer it as a series of purchase decisions? Try an experiment: create an all-in-one pricing bundle and offer discounts for unused options, rather than extra charges for extra options. Track how many customers choose to the default options, how many customers purchase again, and how satisfied customers are with their purchase. You just may find that the best way to serve your customers is to charge them more.

    [Note: the way decisions are presented to people makes a huge impact in what they choose. This is called “decision architecture.” You can learn all about decision architecture in the book “Nudge.”]

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    Cause and Effect in Current Events

    Don’t be surprised when you get the expected result.

    Stupidity is running rampant, world wide. It’s frustrating, because the mistakes aren’t rocket science. They’re really simple stuff. People forget their actions have consequences. Let’s explore some cause/effect you should keep in mind, through the lens of current events. Think how these apply to you, so you aren’t surprised by the utterly predictable.

    (This is going to be a provocative article. If it offends you, recommend me to all your friends. The provocation may cause many unsubscribes from my list from people who would rather indulge in knee-jerk responses than think for themselves. Oops!! That sentence just lost a dozen, right there…)

    Ignore the competition and you’ll lose. Detroit has been whining about how they couldn’t have forseen the current downturn. In business school in **1989**–twenty years ago–we did cases about how uncompetitive the car companies were, and how they were ignoring foreign competition, etc. Anyone who lived through the gas lines and 50+ mpg Honda Civics of the late 70s and hears Detroit complain that they can’t get 30mpg by 2020 should have nothing but utter contempt for the executives running the Big Three.

    If you hit people, they won’t sit there and take it. Hello, Israel and Hamas. Are you listening? Kids beat me up in grammar school. It didn’t make me like them. And if I’d been bigger and stronger, I would have hit back. When Hamas broke a cease-fire and sent rockets into Israel, what did they expect to happen? It isn’t a matter of history, or who deserved what. Just that simple question: what did they expect to happen, other than violent retaliation? (Terrorists knocked down two of our office buildings seven years ago, and we started two wars over it, with a body count that some say is over 100,000 civilians. Clearly, if you swat someone who has more firepower, they just might swat back.)

    Debt is bad if not managed wisely. Learn this: if you spend $10 today that you don’t have, how can you expect to have $12 to repay it with interest tomorrow? This only makes sense if you invest the $10 with the expectation of making $12 or more. Thinking of credit cards as free money is dumb. Thinking of a $1 trillion yearly budget deficit being used to fund expenses (e.g. war) rather than investment (e.g. R&D, research, education, infrastructure repair) is dumb.

    Deliberate get-rich-quick stupidity will be appropriately rewarded. Banks have a thousand-year history of how to evaluate good credit risks. When they write mortgages to people they would never lend to under prudent guidelines, they shouldn’t be surprised when it all collapses. And by the way, every manager involved should be fired. I’d rather have a high school student running the bank than someone with proven bad experience.

    Pay current expenses with current dollars. People get so upset and angry about tax levels. Get over it, people. Borrow-and-spend is _more_ toxic than tax-and-spend; you have to pay back with interest. Unless you are spending on investment that will generate a return, tax-and-spend is a much, much healthier policy. In any event, tax vs. borrow is just a financing detail. The problem is *spend*. (And anyone who still believes either party is more fiscally responsible than the other needs to have their head examined. As far as I can tell, the Repubs are abhorrently irresponsible, while the Dems are despicably irresponsible.)

    Don’t borrow if you can’t repay. See the previous paragraph. This applies to credit card holders, home owners, governments, and investment banks. If you borrow $100, you have to pay back $110 next year, or even more in following years. Borrowing gives you the illusion that you have a higher standard of living than you can afford. The world will happily correct that misapprehension.

    People do what you pay them for, especially if there are no perceived consequences. I’ll let you find the examples for this one. Just look at politicians, lobbyists, and CEOs of failed banks. (Why, please remind me, are any of those people still there? Aren’t we supposed to fire people who demonstrate beyond a shadow of a doubt their utter, complete, and total incompetence to run a solvent business?) This applies to politicians, too. If we connected their pay and career paths to desired national outcome measures, you would likely suddenly see a whole different set of conversations in Congress.

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    Does email overload help us?

    Tim Sanders wrote a blog entry that references a Business Week article on information overload I commented on last week. The writer suggests that information overload might be good. There might be some valuable information, and besides, young people can handle it just fine.

    Sure. In what universe? My Get-it-Done Guy podcast email and people’s reaction to my what is email costing you assessment, suggest many people of us feel our life force being regularly sucked from our bodies by information overload. It makes us jump from topic to topic. It interrupts us when we need to concentrate. And then we feel guilty that we still can’t keep up. Gee, that sounds like a resourceful emotional state for reaching our goals.

    Yes, we’re getting more info. Yes, some of it’s useful. But that’s not the point! We need to ask: is it useful enough? Are the benefits—financial, social, or emotional—worth the cost?

    For Xerox CEO Anne Mulcahy (mentioned in the article), the answer is Yes. In email, they say things they would never say otherwise. Like that comment about the chocolate mousse, telephone pole, and garter belt. Who would ever say that out loud?

    Of course, an anonymous suggestion box would fill the same function. Even better, the tipster could actually include the original garter belt. But apparently, those emails are amazing enough that Anne devotes a lot of time to her email. Since she’s gotten great results at Xerox, for her, the benefits might be worth the cost. (Assuming, of course, that her success is because of email, rather than in spite of it. Maybe a weekly suggestion box would be just as good.)

    If you’re top dog, no one pays attention to how you use your time as long as you produce business results. The rest of us aren’t so lucky. Our pointy-haired boss gives us specific goals, and email can suck up a lot of time without moving us towards our real goals. That “Top 10 Reasons Working Here Sucks” email will only help you reach your goal if that goal is a new job at your major competitor’s firm.

    When you’re deciding how much time to spend with your inbox, think long and hard about the benefits you’re getting. After all, there’s lots you could be doing with that time. Ask yourself if there is any other way to get those same benefits? If you hired a $50/hour assistant to read and answer your email every day, what would you tell him/her to process versus ignore? Are you following those same guidelines?

    Being perfect in every way, I follow my own advice and am ultra careful with my email habits. Even so, I often get sucked in for up to 30 extra minutes a day. Since I’m perfect, that must be the perfect amount of time to waste. But there’s still a nagging feeling: that comes out to three weeks per year. If I’m going to spend three weeks a year blathering mindlessly, I’d rather do it wearing a bathing suit on a sunny Caribbean beach than sitting hunched over my computer in my basement office, looking like one of the Mole People. At least on the beach, I might get a tan.

    So don’t take my word for it. Don’t take Tim Sanders’s word for it. And don’t take Business Week’s word for it. Your email time is productive to the extent it helps you get what you want out of life. Hold it to a high standard and if it isn’t performing, drop it from your life faster than that stalker you accidentally dated in college. With email, only you can take control; there’s no way to get a restraining order.

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    Be Thankful; It’s All in Your Mind

    A Financial Tailspin sucks! Don’t compound it.

    We’re going through some … interesting … times, financially. People feel insecure, established institutions are in desperate need of bailout (funny how attractive socialism becomes when you’re the one who needs the handout) and the world economy seems to be teetering on the brink. Now’s a great time to realize: it’s all in our minds.

    I mean this quite literally. Have you seen “Money as Debt?” It’s an excellent 47-minute video on where money comes from. It tells how our current system came to be. It highlights flaws in the system and offers some alternatives, all with a tasty dose of conspiracy theory thrown in here and there(*). You can watch the video here: http://www.SteverRobbins.com/r/moneyasdebt

    Money is literally nothing more than an idea. It’s a promise we make to deliver a good, a service, or more money at a later date. Why is Bill Gates a billionaire? Because the rest of us agree that he is. We also agree to give him our stuff if he gives us enough money. But it’s all an agreement. Because it’s an agreement, we take action on it, and it’s our actions that have real-world consequences.

    “Don’t worry, be happy.”

    Bobby McFerrin’s song, “Don’t Worry, Be Happy” is right on the money. At any given moment, you may or may not be able to control what’s actually happening around you. But you can always choose your attitude about it.

    I was in a meeting earlier this year, discussing a key feature of entrepreneurship: the ability to see opportunity where others see problems. Just for jollies, I decided to try spending a week deliberately asking, “Where’s the opportunity here?” every time a problem cropped up. Every single time I asked the question, I was able to find an answer. Often, in mere seconds.

    The housing bubble gave many time in an elevated lifestyle

    Then I asked, “What’s the upside of the financial crisis?” You know, one answer is this: millions have had the chance to live far beyond their means for many years. While we don’t much care for the consequences, at least they got to enjoy a standard of living they couldn’t have otherwise afforded. I’m serious about this, by the way. Of course it’s natural to be upset when losing your job, your credit, your home, or your car. But being upset won’t change anything. It will just make you feel bad. You can also choose to feel thankful that you had those things to begin with.

    Be a Thanksgiving Gratitude Geek

    Are there problems in the financial world right now? Yup. And we can live through those problems giving all our attention to the downside or giving all our attention to the opportunities and the upside.

    My suggestion to you: spend this Thanksgiving dwelling on the upside. Ask yourself, “what do I have to be thankful for?” and make a big long list. Help everyone around you do the same thing. They say what we need is more optimism in the economy. Optimism isn’t something “out there,” it’s one of the few things we have control over. So let’s exercise that control and see the glass as 10% full, not 90% empty. Because we can’t always change the outside reality, but we can certainly choose our inner reality.

    Have a Happy Thanksgiving. Here are some of the things I’m thankful for:

    • Friends and community
    • Hot running showers
    • Democracy
    • My four-year-old iPod that still works great
    • The chance to teach high school students at an after-school program
    • Zipcar
    • My podcast
    • Friends and community

    (*) I love conspiracy theories! I always like to remind myself that just because someone’s paranoid doesn’t mean the conspiracy doesn’t truly exist.

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    Nightmare or Hope? Your decision.

    You have only yourself to blame for the quality of your decisions. Improve it. Start today.

    Are you committed to becoming a spot-on decision-maker who can make great decisions that actually guide your world? Because chances are, your personal decision-making process is no guarantee of that.

    We’ve just finished two years of hate-filled, vitriolic lies and attacks. Most of us were swayed, one way or another, by the election rhetoric and talking heads. One thing is certain: few of us went to the candidates web sites, read their platforms and policies. Even fewer then consulted a range of economists, industry professionals, and others to figure out whether the policies were realistic, whether we have any data on that kind of policy, or whether they would even lead to the kind of world we want.

    Pretty much all of us relied mainly on charisma (or lack thereof) and ideology (or lack thereof) and knee-jerk logic to make our decision. And yes, this means you, my above-average-intelligence friends! Intelligent people seem to believe that they understand things better, even though when it comes to politics, there’s no reason to believe that. Smarts are no defense against relying on shallow, biased media reports and cherry-picked statistics.

    The challenge: improve your decision making!

    Here’s my challenge to you: actually learn from this experience.

    Whether you’re feeling fear, anger, hope, or happiness today, grab a piece of paper. Write down all your fears. ALL of them. If you are convinced our President-elect is a terrorist whose greatest desire is to bring down America, write that down. If you’re convinced he’ll raised your taxes, write that down. If you’re convinced that taxes a worse financing decision than debt when you’re running a deficit, write that down, too.

    If you believe that America will become a hotbed of corrupt moral practices, write that down.

    Now write down your hopes. If you believe we will magically become debt-free in an economic prosperity paradise brought on by a single change in President, write that down. If you believe that America will become a multicultural paradise of acceptance and love, put it on paper.

    For both your fears and your hopes, jot down the basis (or lack thereof) you have for those beliefs. You are the ONLY ONE who will see this, so be honest. Expect to have fairly little evidence for any of this.

    You know now what you’re projecting on this candidate, good or bad. You could be wrong about a lot of what you’ve written. In fact, you probably are. And you’ve done this with every election you’ve ever voted in.

    Now is the time to learn, instead.

    Arrange to re-evaluate your decision-making in 2012

    Head over to TimeCave.com, and schedule an e-mail to yourself to be delivered in July, 2012. Type in everything you’ve written. Also paste in the following debrief form. Then in 2012, you may be able to make an even higher-quality decision than you did this year.

    DEBRIEF OF MY 2008 DECISION
    1. Where was I right in my ability to project the candidate’s results?
    2. Where I was right, how much of that was due to the candidate’s efforts, and how much of that was external factors that the candidate couldn’t control?
    3. Where was I wrong?
    4. How much of *that* was under the candidate’s control?
    5. Where did I get my information about the candidate?
    6. Am I using the same or different sources this time?
    7. Do I know how high-quality the sources are? Why do I believe they are high (or low) quality?

    When you receive the email in 2012, spend some time thinking through the questions. You may discover that your fears were misplaced. The world didn’t come to an end. You may discover that your hope was a bit overblown. The world didn’t become paradise.

    Either way, you’ll discover that you can find ways to improve your decision-making in 2012. That’s a good thing. You will begin to be more nuanced and more thoughtful in your vote, which is one of the most important decisions you’ll ever make.

    And why not start now? Campaign 2012 starts in about three weeks…

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    Posted in Business, Leadership, Psychology | 1 Comment

    The key to ethical, sane behavior: the *little* voice.

    Your little voice may have all the answers you need.

    Have you ever wondered how certain corrupt businesspeople can keep spouting great, moral words while doing the exact opposite in their behavior? You wonder how they can wax eloquent about the need to give customers high-quality products while they happily substitute inferior quality raw materials to save costs. You wonder: are they insane? Probably not. Yes, they hear voices in their head. But we all do that. The problem is that they’re listening to the wrong ones.

    In a New York Times article today, John Tierney discusses the science behind hypocrisy and how we fool ourselves. It seems when we distract our conscious mind, we listen mainly to our “gut” (or our “heart,” depending on how poetic an image you prefer), and we know when we’re doing The Wrong Thing. When our conscious minds are free, however, we use them—to self-justify. When we engage in hypocritical or anti-social behavior, our conscious mind goes to work creating justifications so we believe we’re doing the right thing, even when we aren’t.

    In the past several years, I’ve become more aware of my own “heart voice.” When I have a troubling decision to make, or strong ambivalence about a situation, I sit quietly. Actually, my brain is usually shrieking gibberish about how unfair I’m being treated, or about how I don’t deserve what’s happening, or about how I’m an utter and complete failure at life because I missed “9 Down” in today’s New York Times crossword puzzle. So here’s this Shrieking Monster in my head, and I let it rant while putting attention on the middle of my chest. Then when the Shrieking Monster stops to take a breath, I quickly ask, “What should I do in this situation?”

    Then I sit. After a few minutes, beneath the Monster comes a little, quiet voice. It’s barely even in words. And it has an answer.

    The moment the answer comes, I know it’s the right one for me. It’s almost always the moral thing, the ethical thing, the loving thing, the passionate thing. In some weird way, it’s the answer I already knew was right, but just wouldn’t admit to myself. It took a chat with the Little Voice to bring it to the place where it could be heard over the Shrieking Monster voice.

    The Shrieking Monster is the one that usually pushes me to do stupid things. It goads me to yell at people when I’m frustrated, to get petulant and childish when I could be forging alliances, and to beat myself up when I don’t do well, even if I did my best. The Little Voice, though, is my own internal Dear Abby: its advice is excellent, even if its hairstyle could stand some updating.

    If you’ve never tried this, give it a shot. Ponder a decision that’s giving you angst. Maybe it’s an ethical quandry, or an issue with a co-worker, or that persistent fantasy about wrapping your boss in duct tape upside down, hanging from the ceiling. Choose something really, really important, like: is it fair that I always have to spend the 3 minutes to type up action items after a meeting?

    Sit quietly with the situation. Your Shrieking Monster will helpfully point out how unfair it is that you have to type those action items, how your fingers ache, how it’s probably carpel tunnel syndrome and you’ll be crippled for life, and how you really deserve to be the boss and are just not deeply appreciated. Then sit quietly and listen to the Little Voice behind the shrieking monster. It just might have some good advice.

    If it seems reasonable, give it a shot. You might find yourself acting more ethically, more morally, more professionally, and more happily. In other words, you just may find your little voice is the key to acting as—not just aspiring to be—your Very Best Self.

    Find the article on hypocrisy at http://r.steverrobbins.com/hypocrisyarticle.

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    Posted in Leadership, Life balance, Newsletter, Psychology | Leave a comment

    Groupthink, brainwashing, and politics: eek!

    You have everything to gain by thinking outside your own box!

    Click here to hear this article as a podcast.

    Maybe you’ve been successfully brainwashed and just don’t know it. How would you? Pretend you were kidnapped by the People’s Liberation Front of Jordania, which originally attracted you by serving your favorite brand of spaghetti sauce every night of the week (yum!). They successfully brainwashed you, and now you would go on raids with them, eat with them (spaghetti!!), live with them, and genuinely believe in their cause. If someone said to you, “The PLFJ has brainwashed you,” you wouldn’t believe them. You’d go back to contentedly slurping spaghetti.

    Schools brainwash us

    This is more than an academic question, though it arises in academia as well. People attend schools where they learn certain ways of thinking and are taught that some thinking is preferable to others, or even that some thinking is “right” and some is “wrong.” For example, they teach that the Earth revolves around the sun, and not vice-versa. For centuries, people believed the opposite, and could even be put to death for suggesting the Earth orbited the Sun. So which is the brainwashed? Both have their belief systems, both indoctrinate new people into those beliefs, both have evidence that suffices for them, and both would view the others as living in a fantasy world.

    In Business School, students are taught to do cost/benefit analyses, and many of them reframe their entire world in terms of costs and benefits. Great for balancing their checkbook, maybe not so much for making their Sweetie feel loved. “If I spend five minutes cuddling and my time is worth $45/hour…”

    In contrast, philosophy majors are taught there are many ways to approach a problem, and may have a very different way of thinking about life (“Amour! Eros! Love! Let’s cuddle!”), and be lousy at balancing their checkbook.

    Who’s “right?” Both are. And both have habitual ways of thinking that were taught by a school. How are the schools not brainwashing institutions?

    Politics brainwashes us!

    Scott McLellan, Pres. Bush’s former Press Secretary, just published a book that reveals how he now believes he had been manipulated and misled for years by Bush. It wasn’t until he left the administration, however, that he had enough perspective to question what he had been told and been living for several years.

    We’re all brainwashed, all the time.

    If you think about it, you’re probably the member of an exclusive club, all the way down to having your own language. Maybe you’re part of the business club, and you talk about “profits” and “margins” and “business models.” Or you’re a Swing dancer and you talk about doing a “Texas Tommy” (isn’t that illegal in 39 other states?). Or you’re a graphic designer and you know what “Pantone” means.

    Now think about your organization. You probably have your own shared beliefs. Those beliefs are a form of brainwashing, and you don’t question them. Everyone takes them for granted, and those who don’t are marginalized or ignored. But the world changes! Yesterday’s “common sense” is today’s backward thinking. “Cars will never take off; they require pavement, and who’ll pay to pave a downtown when so few cars exist to use the roads?”

    Sometimes, the world doesn’t even change, the conventional wisdom is just wrong. “The world will only ever need four computers.” “Customers will never buy water in bottles when they can get it free from the tap.”
    “I’m really happy to listen to you talk about your ex-boyfriends, dear.”

    Find freedom beyond your assumptions

    In organizations, getting through your brainwashing is the key to innovation, creativity, and “thinking outside the box.” Indeed, it’s your shared assumptions that are the box!

    The key to getting past your brainwashing is to seek out evidence that you might be brainwashed. Write down some of the reasons you know your business is successful:

    • People love our customer service.
    • We are the low-cost provider.
    • We hire the best and the brightest.

    Now write down some of the reasons you know your competitors are doomed to fail:

    • They just don’t “get it.”
    • Our customers would never like their product.
    • We’ve locked up the biggest, most important customer.

    Take the reasons you just wrote down, muster your courage, and spend some time exploring each one. If your belief is false, how would you find out? What data would you seek? What trends would you be following?

    You don’t just have to re-examine your work assumptions. You can also list things you “know” about your family life. Stuff like, “my teenagers won’t listen to me” or “watching TV together is the highest form of quality family time.”

    Start seeking some data. Start following some trends. Try a few alternatives. Find out where you’re following the herd, and where you’re really in touch with reality. You’ll learn how much of your life is groupthink, rather than YOUthink. You’ll find yourself thinking outside the box. Although it could scare people around you, it might open your eyes to a whole new world of opportunity. There are advantages to being the sighted man in the land of the blind, and not just because it makes it easier to button your shirt…

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    Posted in Business, Newsletter, Psychology | 4 Comments

    Ten Cultural Career Lies

    Things “they” told us that just might not be true.

    Please digg this!

    Related article: How to write a good cover letter.

    In April 2008, I gave a talk at Harvard Business School on the Ten Cultural Career Lies. These are things I believed for most of my life. Recently, the conventional wisdom started seeming suspect. I called several of my classmates who are all mid-career and asked what had led to their successes and failures. Upon close examination, much of what I had believed to be true about careers did not seem to hold.

    This is one man’s experience. I invite you to decide if it matches your experience. You can add your comments to the interactive version on my Get-It-Done Guy book blog.

    1. You can plan your career (or would even want to).

    • That’s not my experience, nor is it the experience of anyone over 35 I’ve talked to.
    • Maybe it worked in the 1950s…
    • Maybe it works in careers driven by successive degree requirements (e.g. medicine)
    • We get trained to think in terms of one-step-leads-to-another by 18 years of linear schooling.
    • So: plan less and be more. Hang out with good people doing good stuff and grab opportunity as it passes by.

    2. Being the boss makes for a good life.

    • Have you ever worked closely with a CEO? It can be a great job, but it can also suck. Like any job, it requires a certain temperament and set of skills.
    • So: find jobs that suit your skills and temperament, don’t assume that the “oooh! isn’t that amazing” jobs will be good for you.

    3. “Self-made” people exist.

    • The most self-made person alive still relied on millions of others to provide financial markets, schools, sewers, and the infrastructure that allowed them to go off and become “self-made.”
    • So: Recognize interdependency and build your life around positive interdependency. And when you want to learn to emulate a “self-made” person, pay attention to all the ways they weren’t self-made; that’s where the learning is. (And by the way, they may not be helpful in pointing out ways that contradict their myth.)

    4. Hard work and skill will be appropriately rewarded.

    • Bear Sterns CEO cashed out for “only” $60 million. Cleaning lady @ $8/hour must work two jobs just to pay rent and still doesn’t make enough to save anything. ‘Nuff said.
    • So: understand what is rewarded (by money, power, respect, affection, time off, flexibility, freedom) and do that. If you want money, finance is the surest way to get it.

    5. Do a good job and you’ll get ahead.

    • So: See #4. Pay special attention to what the people who will promote you want to see. Don’t assume it’s results.

    6. I’ll work now and do what I love when I’ve made my first million, cured cancer, etc.

    • Management consulting firms and investment banks use this lie as a recruiting tool.
    • Dangerous strategy, and I know very few who’ve pulled it off. If you don’t do it, you’re left at mid-life trapped in a career you don’t like, with a non-transferable resume, and a network composed of people who are the last ones in the world who could help you do what you love. But boy, could they help you get even further in the career you despise.
    • So: Factor in your passions and ideals from day one.

    7. Intelligence matters.

    • Up to a point. After that point, it can threaten people. It’s only useful insofar as you have the people/political/marketing skills to get your ideas in play. Even then, unless you’re perfect, you run the risk of overconfidence.
    • So: take classes when you need them, but stop assuming more knowledge is the answer to every problem. As a Fortune 500 ceo once confided: “business really just isn’t rocket science. In fact, to a smart person, it’s kinda boring…”

    8. Achievement matters.

    • Actually not. Who you know and who thinks well of you probably matters at least as much as what you’ve achieved, if not more.
    • So: don’t get too caught up in building that great company, finishing that piece of art, or whatever. Yes, getting things done can be good. But if you enjoy and learn from the things that don’t get done, that may be enough.

    9. We can control our lives.

    • Sickness, death, lotteries, luck, and love all happen. My friend just moved from Washington D.C. to Las Cruces, NM, where his snuggle-bunny has a job. That sure wasn’t planned for.
    • So: go with the flow. Learn to accept the things you can’t control. Be o.k. with that. Enjoy the process and don’t sweat it if you don’t reach the outcome. (That said, give it your best shot if you really want it.)

    10. Success (money, power, achievement) brings happiness.

    • This has been disproven by tons of research. See the books Happy for No Reason by Marci Shimoff, Are You Ready to Succeed by Srikumar Rao, or Authentic Happiness by Marty Seligman.
    • This lie causes great unhappiness. See The Happy or Successful diagram below.
    • So: orient your life around happiness and look for success, not the other way around.

    Happy or Successful Decision Tree

    Click to view the image in full-page size.

    Decision tree showing the difference between a life based on happiness and one based on success.

    Decision tree: living for happy vs. living for success.

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    Posted in Life balance, Misc | 1 Comment

    Update your user experience…or die!

    Your survival could depend on it!

    Are you up to date with your user experience? I have been coveting my friend’s iPhone. It is true I have both a Palm Pilot and a Blackberry but the iPhone is getting more and more attractive. Not just because it has got a nice user interface, the reason is deeper.

    I have a Macintosh. Palm made $1.6 billion dollars in 2006 but they haven’t updated their Macintosh software in several years, maybe even as much as a decade. The software is clunky, hard to use and it doesn’t integrate with Apple’s synchronization system, which lets everything else synchronize beautifully with the address book and the calendar.

    Blackberry paid $450 million dollars to quit a patent suit early and resolve it so they could stay in business, and their software doesn’t properly handle certain types of calendar attachments. Their browser is poor and they don’t handle a type of e-mail accounts called IMAP, which let people have their mail on a central server and access it from many places.

    Oh! And by the way and by the way, they have never bothered to come up with a way to synchronize with a Macintosh. From the user’s point of view that makes this products fairly difficult to use on the Mac without third party software and even with the third party software it is usually not as good and has bugs etc. etc.

    But think about it for a minute: 1.6 billion dollars and Palm can’t be bothered to develop an updated version of 10-year old software? Hello! Blackberry 450 million dollars to settle a suit? Where is the $10 million dollars that they could use to make the Blackberry compatible with every existing calendar system, contact management system and sales management system in the world. They haven’t bothered.

    I donâ’t know why they haven’t bothered but it doesn’t really matter because there is something out that there will work for me and that’s called an iPhone.

    Palm is reported to be looking for a suitor because sales are down and they just don’t know what to do. Palm– update your system! Blackberry, I don’t know. They think the iPhones are a threat and until Blackberry realizes that people aren’t just buying a slick little package; they also wanted to work with their computer, well they are going to lose people to the iPhone as well.

    One final example: I recently changed insurance companies and my new insurance company has no autopay option for my premiums. In the year 2008? Excuse me? It hasn’t occurred to them that the user experience for virtually every type of vendor (particularly one with recurring payments) now includes the ability to pay automatically either by credit card or by bank debit. Now it’s true in the short term that’s not going to make a difference. But it’s remarkable because they are the only bill in my entire life that has to be written out by hand every month.

    If they are falling behind on that, what else are they falling behind on? So think about your product. Have you tried your competitor’s products lately? Have you noticed if sales are falling, where are people going instead of your product? When you use and evaluate the competitors, look at the whole experience and what you will find is that there are very compelling experiences out there, some of which may not be yours.

    Leap on them, surpass them, develop your own experience, put some money into what it will take to make your product fun, happy, easy, simple and streamline to use and you just might find that you will be able to stay ahead of the competition instead of going to them asking them to buy you.

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    Happy or Successful? Which will you pursue?

    Click here to listen to this as a podcast.

    Download the “Happy or Successful” diagram that goes with the article.

    On a recent birthday I was looking back at the strategies that my friends from high school and college and I employed to get where we are today. We assumed that success would bring happiness, and as far I can tell, we were wrong. It turns out that the two are separate, even though marketers would have us believe otherwise.The slogan for Cadillac is “Life, Liberty and the Pursuit.” Of course what your mind fills in is Life, Liberty and the Pursuit of Happiness. As if a $50,000.00 car will actually make you happier. And maybe it will. But keep in mind, if your life fundamentally sucks, it’s gonna keep on sucking the moment you step out of the car and onto the concrete. So, if the two are different—if happiness and success are not the same—what’s the best life strategy?

    We are certainly taught to believe that being successful will make us happy. Society tells us, our parents tell us, our teachers tell us, students in high school as young as 12 and 13 are already being lectured about college. I take it to an extreme. I have a 5-year-old nephew, I am thinking about his college, I am thinking about his high school. It’s ridiculous; I am missing his entire childhood because I am so busy thinking about making him successful in the assumption that thus will he be happy.

    I also find that in career coaching new MBAs, they have an almost religious belief that they can plan out a 20-year career path. They say things like, “I will make my money and then I will be happy. Then I will do the things that are meaningful.” Then, then, then. As if, among other things, you can even control whether “then” ever arrives.

    So strategy number 1 is: pursue success and hope for happiness. The other strategy is to pursue happiness and meaning and find a way to make a living doing it. This is the strategy where happiness leads to success. Which one is better? Let’s see…

    If you go for success and you become successful and you find a way to be happy doing it, yeah, you’re happy and successful. If you go for happiness and find a way to make money doing it, yeah, you’re happy and successful. So, in the case where you can achieve both, it doesn’t really matter which strategy you choose, you end up happy and successful.

    But the point we rarely consider is what happens if everything doesn’t work out. If you define your life as pursuing success but you don’t actually find a way to be happy while doing it, or you get to that point where you have the money and now you don’t even know what makes you happy because you have spent the whole time pursuing success instead of happiness, well, great. You’re successful, but you’re not happy. You walk into an empty house surrounded by beautiful gorgeous things. You have a lot of friends and they like you. Why? Because you have a lot of nice things that they want to borrow. You buy a cat, the cat puts with you because you leave its automated feeding bowl in place while you go work at office. It actually hates you because you’re never around. You are too busy working, but at least it will pretend to purr every now and then.

    On the other hand, if you go for happiness and aren’t successful, at least you will be happy and you will have a life full of meaning. They found one of the big things that helps people be happy, for example, it is having family and friends and community. So, if you are happy, but don’t quite make it to successful, you may wander into your one-bedroom tiny apartment and be surrounded by friends and family and people who love you and a cat that purrs because it recognizes you—it knows who you are and it appreciates the fact that you feed it. You may not have the money, but you will be happy.

    So, in the case where the future works exactly the way we want it to, it doesn’t matter whether you pursue success and then find happiness or whether you pursue happiness and then find success. But in the case where you can’t guarantee the final outcome, it makes so much more sense to pursue happiness and hopefully you can find a way to be successful doing it.

    I have spent my life up until very recently doing the opposite. I have spent my life pursuing success under the assumption that it would make me happy and it is not clear that it’s been worth it. Missing a weekend with friends so that I can work hard and earn enough money that I can take time off and … spend a weekend with friends. Hello? This doesn’t exactly make a whole lot of sense.

    What I would like to invite you to do today is to examine your own life and your own motivations—How do you work? Are you pursuing success assuming that someday will bring happiness? Are you pursuing happiness looking for way to be successful while doing it? Are you getting both? And I would invite you to play around a little bit. Try doing something from the other camp and find out if that works for you.

    If you’re a Type-A Personality Workaholic, skip a day of work, call in sick and do something that makes you happy, that’s meaningful, and that could be a taste of the life you could be living right now, maybe in exchange for money but maybe not. Because when you pursue happiness, you never know what kind of opportunities arise.

    I am now one year into a three-year experiment of living my life to the extent that I can get my Type-A Personality to do so. I pursue the things that make me happy and have meaning. The bizarre part is my life is less predictable than ever before. The things I am getting involved with weren’t even on the radar screen a year-and-a-half ago, however, some of them are grander and more exciting than anything I could possibly have planned. Make a choice. Pursue success and find happiness or pursue happiness and find success. Either way you have a shot at both, but in one case you guarantee you will be happy.

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    Posted in Life balance, Misc, Newsletter, Psychology | 1 Comment

    Just Flip a Coin Instead

    Sometimes decisions aren’t worth the cost of deciding

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    [Subscribe at iTunes (search for "Get It Done Guy") or http://GetItDone.QuickAndDirtyTips.com]

    This article is a reprint of an episode of my new podcast. You can visit the site of the original episode here.

    Stever Robbins here. Welcome to the Get-It-Done Guy’s Quick and Dirty Tips to Work Less and Do More.

    Today’s tip is about decisions. The bottom line? If it costs more to research and make a decision than the impact that decision will actually have, flip a coin instead.

    In my first corporate job, we needed a laser printer for our programmers. The executives met to discuss it. After all, a $600 laser printer would only save twelve programmers hours worth of hassle. The marketing department had one, true, but then, they needed one. Otherwise, how could they print drafts of the billboard they erected, celebrating the company’s “Great Beginnings.”

    In the end, they didn’t buy the printer. The programmers would just have to make do. And at night, I lay awake wondered: was this somehow my fault? In retrospect, perhaps I overestimated my own importance.

    Decisions cost money

    But I didn’t overestimate the decision’s importance. The decision not to buy the printer took four executives three one-hour meetings to make. The executives made about $100,000 a year, apiece, which is $50/hour. Multiply by four executives and three hours, and we’re talking $600 worth of management time to make that decision. They should have just spent the $600 on the darned printer.

    This was the first time I saw that decisions cost money. And if it costs more to make a decision than the amount you’re deciding about, it’s more sensible to flip a coin or spend the money without further discussion. That’s why some businesses don’t even require receipts for small expenses when employees travel. It’s cheaper to reimburse $5 than handle the paperwork to document the expense.

    Indirect costs can mount up

    In my example, the cost was the executives’ salaries, but indirect costs can mount up, as well — costs of delays while the decision is being made, the cost of the distraction of having to make the decision, the cost of gathering information, and so on. And sometimes researching one decision leads you to expand the issue way, way too much.

    For example (hypothetical, hah!), imagine the motor in your front- loading washing machine burns out for the sixth time, and you decide to buy a new washer. You call a saleswoman and she recommends an $800 model. But you want to be sure you’re making the right choice. So you demur and research begins.

    You subscribe to ConsumerReports.org, you print descriptions of dozens of washers, and compare them feature by feature. You call the store and ask about delivery options and service plans. And you realize you can have your dryer venting cleaned as long as the workmen will be poking around. And, you know, since you’re moving the dryer to get at the duct, maybe you should just buy a new dryer to match the new washer.

    Soon, your $800 purchase has become a major renovation. Your research gave you so many overspending opportunities that now you’re spending thousands on an extra appliance, delivery, and duct-cleaning. Oh, yeah–and during the project, you’ll be driving your laundry to the laundromat and spending two hours a week doing laundry in bad lighting.

    You just spent hundreds of dollars, twelve hours of research time, six hours of laundromat duty, gas to drive there, and the self-esteem nightmare of laundromat lighting, all because you didn’t want to say “yes” to the saleswoman’s $800 suggestion. When you add it all up, you’d have been way better off just buying the dryer.

    Non-monetary costs are important

    Some decisions have a non-monetary cost. When you and your husband/ wife/transgendered partner or polyamorous family unit decide to go to dinner, you might want a sandwich whereas they want to try a new ethnic restaurant where the food still has eyeballs. Should you graciously say, “Yes,” firmly say “No,” or debate? If you debate, it could become an argument. If you smile brightly and say, “Yes, let’s be adventurous!”, you get major relationship brownie points. Maybe even extra snuggling. If you say, “No, let’s discuss it,” even if you settle on the food-with-a-face, you don’t get the points. With interpersonal decisions, sometimes saying “Yes, dear” and bypassing the decision can be worth way more than getting your way. And you can always order the rice as a safe backup dish.

    If my first employers had just made decisions and spent money, instead of spending money to not-make decisions, they might have survived. You don’t need to make their mistake.

    Today, put it to work. Review the major decisions you’re making about things to buy, places to go, people to see, and all that stuff. Notice how much work goes into each decision, and ask yourself how important each one really is. Then for the decisions that aren’t worth the cost of deciding, just flip a coin. You’ll free up your mind and you’ll move things forward, and all for less than it would take to make a decision.

    [Subscribe at iTunes (search for "Get It Done Guy") or http://GetItDone.QuickAndDirtyTips.com]

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    Posted in Business, Newsletter, Productivity | Leave a comment

    The Tragedy of the Commons explained

    How rational choice makes some markets fail

    The Tragedy of the Commons is a situation where players cooperate or everyone loses, yet each individual has incentive not to cooperate. Also known as the “Prisoner’s Dilemma,” here’s a sample Tragedy of the Commons: farmers graze their cows on a shared grassy area called the Commons. The Commons can support 100 cows. One hundred farmers each bring a cow, and the eatin’s good. But each farmer thinks, “If I bring one extra cow, it doubles my entire income and only puts a 1% drain on the Commons.” All 100 farmers think this, all bring one extra cow, and 200 cows quickly overgraze the Commons. It dies completely, and then, so do the cows, followed by the farmers.

    Pollution fits this structure. The Commons is nature’s ability to absorb the pollution. The benefit of polluting to any one polluter is great–they save clean-up costs. But when every producer does this calculation, rivers and landscapes quickly become clogged with pollution.

    Energy usage fits this structure. The Commons is energy. The benefit to living in a suburb and driving to work is huge–I get lots of land, a nice yard, and a big house, and pay relatively little for a car and gas. But when 350 million Americans all make this trade-off, we’re suddenly using 40% of the world’s oil driving prices up. We don’t know how this one plays out, yet, but it will be interesting, since our physical sprawl makes cars a survival necessity, not a choice, for almost everyone.

    Advertising fits this structure. Any one advertiser can get great returns by sending you junk mail, putting ads on your favorite TV shows, and putting up billboards on your roads. When all advertisers do this, you get so overloaded with messages than now it takes 20 ad impressions for you to pick a product out of the crowd. So now all advertisers must advertise so much that they spend a fortune, and you get overloaded. I no longer even look at my paper mail, and I get around 6-10 pieces a day. A one-week trip brings me back to a stack of 60-100 items. It goes straight into the trash. So now, it’s not clear advertisers can reach me at all.

    Littering fits this structure. Any one person finds it convenient to dump their trash on the ground, leaving it for someone else (mom?) to pick up. When everyone in a neighborhood does this, they end up living in a garbage heap. Eventually, no one even sees a point in using the trash can any more and the litter accelerates.

    I also think social networking sites are a Tragedy of the Commons. I’m not yet completely sure, though. Time will tell.

    The “Tragedy” Can Be Used for Good

    The Tragedy works in reverse, too. There are times when no one person has incentive to do a good thing, yet a small contribution by every person adds up to a huge Good Thing. Consider building an interstate highway system. No one person could pay for it, and even if they could, they could never collect enough in revenue to maintain it and make it worthwhile. Yet building it brings great benefit to everyone. The neat thing is that if every person pays just a little bit, we collect enough in total to take on the project. That’s where taxes really shine as a financing device; they’re one of the few good ways to finance building shared resources. Everyone pays a relatively small amount, and we get services that give far more benefit.

    Public schools are another example. It’s cheaper for us all to pay a little in taxes and end up with schools for everyone. (Yes, you can complain about the quality of our existing school system, but the quality problems have less to do with the funding and more to do with our model of education.)

    Fire protection is another example. While typing this, I received a call from the Volunteer Fireman’s Committee asking for donations. It’s a scary request, as it implies I won’t get fire protection without paying. Yet I’m happy to pay for firemen through my taxes. That way, we all contribute, and we have a fire prevention infrastructure that benefits us all.

    Managing the Tragedy is a Fundamental Role of Government

    I believe Governments are the only players in our world who can manage the Tragedy of the Commons. Our markets are built on the assumption that each customer/supplier should be free to pursue their maximum self-interest. The Government introduces regulation, tariffs, etc. designed to spread the Commons risk among market players, so the market can function and produce what’s best for civilization overall.

    Sadly, I don’t think politicians or voters consider this, so the mechanism fails. Regulation isn’t inherently good or bad; it’s simply the only way to avert certain Tragedies of the Commons. Taxes aren’t inherently good or bad (though many would like you to believe that for their own political agendas); they’re simply one way to raise funds for projects that would otherwise never happen due to Tragedies.

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    Is Counting the Root of all Evil?

    Click here to listen to this article as a podcast.

    The love of money isn’t the root of all evil; arithmetic is the root of all evil. More specifically, counting.

    Don’t get me wrong; counting was a wonderful invention. It has its uses. We can keep track of kids: “Are all 5 kids here? Let’s see, 1… 2… 3… 4… where’s Billy?” We can keep track of time. “He’s working overtime in the salt mines, honey. Instead of 12 hours, he’s working 14 hours today. He’ll be home at … 9, 10. Yes, 10 p.m.” And we can keep track of money: “He gets paid $1.49/hour working overtime, so our bank balance will be $11.37 … $12.37 … $13.37 … $13.86 after Billy gives us his share.” In fact, they remind us over and over in MBA school that “What gets measured, gets managed.”

    So where’s the problem? This is evil? This gave us the industrial-friggin’-revolution. This sounds great!!

    We measure the wrong stuff

    Well, the problem starts when we choose what to measure. We often measure what doesn’t lead to our goal, and expect the measuring to magically create the managing.

    Want profit? Let’s count expenses. Tell all managers to submit weekly reports of their team’s expenses. Let’s call it a TPS Report, and count how many TPS reports people send, to make sure they’re doing their job (which has silently morphed from “running a profitable business” to “submitting TPS reports”). Well, whoopie. We’ve added a whole layer of useless counting, and then another layer to count who is and isn’t counting. Since we don’t actually know what to do with the silly TPS report, we slide further from profitability. We’re counting the wrong thing.

    Or how about sick days? There’s a hoot. “You only get six sick days.” Nice. Like that’s controllable. If you’re sick for seven days, come on in and give it to everyone else in your department, so everyone has to take six days off. You can measure sick days, but the measure is useless.

    Seemingly meaningful measurements … aren’t

    Then we make up measurements that mean nothing and try to manage those. “Let’s rank our employees. Then we can fire the bottom 10%.” Sounds easy; isn’t easy. (Sadly, however, it is a much-publicized Jack Welch policy.) How much time will managers spend on this ranking exercise? Do they apply consistent standards that are directly related to the company’s goals? Do we fire the 10% of managers whose ranking skill is in the bottom 10%? Who decides that?

    Ranking is hard. Really hard. In fact, in 1963, psychologist George Miller’s famous paper “The Magic Number 7 +/- 2″ presented results showing people can make ranking distinctions between 5 to 9 items, and then we pretty much lose track. If you think you can accurately rank a 250-person department, you’re deluded and thus in the bottom 10%; it’s time to pack your bags.

    Even if you can rank, can you use the rankings for action? We want to punt the bottom 10% of the company. We can’t really compare an accountant against a design engineer, so our fresh new Harriford MBA, Darren, suggests we eliminate 10% of each department. That will add up to 10% of the company.

    But what if our 30 design engineers rock, while our 30 accountants all suck eggs? As a company, we want to fire six accountants (10% of 60 employees) and no design engineers. But firing 10% of each department means we leave three mediocre accountants standing, and three rockin’ design engineers out of work. That’s clearly wrong. But we get one benefit: we know Darren didn’t understand the logic of firing, so we know he’s in the bottom 10% and should be fired. Success! We have at least one confirmed cost savings from this exercise.

    Measurement turns us evil

    I know you’re asking: what in heaven’s name does this have to do with spirituality, morality, and/or the rest of our lives? (If you weren’t asking that, don’t worry, just go with the flow.)

    Here’s where the evil comes in. We only measure so we can make decisions about those measurements and change our behavior. But we do this by judging the measurements as “good” or “bad.” When we’re measuring a “bad” trend, we panic. We’re afraid. We’re angry. We get frustrated, anxious, mean, jealous, violent, and nasty.

    How do people act when they feel anxious, mean, jealous, violent, and nasty? Fortunately, we live in a Highly Evolved Society, so we meditate for five minutes, do some yoga, and we’re fine. NOT! Most people want to get rid of the bad feelings. Some fudge the numbers and play financial games. Think Enron. Some people hit something. Some people treat everyone around like crap. And some people blame.

    Yes, they blame. They blame colleagues. “Sales are down! Sally distracted me so I lost the big prospect.” They blame loved ones. “I went over my sick day quota since I had to take Billy to treatment for his Black Lung disease.” They blame the government.”If it weren’t for the (Republicans/Democrats), (the economy/the occupation/global warming/life/love/happiness) would be better.” And they blame themselves. “I’m just a failure.”

    All because they counted, then got emotionally wedded to the counting.

    What counts and what doesn’t?

    I’ve been talking so far about business, only not really. We count the wrong things in business, we count the wrong things in life. We go to pieces when our business counts go off-track, we go to pieces when our real-life counts go off-track. And remember, real life counts more. Where do you get caught in the counting?

    Some of us count who’s done more housework, us or our spouse. Some of us count the dollars in our savings account. Some of us count what someone does to prove they love us. Some of us count how pious our neighbors are. It all turns into judgment, and from there, into emotion. When the counting is going the way we want, we think life is good. When the counting goes the other way, we get upset.

    The upset is extra, though! It’s our reaction to the counting. The counting doesn’t cause the problem; it’s our stories about the counting that cause the problem.

    Let’s fix this. Let counting be counting. Let emotion be emotion. All this score-keeping, counting, and measuring is made up. It’s all fantasy. It’s a convenient tool for making decisions. But it’s not real. And it’s certainly not worth turning yourself into an ogre, feeling horrible, and abusing yourself and your loved ones.

    What if you count and discover your bank account isn’t high enough to send your kids to college? Don’t get upset. Use it as information and change your savings plan. But don’t beat yourself up. You can’t do anything for your kids that way, except set a bad example. Use the information to stay centered and work with the people you love to fix the situation.

    What if you count and discover your spouse overcharged on the credit card? You can fly into a rage, or you can sit down with your spouse, love each other tremendously, and decide from that place how you’ll deal with the situation. I used the “fly-into-a-rage” method several times. It didn’t pay the bill, nor did it make me an attractive snuggle partner, even to our stuffed animals. The counting-as-information plus love-then-problem-solving works way better.

    What if you count pounds, and discover you have more than you want? You can get depressed and eat a chocolate cake to help yourself feel better (Stever’s diet advice: learn to distinguish “sugar rush” from “feel better”). Or realize the number’s just information you can use to change your diet. If you’re going to diet, doing it from a place of fun makes it … well … more fun. And if you’re not going to diet, then at least enjoy the chocolate cake. But don’t let counting trick you into not-dieting, and also not enjoying the cake. That’s plain foolishness!

    And what if you count and discover you’re not as rich as Darren, despite your superior skills? Or you’re not as rich as the goal you set at age 23? You can call yourself a failure and jump out of a plane without a parachute. That’s one solution. But maybe you can notice that a number is just a number, while you’re an entire human being who has much more to offer than a number.

    Counting is optional. If you stop counting and look around, you just might find you’re warm, dry, full, and reading the web. And that’s not such a bad place to be. So count only when it’s useful, don’t take it too seriously, and feel good either way. Move your attention from counting to living. Put your attention on the things that make you feel happy, joyous, and grateful. If you must count, count those, and every day, count a little higher. It’s your life, and only you can make your counting count.

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    Is “nice” good business or just wishful thinking?

    Click here to hear this article as a podcast.

    I’d like to share with you a LinkedIn exchange I had on the topic of whether Being Nice is a good business strategy.

    Questioner Is there power in being nice, with people in general or as a management tool? … Do you agree, or is this just so much psychobabble?

    Stever

    I haven’t read “The Power of Nice,” though I’m amused that we’ve created a culture where we believe we have to make a case for treating each other nicely. It can certainly be better business to screw people. Prof. Howard Stevenson of Harvard Business School did a study about that years ago. He concluded that being unethical did, indeed, pay, but it produces a world we don’t want to live in, so we tell stories like, “Being ethical is good business.”

    In my life, I find when I’m centered and calm and at my best, I naturally want to be nice to people, and it feels darned good. And yeah, there’s more and more research supporting that position.

    Questioner Are you saying there are times when the best thing to do is “screw people”?

    Stever

    The “best thing to do” depends on your value system. In business, if you value profits over people, you can sometimes maximize profits by screwing people. Nicotine-enhanced cigarette, anyone? Unethical behavior is common in business. The Conference Board did a study showing 60% of all people interviewed over a wide range of companies and industries routinely were asked to do unethical or illegal things. That makes it the majority way of doing business. That says to me that unethical behavior is more normal in the workforce than being female. (Copy of the study is available in PDF form here. See page 22.)

    Personally, I value people over profits. I would love to live in a world where, if a business can legally, but unethically, make a profit, it would go out of business regardless of profitability. I used to stand up in meetings and point out when we were doing something unethical. Now I’m self-employed; honest self-examination isn’t a survival trait in corporate America. What *was* a survival trait, however, was the willingness to help everyone convince themselves that the profit-maximizing choice was also the ethically and morally “right” choice.

    My own life has been a continual effort to deepen my integrity and building a life that aligns with my values. It disturbs me to see people damage their own integrity through self-denial.

    That’s why I quoted Prof. Stevenson’s research. There’s this very comforting, but empirically false story that we can somehow maximize our business fortunes and our ethical/moral fortunes in one happy bundle. When we adopt the story, we get to have it all. When we face tough choices with very real tradeoffs between being a “good businessperson” and being a “good human being,” we relieve ourselves of having to confront the real choice, since our little story lets us maximize people OR profits, and claim that in the long run, our decision was magically best for both.

    So back to your original question… I’ve had a very happy, satisfying, successful life on many levels, and have forgone chances to get a lot richer, legally, in ways that would have compromised my personal sense of integrity.

    You may be different. If you prefer profits to people, then yeah, the best thing for you may be to screw people. I suspect if you do that, you’ll find yourself at life’s end surrounded by people you don’t like very much, with fewer happy memories than you might like. But that could simply be MY wishful thinking. I’m sure there are people who’ve been total jerks their whole life, accumulated huge fortunes, and died quite happy and quite oblivious to any suffering or harm they cause to others.

    The good news is that you get to choose who you’ll be.

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    Posted in Business, Newsletter | 2 Comments

    Using recursion in NLP

    NLP is said to be recursive. What does that mean?

    From a conversation on NLP connections:

    innovating new high-level models in NLP? … is expected to be out of reach for most.

    Richard also encourages people to go out and invent their own stuff. I don’t really think NLP is a field, the way, say, optics is a field. NLP is a particular approach to psychology, but to become self-sustaining, it needs enough organizational, research, and development infrastructure to outlast its creators. That infrastructure just isn’t there.

    Bizarrely, EMDR might end up lasting longer, more widely used and accepted, than NLP, even though Grinder claims EMDR’s Francine Shapiro basically took one tiny NLP concept, relabeled it, and went out and sold it (successfully) to the established psychological machine.

    So as an open question, what specific parts of computer science … to build recursive and generative models

    Well, for one, go study recursive functions in computer science. If you work your way through the book Structure and Interpretation of Computer Programs by Sussman and Abelson, you’ll know recursion like the back of your hand. (You actually have to do the problem sets, though. Understanding it is very different from being able to do it. The book is now freely available on the web.)

    Recursion is the programming equivalent of mathematical induction, by the way. It’s hard to understand without learning it deliberately. And it’s hard to use without a learning curve. Many people throw the word around with no understanding or concept of what it means. I used to TA a course in computer science taught using the programming language LISP. LISP is notable, among other reasons, because it’s designed to find recursive solutions to problems. Some people “got it,” but many people didn’t, even very, very smart people.

    Recursion is defining a function in terms of itself. Consider the Fibonacci series: 1, 1, 2, 3, 5, 8, … Each term is made by summing the previous two terms. If you were to try to write a normal math function that would generate the sequence, it would be very long and complicated.

    But you can express it recursively very simple:

    The Nth fibonacci number = The N-1th fibonacci number + the n-2th fibonacci number
    or in math terms: Fib(N) = Fib(N-1) + Fib(N-2)

    If you think about this, it works, except somewhere you need to specify two consecutive Fib numbers so all future ones can be computed. The final recursive definition looks like this:

    Fib(N) = Fib(N-1) + Fib(N-2)
    Fib(1) = 1
    Fib(2) = 1

    So now we know:
    Fib(3) = Fib(2) + Fib (1) = 1 + 1 = 2
    Fib(4) = Fib(3) + Fib(2) = 2 + 1 = 3
    etc.

    In some sense, the later Fib() functions are built up of earlier Fib() functions.

    In LISP, recursion is sometimes used to build self-modifying programs. Since the program is essentially defined in terms of its earlier self, it’s recursive.

    How does recursion apply in NLP?

    One place recursion applies in NLP is in strategies. A non-recursive strategy is attached to a specific time and place. For example, “Go into a bar. See attractive person. Feel confident. Walk up and offer to buy a drink.” There’s no recursion in that.

    A recursive strategy in some way refers to itself or builds a stronger version of itself. For example, “Go into a bar. Remember what you did last time and generate a dozen new possiblities for how to behave to meet someone. Go do that. Afterwards, future pace that behavior if applicable to a dozen new contexts.” That’s recursive because the behavior in any one time is built on past runnings of the strategy. The strategy is also self-modifying and self-improving.

    In Richard’s trainer’s training, he teaches some specific skills. A big piece of the strategy he installs, however, is essentially, “When in a troublesome situation you’ve never been in before, enter a resourceful state and invent a new strategy on the fly.” That’s recursive because it’s a strategy-modifying strategy.

    Make sense?

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    NLP: Model, modeling tool, or both?

    When Bandler, Grinder, Dilts, etc. first formalized NLP, they certainly did it using the terminology of mathematical models, particularly calculus.(1).

    The early NLP literature (Structure of Magic, NLP Vol I) talks about “4-tuples” (or 5-tuples, if you go back far enough), and “operations” that can be done to 4-tuples.

    This was an early attempt to make NLP a calculus. Math-phobics, suspend that phobia. We aren’t talking mathematical calculus, but a general calculus. That just means they defined distinctions to pay attention to, operations on those distinctions, and rules telling how they all went together and what produced what results.

    In Math, distinctions called “numbers” include 4, 5, and 9. Our operators include something called “addition.” The rules of math say when you combine 4 and 5 using addition, you get 9.

    In NLP, we have distinctions called “4-tuples” with a specific set of internal/external sight, sound, small, taste, etc. We have an operators, “set anchor” and “fire archor.” Given two different 4-tuples, we can anchor both. When we combine them using the operator “fire off anchors,” we get a new 4-tuple with elements of the original two.

    So NLP, itself, is a model. It has distinctions like 4-tuples, physiological state, internal images, auditory voices, submodalities, the unconscious mind, etc. It has operators like anchoring, shifting submodalities, etc. It also has rules for how those combine: if someone has Friends coded in one set of submodalities and Acquaintances in another, they can make an Acquaintance a friend by shifting the set of submodalities.

    When they were developing NLP, existing therapies weren’t this rigorous. They didn’t have well-defined distinctions or operators, and had no real idea why or when their stuff worked. NLP was (and to some extent, still is) novel in that it attempted to be as rigorous as a mathematical model.

    (To this day, the DSM-IV, the traditional therapeutic Diagnostic and Statistical Manual, has many descriptions that are too vague to be used as good, rigorous distinctions.)

    Producing models with NLP

    NLP can also be used to produce models. You can use the NLP distinctions to build a model of a skill. The famous spelling strategy, for example, uses the NLP distinctions to produce a model of how some good spellers spell: they create a mental image of a word properly spelled and anchor it to the sound of the word. That’s a super-simple model, but it reflects how the process operates.

    B&G originally hoped people would go out and use NLP to produce models of how people did all sorts of skills. In practice, this hasn’t happened. I’m not sure why, but I suspect that successful modeling is a specialized skill that isn’t terribly useful in daily life, so few people get good at it.

    Models by themselves aren’t very useful. Their usefulness comes from applying them. You can develop one model and then spend a lifetime applying it. The paradox is that those who love building models rarely enjoy applying them once the model seems to work. And those who like application are rarely good at building them.

    Some professions are pure model-building professions. Linguistics, mathematics, physics, computer programming, academic research, and some forms of management consulting (e.g. business process re-engineering) are all model-building professions. Look closely at that list and you’ll find that those professions sort by task/system, not by people. They may be good at building models, but those practitioners rarely spend their time developing fine distinctions about people. Rather, they model things and systems.

    So is NLP a model? Yes.
    Can NLP be used to build models? Certainly.
    Is NLP used to build models? By a few people, but rarely.
    Is NLP necessarily model-building? Not at all. You can be highly skilled at using NLP for therapeutic interventions and not do any model-building.

    Addendum from a conversation on 18 Aug 2007

    A key piece of modeling is choosing the distinctions your model will have. Physics, for example, uses the distinctions “FORCE,” “MASS,” and “ACCELERATION.” Newton is very famous for finding and proving the relationship FORCE = MASS * ACCELERATION (F=MA).

    What is often (always?) overlooked is that the very choice of Force, Mass, and Acceleration to measure is, itself, genius. If he had chosen WEIGHT, DENSITY, and SPEED, he likely would have found no relationship.

    Bandler’s greatest genius, in my mind, is that he simply slices up reality a bit differently from the rest of us when watching people. He creates new models not because he has great skill in modeling (though that helps), but because he can slice up his observations in ways no one has ever done before. His ability to articulate what he does is relatively rare, and lets him teach portions of it.

    For example, he noticed voice tone and tempo when talking to Erickson. Others simply hadn’t noticed it before. Is the genius in noticing that Milton would embed commands through his tone or tempo (relatively easy to hear, once you know you’re listening for tone and tempo changes)? Or is the genius noticing that tone/tempo might be relevant in the first place.

    Maybe it’s both.

    That’s why I find Bandler irreplaceable in many ways. He perceives differently, and that is a powerful piece of his modeling.

    I came across this when modeling software engineers long ago. After many frustrating hours trying to figure out how one superb programmer broke down his solutions into code, he simply shouted (words translated to a metaphor for the non-programmers), “Stever, you just don’t get it. HAMMERS aren’t used to pound nails, they’re just a way to provide bracing while you use the door frame to pound the nail.”

    His definition was radically different from how everyone I knew thought about hammers. But with his definition (his way of slicing up the world), many previously hard problems suddenly became simple. Ditto for the entire concept of recursion, by the way. Many extremely hard problems, when expressed recursively, can become absurdly simple.

    Modeling = the distinctions you make AND the relationships you find between them.

    The magic resides in both halves of the definition.

    (1) For those of you who have taken group theory, think “Rings” and “fields.”back

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    What’s the difference between unconscious assimilation and unconscious modeling?

    What’s the difference between the two?

    My impression is that unconscious assimilation is the natural ability we have to mirror others to the point where we adopt their cognitive skills. It’s the way we learn language as an infant, and it extends well into adult behavior (ever notice that people follow their leaders’ actions, not words?) For some fascinating reading on what might be the mechanism behind unconscious assimilation, Google “mirror neuron system.”

    Assimilation isn’t installation, at least not as Bandler uses the word.

    Installation, as Bandler uses the word, is very precise, and very different. Bandler leads audiences through sequences of unconscious representations and emotional states over and over and over until those sequences get learned through repetition. Then he anchors them to the desired context.

    For instance, I once saw Bandler up on stage (ever seen his Orlando videos? Where he’s sitting there with a huge banner saying “NLP Seminars Group” above his head?) as he was doing an installation. He was talking about how he remembers a given person’s meta-programs and issues. He does it, he says, by visualizing a list of their criteria, etc. above their head. So looking at someone, he sees this little checklist above their head, telling what work needs to be done. Of course, journalists just use a little book and jot notes. It’s an archetypical American image: the 1950s journalist in dapper suit, gripping a notepad and scribbling with a pencil. Sometimes, they even have a pencil stuck behind their ear, right beneath a hat with a big sign in the hatband that says “PRESS.” Very film noir.

    If you followed along that last paragraph, three times you likely made pictures of people with large, readable words over their heads. If we told those stories a dozen times, your unconscious mind would start to “get” the general strategy: make pictures of big, legible words over people’s heads.

    If I anchored it correctly, later I can help you link it to the right context. I might ask, “If you’d like to learn a cool way of remembering people’s names, stop for a minute and imagine you just met someone on the street…” As I see you start to enter your name memory strategy, I fire the anchor and Bazoom! the strategy gets linked. I would reinforce it with some hypnotic language, test the work, of course, and probably tell your conscious mind some other story to distract you. The installation part is the rehearsing and anchoring of the strategy and associated feeling states.

    So in my understanding:

    • Assimilation uses the mirror neuron system to “get it” unconsciously.
    • Installation is a deliberate leading of someone through representations below conscious awareness to help them develop a cognitive skill.

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    Are you as good at recruiting as you are at sales?

    August 2007 Newsletter

    Click here to listen to this article as a podcast.

    We say people are our greatest resource. And Dilbert’s boss points out, “resources are our greatest asset.” But most companies put huge effort into attracting and retaining customers, and much less into attracting and retaining people. Salespeople get trainings, off-sites, apprenticeships, workshops, and books on finding and romancing customers. But rarely does a company jump so fully into finding and romancing their people (“our greatest asset,” remember?)

    If your business depends on innovation, judgment, or in-person contact, people are key. MIT says 40% (yes, 40%) of its grads enter into finance or consulting. They don’t go because they like the fields, nor do they go for the money; grads go because consulting firms and I-banks put as much effort into recruiting as they do into sales. They recruit better than other companies. You could have those kids working for you instead. It would be better for you, and frankly, better for the country.(1).

    When you want a customer, you go where customers hang out. You learn what motivates them. Why do they buy what they do? What are their needs? What do they think of you and your products? With your insights as a guide, you begin the dance that ends, we hope, with a nice new business relationship.

    So where do new recruits hang out? What are their needs? Why do they choose the jobs they do?

    Last week, I blogged about the absurdity of punting a job candidate after reading their MySpace page. I said it’s us old fogies who don’t understand that the World has changed, and we need to get with the program. It turns out, I was righter than I thought.

    My friends Ian Ybarra, recent grad, Chris Resto, founder of MIT’s largest intern program, and Ramit Sethi just published “Recruit or Die.” Interviewing over 1000 students, they give a tour through the minds of today’s best candidates and how they make decisions.

    Today’s job candidates research companies as much as companies research them. And then candidates swap notes. A lot. MySpace, Twitter, you name it, they use it. Successful recruiting means managing your reputation as much as selecting the people you want. When you ding someone, act rudely, show up unprepared, or rescind an offer, the news flashes through the social networks back to the people you most want to hire. If you’re less than top-notch, you’ll never even know you’re chasing away your best candidates.

    What are candidates discussing in their online forums? Top performers aren’t looking for a salary; they’re looking for a career. They don’t want a retirement plan, they want growth, opportunity, and positioning for their next jobs. They don’t want to feel like a cog in the machine, they want a chance to have real responsibility to rise as rapidly as their talents allow. Take a look at your current recruiting pitch. Is there any overlap with what your recruits want?

    Once your message is right, you need a quality recruiting process to deliver it. Sales has a century of research and frameworks. Recruiting, not so much. But just as sales builds on itself, so does recruiting. You research and contact your potential recruits. You build brand awareness among them, complete with all the brand attributes you want your company to stand for as an employer. Then you develop ways to identify your prospects early on, and begin building relationships far in advance with the people you someday want. The pieces of good recruiting aren’t hard, you just need to do them and put them all together.

    The second half of “Recruit or Die” lays out the recruiting process start to finish—including what to do once your offer is accepted to build a strong partnership with your new employee. They make recruiting as rigorous as sales. In fact, just replace “job candidate” with “customer” and the book becomes a sales management handbook!

    If people are key for your business, pursue them as you’d pursue your hottest prospect. Get inside their minds, provide real value (and not just money), communicate respectfully, and you’ll find you’ll attracting recruits of the very top calibre.

    You can find Recruit or Die via my website: http://www.SteverRobbins.com/r/recruitordie.

    (1) Stever’s over-the-top soapbox: This trend spells doom for America. Forty percent of MIT students go into consulting and i-banking? FORTY PERCENT? These are exactly the people we need innovating. We need them discovering clean, cheap energy, halting global warming, and helping us compete globally. If they get sidetracked into producing 500-page jargon-filled strategy documents, we’ll lose their potential forever.back

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    Overcoming your own change resistance

    Some change resistance is good. How about yours?

    Click here to listen to this article as a podcast.

    Q: I am change-resistant. I know it, but it doesn’t help. Once I’ve decided to change something, I enjoy the challenge. But I often resist with “it won’t work because…” How do I know when I am simply resisting change or have a valid concern? You can always point out what can go wrong, and the change resistant-person (e.g. me) truly believes he or she is correct in their objection. – Suzanne

    A: You’re in good company, Suzanne! Things change fast these days, yet success is built on resisting change. Yes, you heard right; results come from stability, dependability, focus, and persistence. In other words, the *change-resistance* that keeps us on-track day in and day out. Trust me, Fortune 500 companies rarely get there by embracing change. They innovate once (or get lucky), grow, then do everything they can to keep anyone from creating change that might topple them. Just watch ExxonMobile embracing change around global warming…

    Change is hard, physically hard. Our brains grow neural pathways when we learn. Change means creating new paths, PLUS actively resisting our past learning. It’s way easier to invent reasons not to change, so we often do.

    You know you’re knee-jerk resisting when you start with objections. Your points may be valid. Maybe. But starting with “No” shows resistance. If the objections come rapid-fire, that’s an even stronger signal. On your third “yes, but…” you’re driving from habit. Realize it. Pat yourself on the back for realizing it. Then stop.

    (Try a rubber band around one wrist. When you hear yourself say “yes, but…” snap the rubber band lightly to remind yourself to shift gears.)

    Next, just listen. Inside, think, “yes, AND…” Outside, say “Tell me more.” Listen, nod Yes, smile, and take notes. Agree to nothing. Just listen. Inside, object to your heart’s content; go wild. Outside, nod, smile, and write. Then say, “I’d like some time to think about this. Thank you.”

    You listened, now think. Write down your objections. On paper, you’ll often find them less daunting than you thought. Once you’re done kvetching, list the possible benefits of the change.

    Now, stretch your imagination; write down three or four possible futures that could come from the change. Explore positives and negatives about each one. For example, “If we move, we’ll have more Chinese restaurants that deliver. That means more romantic evenings at home. But then, we’ll bloat from the MSG, so we’ll need to buy a treadmill…” Be humorous. You’re not trying to predict the future; you’re just shaking up your thinking.

    After this brainstorming, decide if you agree with the change. If not, you’ve thought enough to build a careful argument. Rather than a seeming nay-sayer, you’ll be a thoughtful contributor to the discussion. If you decide you like the change, psyche yourself up for the challenge and give it a go, full steam ahead!

    Change-resistance is fine, if your reasons are good. By letting your knee-jerk response signal Time To Think, you can choose when to keep the status quo and when to act. Either way, you won’t respond willy-nilly; you’ll make a good decision from careful deliberation.

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    How to think strategically

    What is strategic thinking, anyway?

    Click here to listen to this article as a podcast.

    It sounds easy: my client wanted to think more strategically. isn’t that the hot buzzword? “Strategic thinking.” Oooh! Sexy. There’s only one problem: what, exactly, does it mean?

    You’d think we would know. But I’ve seen executive teams discuss in all seriousness what the lever does on a piece of machinery. That’s about as non-strategic as it gets. In fact, a general rule is that if you read it in a manual, it’s quite likely not strategic.

    What is strategic is when you’re doing something that changes the structure of the business in some basic way. Paint a machine lever red? Not strategic. Decide to outsource manufacturing to China? Strategic, because it changes who you hire, how you manage them, and what they’re capable of achieving. You punt your machines and take on eager young managers who speak Mandarin.

    This is the first kind of strategic impact: changing organization structure. This includes outsourcing, selecting vendors (since what you can do now becomes expanded and limited by what they can do), mergers and acquisitions, changing the org chart, going public, and hiring and firing people who will in turn make strategic decisions.

    Or consider an entrepreneurial client who insists on answering the phones himself. He’s done it since founding the business 20 years ago and prides himself on knowing everything that’s going on. But now that the company gets a hundred phone calls a day, he decides to install an automated attendant, freeing himself to do other things. This is an example of “business process reengineering,” which is a fancy way of saying “doing things differently.” Changing how a business does something is strategic because different hows give the business different capabilities. If your product is produced on a machine that turns out 100 widgets a day, then you simply can’t bid on a job that wants 500 units by tomorrow. If you can rearrange your factory processes and produce 5,000 units a day, whole new markets open up.

    Speaking of markets, choosing the markets to compete in, what to sell, and how to price are all strategic decisions. After all, those decisions determine who you’ll hire, how you set up your org structure, and how you’ll deliver your product or service.

    The American Express web site lists 20+ cards. I called a friend in Amex’s strategy group to help me understand the difference between the “Platinum Business” and the “Business Platinum” cards. He said, “I work in strategy. I don’t really know our product lines.” A strategy group that doesn’t know the products? I don’t know what they do, but it seems awfully dangerous to be making organization structure and process decisions without even knowing what your customers are buying.

    Everything we’ve discussed so far is cross-functional; they can involve changes that affect many parts of a business. Though it’s possible to make strategic decisions in one area of a company without involving other areas, that’s a dangerous game. If our marketing department starts competing in a new market that cares about delivery time, but doesn’t tell our shipping folks, they can set the company up for failure.

    Don’t make the same mistake. Learn when your decisions are strategic. That means decisions about org structure, process–the HOW–, cross-functional decisions, and the marketing decisions of what to sell and who to sell them to.

    If you want to learn more about strategy, my very favorite book is Co-opetition by Adam Brandenburger and Barry Nalebuff. I also liked Geoff Moore’s “Crossing the Chasm.” Both books are circa mid-90s. There are 83,416 other business books that will teach you some kind of strategic thinking. I’m not sure the specific strategic approach is very important (though consulting firms will make big bucks telling you otherwise); to me, the value comes from learning to think at a strategic level consistently and integrate strategic thinking into your daily running of the business.

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    Producing powerful business results with NLP

    Using NLP at an organizational level

    NLP business applications often suck. Well, maybe they’re not that bad, but all you hear about is rapport skills, predicate matching, and sometimes meta-programs. At best, they’re applied to getting people to play nice together, helping customers who call for help feel better, and convincing people to feel good buying stuff they don’t really need or want. NLP is a universal tool that can be used much more widely. It’s a tool for understanding, and a tool for making changes. Using an NLP mindset can lead to powerful business results, just as it leads to powerful personal results.

    NLP Thinking Helps Fix Business Problems

    NLP provides Practitioners techniques like Change History and Anchoring. As your skill increases, you start thinking in processes. You ask, “How does this person get their current results?” You elicit strategies and states, identify triggers, and choose interventions that change a person’s process.

    Process thinking is like gold in business; few people do it well. Applying NLP thinking to business helps find the root cause of business problems. While a person is conveniently self-contained, a business is made of many people, so you’ll be doing your strategy elicitation by working with people and the relationships between them.

    Imagine Miss Anne’s Department Store is losing business. Elicit MADS’s strategy for making money by asking, “What’s MADS’s strategy for getting a customer to buy?” Then trace the process step-by-step to find out where it fails. Your strategy elicitation will lead you through the entire organization:

    First, MADS must get customers. This leads you to marketing. You ask customers how they heard of MADS. Everyone says, “on MADS’s 5 p.m. radio ad,” even though MADS advertises in 5 different places.

    Next, customers visit the store, try on clothes, and buy or don’t buy. You notice people who try on the clothes return most of what they try on when they return from the fluorescent-lit dressing room.

    Then, customers approach the cash register to pay. They walk up to an empty register, look around in puzzlement, and hunt through 3 departments to find the on-duty cashier. After a 10-minute wait, they reach the register.

    Finally, customers pay. You notice that several want to pay by credit card, and are dismayed by MADS “cash-only” policy. Without sufficient cash, some customers return clothes to the racks.

    We’ve just seen the business-equivalent of a strategy. Just as NLP strategies lead you to the intervention (“you’re yelling at yourself? Let’s turn the volume down!”), business strategies also suggest their own interventions. In this case, help the marketing department do a better job of attracting customers, replace the dressing room light bulbs with full-spectrum lighting, make sure cash registers are fully staffed, and accept credit cards.

    NLP Helps Understand the Link Between Individuals and the Business

    Once you’ve found the critical organizational process moments at the business level, you can search for the people at the heart of organizational issues. When people make decisions that set policy, those decisions get magnified into organizational behavior. For example, I worked with a COO candidate who made decisions too slowly for his CEO’s comfort. He liked making fully-informed decisions. Really fully-informed. Jam-packed-fully-informed. He could spend months gathering and analyzing data. Thus, the organization itself would slow until he made up his mind.

    This executive’s personal decision-making strategy determined the entire organization’s speed! At this point, we could shift to “typical” NLP with the individual. Here, NLP came into play unpacking and revising his decision-making process. His decisions sped up, his organization’s decisions sped up, and he was eventually promoted to COO.

    You’ll find this is not uncommon. Individual NLP skills can, indeed, help people in an organization get better at what they do. But when you combine individual NLP skills with NLP process thinking at an organizational level, you can find the organizational leverage points where a single change in the business or in a person can create lasting, significant business value.

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    The Joys of Overhead (why overhead isn’t necessarily bad)

    Why Overhead isn’t necessarily bad.

    Click here to listen to this article as a podcast.

    I never thought I’d be able to grow up and say, “Mom, I’m not just a productive businessperson, I’m overhead!” Many people think overhead is a bad thing. Well, maybe. Maybe not. Overhead’s an essential part of business.

    Overhead is the time, effort, money and manpower you spend on parts of the business that don’t directly make money. The cleaning service that keeps your desk so shiny you can see yourself? Overhead. Your office rent? Overhead. That cool new Blackberry? Overhead. The wonderful people who work in your accounts receivable department? Also overhead. And brace yourself: if you’re a manager, you just might be overhead, too.

    We talk as if overhead’s a bad thing. That’s just silly. Building and maintaining the support systems to do our job, that’s overhead, but it’s also necessary. In today’s office environment, I’ve had executive clients who hunt-and-peck type their own letters and fill out their own expense reports. They don’t want the overhead of an assistant, they say. Harumph, I say. If they’re high-powered folks (and they people I work with are!), they can do more for the business by concentrating on their jobs, not their expense report. If they could spend 100% of their brainpower on their job, they would build so much great business that the so-called overhead of an assistant is peanuts.

    One place the world is very confused about overhead is with non-profits. Many people think the better a non-profit is, the less overhead it will have. “Only 2% of every dollar goes to overhead!” non-profits proudly claim.

    What they’re not claiming, probably because most non-profits don’t know how to educate donors, is that with only 2% money available for overhead, they’re not likely to ever build the talented staff, tight business systems, and focused delivery to make a big impact in the world. We routinely accept that businesses may need 30-40% overhead just to get the job done well. The same is true of non-profits.

    The way to think about overhead is to ask whether the organization gets better results with the overhead than without. For for-profit companies, it becomes the most fundamental management question: does a dollar spent on overhead turn into more than a dollar of profit. If the answer is Yes, then it’s useful overhead. (Note that I’m not saying a word about CEO salaries here.)

    For a non-profit, the bottom line isn’t money, it’s impact. You need to ask: can the non-profit have greater impact with its overhead than without. Consider a Non-Profit Co, a third-world hospital. They could have low overhead by taking donations, buying and distributing medicine. But if they increased overhead by spending money educating hospital staff in public health, they could educate communities to prevent many diseases in the first place. The training costs increase overhead, but increase the positive impact of the hospital even more than if the money were spent directly on medical care.

    Personally, I incorporated last month. My last two weeks have been spent filing incorporation stuff, navigating government websites, arranging payroll deposits, transitioning merchant accounts, and doing lots and lots of stuff that is all overhead. I decided to write this article to convince myself that the overhead was time well-spent. And it was, because overhead is only a bad thing if it doesn’t help the business move forward. And in this case, the overhead inspired an article and a podcast. And that, my friends, moves my business forward.

    So don’t reject your overhead. Embrace it! Because like it or not, it’s here to stay.

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    Profit and Cash Flow Explained

    What’s the difference between profit and cash flow?

    Often, it’s the difference between success and bankruptcy.

    Before we begin, let’s use clear language. I won’t say “income” because different people mean different things by that word. I’ll say “revenue” to mean money that comes in from selling a product or service.

    Imagine two kids who want to start a lemonade stand. They plan to charge 50 cents per cup. If they sell 100 cups, they will make 100 times 50 cents, or $50 of revenue. Of course, they know it takes money to make money. They figure each cup costs 13 cents to make: 10 cents for ingredients, and 3 cents to pay protection money to the neighborhood bully. Their expenses will be 13 cents times 100 cups, or $13. They will have revenue of $50, expenses of $13, and their profit–revenue minus expenses–is $37.

    Profit is the money left once expenses are paid. Some people think business owners can take profit to the bank. If only! Profit is used to pay for any new equipment or materials needed for the business to grow. And unless you buy a politician or two, you pay taxes out of profits as well. (Sometimes, profit is given as “pre-tax profit” and “after-tax profit,” so you know what the business produced on its own.) Only after paying for growth and taxes do owners get to take money home.

    Our kids are ready to go! They needn’t buy equipment or pay taxes, so they’re eager to start their business and bank their $37.

    But wait! If only this story were so simple. There’s a dastardly twist!

    On the very first day, the kids go to the store to buy lemons … only to find out neither of them has any allowance money left. The store won’t loan them the lemons, so they can’t even get started. They’re out of business before they begin, thanks to cash flow.

    Cash flow refers to when a business needs money. Often, businesses spend money on salary, utility bills, and lemons before they bring in any revenue. By plotting out when cash will come in and when it needs to be paid out, a business can identify when it needs cash on hand, and can do what it takes to make the cash available.

    Companies often take out loans to survive until revenue comes in. If our kids must pay the grocery store $5 for lemons today in order to make $50 by selling lemonade this weekend, they can ask Mom or Dad for a loan, to be paid back once the lemonade sales come pouring in. They borrow $5 today, make and sell their lemonade, and then pay back the loan next week.

    What about the protection money for the bullies?, you ask. Well, the bullies are kind, generous people who understand cash flow. They’re willing to let our entrepreneurs pay after the revenues come in, avoiding a cash flow crunch.

    Cash flow and profit don’t always match up.

    A company can be profitable and still go bankrupt from cash flow problems. If they must pay for materials in January but don’t get paid by their customers until June, they need a loan to survive until June. If they don’t get that loan—even if they have guaranteed sales in June—then they will go out of business. Sometimes customers themselves will pay in advance, effectively giving an interest-free loan to a company to help cover cash flow.

    A company can have great cash flow, but not be profitable. Amazon.com raised so much money by selling stock in the mid-1990s, that they had $2,000,000,000 in the bank. Every year, they spent more money than they made, so their yearly profit was negative. But because they had so much money saved up, they could afford to make up the difference out of their bank account. The big stock market cash inflows made up for the continual losses. Only after a decade did Amazon actually start making a profit as a company, so they now have good cash flow and are profitable.

    So remember: profit is how much money you have left after you get your revenue and pay your expenses. Cash flow is when you actually get and pay the cash. In the long-term, you must eventually get profitable or find someone like stock investors to keep giving you cash to make up for your losses. In the short-term, even if you’re profitable, you survive or fail based on whether you have cash to pay the bills. That’s why they say Cash Flow is King.

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    What does a CIO do, anyway?

    A CIO job description

    For a CEO job description, see my article on CEO job descriptions.

    For a podcast of this article, see my Podcast entry.

    What does a Chief Information Officer do, anyway? Most of the descriptions I’ve heard make them sound like a glorified purchaser. “They make sure our systems are up to date.” Mega-yawn. CIOs fill a very important role, it’s just no one knows what. Well, today’s podcast will outline the four things you want from your CIO (and probably don’t get).
    Continue reading

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    Make Everything Easy! (Especially during the holidays)

    Hello!

    A client of mine makes everything hard. Instead of just going after the job she wants, she maps out a 10 year plan the requires 15 key skill development efforts, seven essential relationships to be built, and a critical mass of completed projects. Then she decides it’s not doable, and settles for less, for MUCH less. We all do this. You should see me agonizing over every word of an article. Absurdity! This month’s article is on making things easy, instead.

    This month:

    • Brief peek into the future
    • Article: Making things easy (especially during the holidays!)
    • Please send questions!

    ========== Brief peek into the future

    Starting in January, I will be developing and launching CDs on leadership, management, and entrepreneurial topics. Stay tuned!

    ========== Article: Making things easy (especially during the holidays)

    Make it Easy!

    Have you ever noticed how hard we make things for ourselves? A client of mine was holding back on her dream of working in pro sports. “I don’t have the background,” she said, “so I’ll settle for banking.” (Not as my client, you won’t!) We picked up the phone. Five minutes later, she had an interview with the CEO of a major sports franchise. It wasn’t so hard after all; we just had to call and ask.

    We all make things hard. It’s weird. We’re scared to let things be easy. We have lots of reasons. If something is easy, we tell ourselves it must not be worth much. My job can’t be easy … how would I justify my salary?

    It’s easier to believe something is hard than face our real motivations, like fear of failure. If something’s easy, we have no excuse but to try. If we try and fail at something easy, that says bad things about us. Better to make things hard, so if we ever try and fail, we can blame the task, not ourselves.

    Lastly, we make things hard so we have jobs! We’ve created huge corporations and bureaucracies in part to employ people. If things were simple, we might be out of a job. (My favorite is receipts. How much of our economy is devote to nothing more than tracking receipts and expenses, for tax and accounting purposes?)

    So how do we make things easy again?

    Stop solving the solution! We often start solving a problem and the solution becomes worse than the problem. A startup’s IT department needed a new laser printer. Concerned about costs, the management team met to discuss the purchase. They met three times, for an hour each time. By the time they decided not to buy the $500 printer, they had wasted thousands of dollars of management time, and distracted the managers from really moving the company forward.

    Settle for 80% quality. This is my Achilles heel. A perfectionist, I like things to be perfect. But that last 20% towards perfection often takes as much work as the first 80%. When you find yourself worrying about whether the font on your weekly status report uses small capitals correctly, you’ve traveled far into the land of absurdity. Let yourself settle for 80%, you’ll be happier when you do.

    At the end of the day, “hard” is our story, it’s not the truth. We can make something hard in our minds, or we can let it be easy.

    The experiment for the holiday season:

    You’ll have lots to do in the next week. Make it easy. When you catch yourself thinking, “This will be a hassle,” stop and chuckle. Then decide you’ll make it easy, and do it. Stop solving the problem. Settle for less. You’ll be surprised how much you get done. And when you discover you have more free time than you thought, don’t tell anybody. Just give it to yourself as a Holiday present.

    See you in the New Year!

    [Send your questions to Stever at: inquire@SteverRobbins.com]

    ========== Please send questions!

    I like to base newsletters on your questions. Send questions to:

    inquire@steverrobbins.com

    I’ll answer the best in my newsletter and BLOG.

    ========== Want to exceed your own expectations in your business or career? Call 617-491-7638!

    When you’re ready to start doing seriously better, give me a call and I’ll help you make it happen. Just call +1-617-491-7638. Whether it’s becoming the best executive possible, climbing Mt. Kilimanjaro, or having a successful business and fulfilling home life, some dreams _should_ come true. I coach high-performing leaders to help them further their skills, careers, and lives.

    ========== Become a better leader in a Fun, Provocative Read!

    Looking for new ideas you can implement immediately to be a more effective leader? Pick up a ‘It Takes a Lot More than Attitude … to Lead a Stellar Organization.’ This collection of essays explores with what it takes to be a great leader, in an engaging, no-nonsense conversation that keeps you turning the pages. It also makes a perfect gift for the person with the leadership title who just doesn’t get it.

    Buy it now at http://www.alotmorethanattitude.com

    (The only book on leadership that starts by discussing the responsibilities of leadership, and goes on to reveal all the secrets the great leadership pundits never discuss. Like when and why you can wear a feather boa to staff meetings…)

    ====

    Do Great Things!

    - Stever

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    Innovate, Compete, Win: pierce your belly button

    Just be prepared to get your belly button pierced…

    No one should take themselves so seriously
    With many years ahead to fall in line
    Why would you wish that on me?
    I never want to act my age
    What’s my age again?
    What’s my age again?
       —Blink 182, “What’s my age again?”

    Heck, everyone’s saying we must innovate to stay a competitive nation. So the government is throwing money at high-tech businesses. But that only takes care of funding, and frankly, money’s easy to come by if you have a good idea. Once we have the money, we businesses have to use the money to Do New Things.

    The hard part is finding the people. We need people who can push the boundaries. Who can go beyond the ordinary. Who can think new thoughts. A lot of those thoughts will be wrong and won’t work. But hopefully, enough will work so we can keep pushing forward. There’s a reason high-tech growth seems to be pushed by 20-somethings—they don’t know what’s impossible, and they haven’t yet been beaten back into conformist thinking.

    A Fable that Starts True: Extraordinary People Producing Ordinary Results

    A young man—college student—with a goatee and headphones sat across from me on the subway. Hunched over a book, he was wearing cargo pants, a T-shirt, several bracelets, and many necklaces. The knapsack in his lap proclaimed (in hand-written magic marker), “Life is a verb, not a noun.” A button on the knapsack: “Reading is Sexy.”

    I looked around. Everyone else was wearing sensible clothes. Khakis. Button-down shirts. Gap shorts. Me? Khaki shorts and a generic polo shirt. Clothes, happily devoid of personality. The young man had more personality in his little finger than the rest of us had together. Pondering, I wondered if he would ever end up as Boring as the rest of us(1).

    Step-by-step, he’s molded into Everyman

    It would begin on the first day at work. “Wearing a goatee isn’t really appropriate for this office,” he would be told with a smile by the kindly secretary who wants to see him succeed. The next day, he’s cleanshaven. Bracelets, she informs him, aren’t really right for work. And why not leave the necklaces at home, too.

    The next day, he shows up, feeling a bit less like himself, feeling like he’s holding back. But, eager to do a good job, he cuts his hair. He shoves the backpack under his desk and buys a smart, leather folio. He shows up “dressed for work.” A colleague sees his old knapsack under his desk, smiles condescendingly, and offers helpful advice, “As an expert at copy-writing I can assure you that technically, ‘life’ is a noun. The verb form would be ‘live.’”

    A few weeks later, he finds his childhood hero is speaking in a nearby town. He wants to take a day off and go. “Sorry, kid. You haven’t accrued enough vacation time, yet.” He sighs, understandingly … and in that moment, his Life really does begin to transform from a verb into a noun.

    Next comes his yearly review. His best idea saved the company a cool million, but some of his ideas are a bit … out there. We helpfully give him the Tried-and-True industry handbooks, so he can tone down the wacko ideas. He learns quickly what is and isn’t possible. And since he did a good job, we give a whopping 5% raise. (That is $1,750 given his $35K salary. We’re glad he’s not a $200K person; we’d be shelling out ten grand. He doesn’t notice that his raise amount has far more to do with his age than with the value of his idea. We don’t notice, either.)

    Within a couple of years, our young friend fits right in. He wears the right clothes. He cancels his dinner dates for Oh-so-important client meetings. He knows the conventional wisdom, and can self-censor his wacko ideas in the bud. He spends his time working, attending industry conventions, and absorbing the Status Quo. He’s a success. And he’s quite unlikely to be an agent of innovation, creativity, or newness. Mission accomplished!

    Conformity is our boon and our curse

    The problem is conformity. We love it. We like people who look like us, who dress like us, who care about the same things, who live similar lives. It’s hard-wired, you know. Given two identical college applications with different candidate names and pictures, we prefer the one who looks and sounds like us. And never mind the Internet “revolution.” We’ve now made it possible to read only news that agrees with our existing beliefs, communicate mostly with people we know will agree, and read commentary that comes straight from our comfort zone.

    Conformity has its good side, of course. It’s very easy to manage. You only need to learn one way of dealing with people, and, well, that’s that. You can pretend everyone’s the same, and since we all agree dress, emotion, purpose, and rewards in the workplace are pretty much standard, we’ll play along enough for us all to happily work together…limiting ourselves to the lowest common denominator of our uniqueness.

    But we innovate, create, and find new ideas come people interact who think differently. People nudge each other outside their comfort zones, and if the environment is right, they can end up breaking existing molds and creating Great New Things. But innovation means helping people cultivate their differences and then bringing them together in ways that spark creativity.

    When we all wear the same work uniform, we send the message: differences in expression aren’t allowed here. When we all work in identical cubicles, we send the message: individuality is limited to two 8×10″ pictures above your keyboard tray. When our idea of flex-time is letting someone come in at 8:15 instead of 8, we send the message: no matter what your own rhythms, they matter less than having your body here.

    And guess what’s the worst of all? Hiring for “fit.” You know what happens when you hire only people you feel comfortable with? You get yet another carbon copy of the Standard Employee you already have way too many of. The candidate who makes you feel a little uncomfortable, who thinks a bit off-the-wall, will bring you genius, if you treat them right.

    So bring some extraordinary results into being by bringing together ordinary people, just not your definition of ordinary. Practice stepping outside your comfort zone. Wear some clothes that you’d never normally wear. Don’t be my friend who, at age 60, confided that the only thing he can wear comfortably is a suit and tie (even at home). Go someplace new. Try a new cuisine. Stretch yourself. Find out what happens. Learn from it. Meet some people outside your normal sphere. Go to Burning Man.

    But why stop there? Instead of looking oddly at the young man in your office who pierced his nose, go get something pierced yourself. Your belly button is a good choice; you can always tuck in your shirt when you want to be discrete. But above all, remember that conforming to the norm leads you nowhere but the norm. It makes for boring business and a boring life. If you’re going to dream big dreams, matter to the people around you, and create breakthroughs whereever you go, start by piercing your belly button. Khakis and a polo shirt in a gray cubicle just aren’t going to take you anywhere extraordinary.

    (1) In a twist of fate, I ended up in line next to this young man several months later. His name is Phil. I’m giving him a copy of this article in the hopes that it will make a difference… back

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    The Executive Mindset

    Executive jobs are the ultimate “buck stops here” jobs. The core of being an executive is decision making. Executives have the final say in their area of the organization. As I’ve written about before, the CEO is ultimately responsible for everything. But the CEO can’t do everything, so she hires executives to help. Let’s explore the essence of the executive mindset. What is so intrinsic to the executive that it can’t be delegated?

    What’s an executive?

    First, we need to find an executive. You can often spot an executive by her title. In industries like banking, title inflation has made everyone a vice president, but here I’m talking about real VPs, not the ones who took an impressive title when they could have asked for a raise instead.
    “Chiefs” are special. Their titles imply specialty—CFO is finance, CMO is marketing, COO is operations—but that just describes their expertise, not their scope. Their job is making decisions from the perspective of the entire business. They think about making the entire business succeed, not just their own domain. You know that grand vision statement the company wrote last month? It’s the chiefs who link the leadership vision with the strategy and tactics that get carried out.
    Vice presidents should also be striving for global thinking, but they’re more specialized. They often come in many flavors—VP of Northeast Sales, VP of Human Resources, VP of Quality, VP of Customer Service, etc. VPs are accountable first for their area, and then for the business as a whole. But they’re still executives, at least with respect to their area.

    Executives must think vertically

    People generally rise from the bottom to become executives. They have experience at every level of the business. They know the issues, goals, and concerns of front-line workers, managers, regional managers, and directors. If they paid attention along the way, this makes them uniquely qualified to think up and down with their decisions.
    It’s Monday morning, and an eager young intern suggests, “Let’s take our squeegee brushes and bundle them with free eyeglasses. It’ll be the biggest promotion ever!” The VP can consider the suggestion at every level: Does this idea fit with the strategy? Does this idea make sense given the director-level org chart? Will it work in manufacturing?
    The VP’s job isn’t to answer these questions, however, even if she knows the answer. The VP’s job is to raise the questions with the right people so everyone at the appropriate levels does the in-depth analysis required to know if the idea makes sense.
    In this way, the VP is doing her real job: building the organization. At lower levels of a business, everyone’s delivering a product or service. It could be the new Mach 9 Razor (now with seven diamond-coated blades), or the Faster than Light Package Delivery Service (packages delivered the day before you mailed them). At the executive level, that changes. The deliverable is not a Mach 9 Razor; it’s a business that delivers a Mach 9 Razor. The distinction is subtle but crucial.
    The executive’s job is hiring the right people, asking them the right questions, and engaging them the right way during decision making. That’s why the VPs who think at all levels are so effective; they can spot opportunities throughout the business, and help the right people at the right level pursue them. Those people learn, and can spot the next opportunity on their own. Developing people and systems, now that’s building a business, not just building a product.
    Executives who rise too fast or didn’t learn along the way often get stuck at one level. Some VPs think only at 50,000 feet. Their big picture thinking is great, but their strategy doesn’t capitalize on the actual strengths of the organization. They don’t know how to connect strategy with operations. Their strategies can range from completely unrealistic to merely a bad fit. And beware the 50,000-foot thinker with Attention Deficit Disorder! Every day brings a new initiative, any one of which would occupy the entire division for a year. Life with them is exciting and fast-paced, but somehow, not much progress comes from all that sound and fury.
    Other VPs are stuck at 5 feet. While I was helping a finance company’s senior team plan a strategy, one VP mentioned, “the customer service input screen needs a ‘back’ button.” That may be true, but it’s out of place when discussing fifteen-year industry trends. VPs mired in details micro-manage, and usually do it poorly. When they appear on the scene, everyone rolls their eyes, smiles fake smiles, and waits patiently to start cleaning up the mess when they leave. Their contribution to the business? Less than zero. They don’t help at the top and they muck things up at the bottom.

    Executives must think horizontally

    Executives have entire functions or business units reporting to them. It’s the executive’s job to recognize how everything interacts and make sure those handoffs happen as they should.
    In a start-up, everyone sits in one room. The product designers are three feet away from the people doing the invoices, and all of them gather in the storeroom every afternoon to manufacture that day’s batch of product. Everyone hears customer complaints. Everyone hears internal issues. And everyone can work out who needs to hand off what to whom and when.
    Good executives think long term, short term, and every term in between.
    But as the business grows, the tasks get too big for one person to handle; now ten people take calls in a call center. They’ve never met the designers, and don’t know what happens with the complaints they so dutifully record. Each customer service rep now does a tiny slice of the original one-person job.
    As businesses grow, tasks grow. As tasks grow, any given job is a much smaller slice of the task. As jobs shrink, we need systems to link people, paper, and process so that everything gets done. Executives are the only people in the right place in the organization to identify all the different pieces and make sure the links happen.

    Executives must think through time

    The most critical decisions in a business are where to spend the limited reserves of time, energy, and money. Since executives are the ultimate deciders about their area’s resources, how they direct people and dollars determines the fate of the company.
    A front-line salesperson in a retail store needs only to think as far ahead as helping the customer select an outfit. Total attention span? Five minutes for the customer interaction. A middle manager might be in charge of a project that takes several months to complete, or even a couple of years. Converting 500 outlet stores to a new automated post-of-sale system doesn’t happen overnight. The middle manager needs to make decisions balancing the emergencies of today with the need to move the multi-year project forward.
    Good executives think long term, short term, and every term in between. As company stewards, they make decisions considering the effects on the short-term environment, all the way out to the long-term implications.
    Many attractive short-term decisions become bad decisions years later. In many cases, this could be predicted in advance. Layoffs became a fad in the late 1980s’ LBO craze. They produced (and still produce) short-term gain. But long term, they destroy trust and create a workforce that rightly feels very little loyalty to employers.
    Start thinking now!
    Success as an executive requires the ability to move freely from strategy to tactics, the ability to understand linkages across organizational boundaries, and the ability to balance short- and long-term concerns. Whether or not you’ve made it to the top of your game, start cultivating this flexibility and you’ll be a prime candidate for the C-suite

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    How to Set Salaries for Entrepreneurs

    “How to Set Salaries” is an article that first appeared on Entrepreneur.com in May, 2006.

    Setting salaries for your staff is always a tricky thing to do. It’s especially hard if you’ve never done it before, because you probably don’t even know where to start. On the one hand, you want to pay enough to get the best possible talent. On the other hand, you don’t want to overpay. What’s an entrepreneur to do?

    First of all, don’t panic. Remember that your goal is to attract good talent and pay them fairly… (continued at http://www.entrepreneur.com/humanresources/article159438.html)

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    Getting the Most from Your Advisors (slides)

    Finding and Retaining Great Advisors
    HBS Cyberposium 1999

    Many great leaders have had great advisors. When you’re searching for advisors, where do you go? How do you get them? These slides from Stever’s 1999 presentation at Harvard Business School’s “Cyberposium” might shed some light. Click here to download the slides on using advisors in your business.

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    From Idea to Business: I have an idea … how do I turn it into a business?

    I have an idea… how do I turn it into a business?

    Many businesses start with a great idea. But a great idea isn’t enough; you have to make it a great business. If you know business, that might be easy. But if not, here’s an overview to find out what’s involved in going from idea to business.

    Building a business takes four things: a product or service, a business model, a team, and money. There is no standard order to gathering these, though they all affect each other. For instance, raising money first makes it easier to attract a top-notch team, but you will have to give up more of your equity to raise the money. Having a prototype first makes raising money easier, but without money, prototyping must be done on a shoestring. The tradeoffs will reflect your judgment, willingness to take risks, and the circumstances that come your way.

    One word of advice: beware “equity paralysis.” I’ve seen entrepreneurs stall their business to keep as much equity as possible. It is better to own 10% of a $10,000,000 company than 80% of a $1,000,000 company. And if your idea needs to come to market quickly, giving up equity may make sense if it will buy speed.

    You need a product or service

    Most entrepreneurs start with a product or service idea. Make sure that your idea fills a real market need. Better technology rarely wins in the marketplace. It must meet a real need, and must be marketed in a way that the customers are willing to buy it.

    In fact, you don’t always need a new product category. Microsoft was a late entrant in window systems, spreadsheets, word processors, and presentation software. Yet they virtually own those product categories.

    Without a product or service, it is harder to raise money or a team. But even so, some entrepreneurs raise money for a “search fund,” where they take a year to find a business to buy or a product idea to develop from scratch.

    If you plan on raising venture capital funding, you will find that products/services that alleviate customers’ pain are easier to fund than products/services that simply make life nicer. In general, people buy immediately to eliminate pain, while they are less urgent and motivated to make things better. A leaky roof gets patched before a homeowner adds ornamental trim.

    You need a business model…

    This article is continued in the “Entrepreneur’s Companion” volume 1. Click here to purchase.

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    What are Venture Capitalists? (What are VCs, anyway? Are they right for me?)

    What are VCs, anyway? Are they right for me?

    Q: I have a business idea on running a cafe. I was thinking of going to a venture capitalist for funding. Problem is, I don`t know how they work. Can you shed some light on some of their practices?

    A: VCs are money managers who make high-risk, high-return investments. They raise a fund, usually $10 million to hundreds of millions, from private and institutional investors. They then invest those funds in startup and pre-public companies (their “portfolio companies“), hoping for a substantial return. The VCs are paid a percentage of the fund’s value as a management fee. They also have a “carried interest”—they get a percentage of any profits above a certain point.

    VCs get their money back (“harvest” their investment) when a portfolio company sells shares to the public in an initial public offering (IPO) or when it is acquired by another company. Despite all the late-90s publicity around IPOs, there really aren’t very many of them–maybe a couple hundred in a good year, in contrast to several thousand companies invested in by VCs.

    VCs want opportunities that have a huge market, tremendous growth potential, a competitive advantage in the marketplace, and experienced management teams. Financially, they often evaluate investment opportunities expecting a minimum return of 40-60% per year on their investment. Since they are required to return money to their investors on a certain timetable, they also want the possibility of harvest in a certain number of years. And depending on the size of the fund, they may only invest in companies raising more than a minimum (e.g. $2-$5 million).

    You raise money from VCs by putting together a business plan (see bizplanhints.htm) and arranging for that plan to be given to a VC with a referral from someone they know. Unsolicited plans almost never get funded. Your plan must lay out the market for the business, how the business will operate, who the management team is, etc. See my Entrepreneur.com column “Formatting Your Plan” for a typical plan outline. I also recommend Palo Alto Software’s “Business Plan Pro” (www.paloalto.com) as a good source for guidance in writing a plan.

    To return to your situation…a cafe does not meet most venture capital requirements. Most cafes aren’t a new idea, don’t have the growth potential to return 40-60% to their investors, have no obvious harvest strategy [a chain of cafes can go public-a single cafe can’t], and don’t have clear competitive advantages strong enough to outweigh the risks. A cafe furthermore probably takes a few hundred thousand dollars to start, rather than the millions most VCs want to invest.

    For smaller businesses, private investors or bank loans are your best bet. Many banks offer small business loans to people starting businesses that aren’t appropriate for high-growth investors. If you’re in the US, check out the Small Business Administration at http://www.sba.gov. They can help you find funding opportunities more appropriate to a cafe.

    Best of luck!

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    Romancing the Dragon: Know What Accepting Investor Money Means

    Right around the turn of the millennium, a startup named ArsDigita was born, flourished, and died a horrible death. The entrepreneurs blamed the venture capitalists and circulated their Tale of Woe far and wide.(1) I’m less than sympathetic. If the entrepreneurs had done their homework before eagerly accepting gobs of money, they might have understood the risks of accepting that money.

    Having heard a bit from both sides of the ArsDigita story, there seem to be several lessons lurking here for entrepreneurs:

    Understand what you’re getting into when you bring in outside money. Read the documents. Choose VCs who know how to run a business. Know how VCs are motivated, and understand that the very nature of VC deals gives the VCs a far better deal than you’re getting.

    Read everything you sign. Twice. With lawyers. One ArsDigita founder mentions that the VCs invoked a clause out of the "phonebook" of financing documents. His naivety is touching…Didn’t he notice the quiet guy sitting by VCs? That was their lawyer. It should have tipped him off. They had a lawyer review the thousand-page document. He should have had his own lawyer go over it with a fine-tooth comb.

    When you accept money from investors, you’re making a commitment. But you’re not committing to a vision. You’re not committing to a technology. You’re not committing to a dream. You’re committing to providing a certain return on that money to your investors in a certain timeframe. It’s an economic arrangement, and if they disagree with how you’re going about that, they almost certainly structured the deal so they can pull rank.

    There’s no reason to believe that any given VC knows anything about running a business, or even choosing managers to run businesses. Some do, but a lot don’t. Many have never held an operational job, and even those who have didn’t necessarily learn from it. And even those who learned didn’t necessarily learn lessons that apply to your business in the current business environment. (Keep in mind that their rule of thumb is 2 home-runs, 2 failures, and a bunch of in-betweens out of a portfolio of 12. That’s called a "normal distribution," ladies and gentlemen, and may mean that most VCs aren’t doing much better than random.)

    Furthermore, no matter what a VC thinks about their own motivation, as long as they are investing other people’s money, legally, their first priority must be making money. Their funds have a time horizon, and they own a portfolio of companies. That means when push comes to shove, harvesting your company is more important than your company’s mission or sustainability(2). And if another of their portfolio companies looks more promising than yours (say a 10x return in 2 year versus your 5x return in 7 years), that company will get more time, attention, and subsequent reinvestment. It would be bad business from the perspective of the VCs to spend their resources any other way.

    And remember: you have to hit certain targets over several years in order to “earn” your equity in your company. They get all their equity simply by engaging in a one-time financial transaction. Unlike you, they are under no onus to do anything once they’ve put that money in. And if another portfolio company suddenly gives them the needed return on their fund, unlike you, there’s no vesting schedule or performance-based incentives to keep them interested or motivated. I’ve coached a CEO dealing with an outside VC that wanted out of the deal simply to simplify their own portfolio management. The VC was pressing to liquidate the company so they could get cash back out of the investment.

    Remember: about 85% of a V’s investments aren’t home runs, and it may be their own fault. We rarely hear much about any except the home runs (“I started and grew a mediocre company” doesn’t make the cover of Fast Company).

    That said, the right VC can bring a lot to the table when paired with the right management team. A VC can bring legitimacy, the ability to attract top management, and the connections to bring a company to the next stage of growth. But be very careful about what you’re getting into before you sign on the dotted line.

    (1) I will not reprint the stories here. There has been a lot of litigation around the case, and I want to keep my distance. It’s juicy, though. Search for “ArsDigita lawsuit” on the web and you may find something on your own. back

    (2) I made the mistake once of thinking that the finance community cared about sustainability. Maybe Warren Buffett and a handful of value investors do. But my experience is that this attitude is the exception rather than the rule. Learning that lesson cost me the chance to make $6.5 million … please learn from my experience! back

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    What is Viral Marketing? (What the buzzwords mean, and why not to use them)

    What the buzzwords mean, and why not to use them

    “We will leverage our viral marketing efforts, resulting in widespread adoption of our revolutionary ‘no-revenue’ product, as customers recommend us to their friends.” — Any of a million forgettable business plans

    Blech. Let‘s get real. It is mid-2000. Tech stocks are tanking, and VCs have boldly declared startups should have a revenue model. In this brave new world, the old “new rules” don’t apply, and the new “old rules” say business plans need more than New Economy Buzzword Hype.

    Nonetheless, every plan I read will blow the world away with “viral marketing.” They almost always use the phrase incorrectly, Let’s explore the correct use of Viral Marketing.

    The best plan: don‘t use buzzwords like “viral marketing.” Buzzwords rarely impress your readers. If you can’t say it in plain English (or your native language), then it‘s probably fluff and doesn’t belong in a serious document.

    If you must use “viral marketing,” use it correctly. Viral marketing campaigns piggy back on your product, exposing non-customers to your company automatically when your existing customers use the product.

    Hotmail spawned the viral marketing revolution. Hotmail is web-based e-mail that appends “Try hotmail!” to every outgoing message. Without any user action, every e-mail advertises the service to the message recipient, who (at that time) probably didn’t know about Hotmail.

    Hotmail was weak viral marketing, since the recipient could ignore the ad without trying the service for themselves. Weak viral marketing requires voluntary action. MCI’s successful “Friends and Family” plan gave discounts for calling people in your plan circle if they were also on the plan. This made customers persuade friends to join the plan, and friends could refuse without trying it. The need for both customer and recipient action made this weak..

    Strong viral marketing requires the non-customer to try the service. To receive money e-mailed with the “Paypal” payment service, a recipient must register with the service. Since registration means receiving money, Paypal recipients are highly motivated to join. Evite online invitations also require recipients to use the service to confirm an event invitation. Other strong viral applications include Yahoo!’s shared calendar service and their briefcase service.

    Pressuring customers isn’t viral marketing. If you’re selling manufacturers a production planning system, and the manufacturers pressure their distributors to switch to the same system for convenience, that’s simple peer pressure. It may be effective, but it isn’t viral marketing, since using the system normally doesn’t automatically expose new prospects to the system.

    Word of mouth is neither viral nor marketing. Since it depends on the customer acting voluntarily, it isn’t viral. Since it’s what the customer does, it’s not marketing (marketing is what your company does; not what your customers do).

    In short, Viral marketing works in transaction oriented businesses where a customer transacts with a non-customer. The opportunity comes in controlling that interaction so the non-customer must be told about your product (weak viral) or actually made to try the product (strong viral) without action by the current customer.

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    A Handy TO DO Sheet Template

    This TO DO Sheet Template is a form I’ve found useful in categorizing the urgent, the important, and the let’s-not-do-that-shall-we?

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    Posted in Misc, Productivity | 1 Comment

    Conquering the Stress of Uncertainty: Keeping Yourself Sane in an Uncertain World

    A reader writes: I could use some helpful tips in overcoming stress from not seeing success right away.

    For many of us, the economic slowdown has meant less business. We can no longer count on steady growth and reliable money. It’s easy to become stressed when we aren’t seeing the results we expect.

    In Western culture, we are rarely taught coping skills for uncertainty. It can be especially hard having patience and a clear mind when things aren’t going the way we want them to (witness our country’s difficulty with two weeks of uncertainty around our Y2K Presidential election!).

    If you haven’t been seeing success right away, start by asking yourself “what constitutes success?” If you’re attached to an outcome—say, doing $10 million of sales in your first year—you’ll find that success is all-or-nothing; you’ve either reached the outcome or you haven’t. It may help you feel process to subdivide your goal into smaller pieces. Shoot for at least one milestone a week, so your progress is continuous. Your first week’s goal could be to get a face-to-face appointment with three prospects and land one sale. Each goal you meet will help you feel progress.

    The key is that you’re not choosing your milestones just to manage the projects. This is about managing your emotions; choose milestones that will cause you to feel progress in your gut, even if the outside results aren’t there, yet.

    You can also succeed with process goals. Process goals measure what you’re doing, not where you are. You’re shooting for three prospect appointments? You might set a process goal of calling 10 Widget Retailers from the phonebook daily. That’s a process goal. If you find you’re missing your process goals, asking yourself why can lead to you choosing a better way to reach your outcome. For example, if you miss your ten daily calls because there are only three Widget Retailers in the phone book, it’s a signal that you’ll need another way to find prospects. Process goals give you the chance for daily "wins" on your way to your bigger goals.

    If you find yourself stressed even when you reach smaller progress goals, you might want to tackle the stress directly. Meditate for a half hour a day, get some exercise, and set aside time for yourself to relax and unwind. Choose a time for the day to be over and when it is, go home and do something completely unrelated to work. It can be a challenge, but separating work and home life can save your sanity. At least three times a week, leave your office by 6 p.m. and go play. Clear your mind. Get a massage. Indulge yourself in a bubble bath. Treat yourself well! (My personal touchstone is yoga.)

    Of course, it’s possible your business might not be truly sustainable. The market may not be there, the distribution can’t be worked out, or competition makes it impossible to build a business that makes money. Set boundaries for yourself to keep yourself healthy. Decide now how much time/money/effort you are willing to put into the business, so you don’t someday wake up having overspent yourself. Also, think hard on how you’ll know if the business really won’t work. Just setting those limits can help. If you decide three months of consecutive losses is the signal that your specialty Pokeman Roller Skate Shop has outlived its usefulness, then you’ll know when it’s time to quit. And knowing there’s a defined exit point can really be calming.

    But meanwhile, give it your all! With well-thought-out process and outcome goals, you may never have to worry about your exit conditions. You’ll know early on if what you’re doing isn’t working, and you can take action to insure your success. With hard work, skill, and a little luck, you main worries will be plotting your multibillion dollar expansion …as you relax in your mansion’s new whirlpool bubble bath.

    So take a deep breath. Calm your mind. And Go For It!

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    Living Your Life with Quality

    A story by Mark Albion of Making a Life, Making a Living.

    An elderly carpenter was ready to retire. He told his employer-contractor of his plans to leave the house-building business and live a more leisurely life with his wife enjoying his extended family. He would miss the paycheck, but he needed to retire. They could get by.

    The contractor was sorry to see his good worker go and asked if he could build just one more house as a personal favor. The carpenter said "yes", but in time it was easy to see that his heart was not in his work. He resorted to shoddy workmanship and used inferior materials. It was an unfortunate way to end his career.

    When the carpenter finished his work and the builder came to inspect the house, the contractor handed the front-door key to the carpenter. "This is your house," he said, "my gift to you." What a shock! What a shame! If he had only known he was building his own house, he would have done it all so differently. Now he had to live in the home he had built none too well.

    So it is with us. We build our lives in a distracted way, reacting rather than acting, willing to put up less than the best. At important points we do not give the job our best effort. Then with a shock, we look at the situation we have created and find that we are now living in the house we have built. If we had realized, we would have done it differently.

    Think of yourself as the carpenter. Think about your house. Each day you hammer a nail, place a board, or erect a wall. Build wisely. It is the only life you will ever build. Even if you live it for only one day more, that day deserves to be lived graciously and with dignity.

    The plaque on the wall says, "Life is a do-it-yourself project,"

    Who would say it more clearly? Your life today is the result of your attitudes and choices in the past. Your life tomorrow will be the result of your attitudes and the choices you make today.

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    Dealing with Overwhelm

    The overwhelm can be worse than the backlog!

    From my March 2001 newsletter

    A client of mine discovered that the feelings of overwhelm can be more harmful than the fact of overwhelm itself. The feelings lead to stress, which makes one less productive. The less productive, the more work piles up. Bigger piles lead to more feelings of overwhelm, and the cycle repeats.

    But what if the work really is manageable? How can one address the feeling of overcommitment and go ahead to get things done?

    Getting a lot done is really a matter of doing one thing at a time, whether or not you stress. When the stress is from volume of work, locally reducing the volume can help the stress…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Take Time to Recharge (Pushing Yourself, You’ll Get Less Done Than You Think)

    Taken from February 2001 newsletter and private correspondence

    One of my clients was feeling under the weather last. Motivation was down, stress was up. Instead of an attitude of optimism and cheerfulness, the world was melancholy gloom. Overall, a bad scene, and not one to set a good tone within the business–a CEO‘s mood can infect the entire company. The problem? He wasn’t getting enough sleep, was working through his normal exercise time, and was making up the energy deficit with coffee during the day.

    This is an all-too-common spiral…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    The Macho Test, by Shelle Rose Charvet

    by Shelle Rose Charvet

    One of the most irritating aspects of day-to-day communication is trying to convince someone who takes a Macho attitude. Women are often dismayed to find that while amongst ourselves we can build on and critique each other’s ideas, it is sometimes much more difficult to do this when male colleagues are involved. And sometimes even women become Macho!

    When a person is running a Macho Pattern, they operate as if they believe the following:

    • They already know everything there is to know.
    • They do not have any problems; they and everything connected with them are perfect.
    • If there are problems, they are of someone else’s making.
    • They are better, higher, more important, more knowledgeable than anyone else.

    How many times have major decisions been made to assuage someone’s ego or to simply not lose face? Just listen to radio interviews. When the interviewer asks if someone were surprised by the turn of events, rarely if ever will the person admit to being surprised. That would be saying that they did not already know everything there is to know. Once I sold a training program with optional follow-up coaching. No one took up the coaching offer because that would have meant conceding they needed help. Now the coaching is just part of the training program.

    All of us become Macho at times. Notice your reaction when one of your parents tells you what to do!

    To make sure that even someone who has become Macho will consider your ideas, you could use the Macho Test as an editing technique. While I have formalized the Macho Test, you may have already done something like this yourself to make sure your important messages get through.

    Write the document or prepare what you are going to say using the 4 step formula for presenting ideas to skeptical people. Then look it over and ask yourself the following questions about what you have prepared:

    Is it anywhere stated or implied that:

    1. There is something they don’t already know,
    2. I am telling them what to do,
    3. They have a problem and I have the solution,
    4. They are not perfect in some way, and/or
    5. I am better than they are in some way.

    If any of the above are stated or implied, it does not pass the Macho Test! You may wish to rephrase as follows:

    1. As you probably know….(then state the thing you suspect they do not know)

    2. Use the language of suggestion: You may wish to consider.

    3. I understand that other organizations have had this issue and what some of them have done is… How have you solved this problem? (implies they have already solved all the problems)

    4. With your experience and knowledge in this area….

    5. Your role is…. My role is… (establishing different yet equal roles)

    Next time you get the sense that if you present a ‘new’ idea, the person will deny it’s actually new, try suggesting that it may be something they have already considered. You probably already know exactly who the Machos are in your life. I find that once I rephrase to pass the Macho Test, the people I’m addressing stop being Macho and become more willing to participate in the free flow of ideas.

    I published an article entitled: "Ten Tips for Surviving the Health Care System." The title passes the Macho Test as "tips" are only suggestions. It would not have received nearly as much attention had I entitled it: "Ten Rules for Getting Through the Health Care System."

    From my years helping people solve communication problems, I have learned that most of the effort is in getting someone into a mental and emotional state of openess, where they will be able to hear what I am saying. When we are successful at getting people to listen and take us seriously, it is because we have cleared enough mental space in the other person for our words to go in. Don’t believe me? Try it out for yourself!

    Published in Profit Magazine on-line version: www.profitmag.com

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    Losses and Responsibility: How everyday business language lets us engage in accounting…deception.

    How everyday business language lets us engage in accounting…deception.

    We’re living in interesting times. Worldcom announced $4 million in losses that had been buried as, um, capital expenditures (oops. Don’t you just hate it when that happens?). Enron’s collapses from horrendous mismanagement, taking Arthur Anderson down for obstruction of justice. Tyco apparently funneled billions of company dollars straight to the founder’s family. Global Crossing… Xerox… Merck … Everyone is so upset about the losses. We’re losing so much money. Losses, losses everywhere. But wait!

    What does that mean? When I "lose" my wallet, it’s because it got accidentally (and thoughtlessly) misplaced. Getting into the cab, it was there. Six tequila shots later, when it was time to pay, the wallet was gone. Whoops. I must have lost it. Fortunately, the realization comes after the six shots, so the consequences (while probably severe) seem like little more than a hazy dream…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    What is Leverage? What the buzzwords mean and why not to use them.

    What the buzzwords mean, and why not to use them

    “We will leverage our viral marketing efforts, resulting in widespread adoption of our revolutionary ‘no-revenue’ product, as customers recommend us to their friends.”
    — Any of a million forgettable business plans

    Leverage

    Where you put in the same force but get much bigger result.

    You leverage "X" to do "Y". You need a second verb in order for the construction to make sense.

    You leverage small amounts of money to control a lot of money by borrowing with a small downpayment.

    When you leverage X to do Y, Y must be something you could do without X. And having X must make Y a whole lot easier. If having X doesn’t make Y easier, it’s not leverage.

    You leverage one person’s smarts by having them be a teacher.

    You don’t leverage one person’s smarts by having them do their work.

    You leverage your salesforce by having each of them get a dozen customers to become evangalists.

    You don’t leverage your salesforce by having them go out and sell.

    If you’re going to "leverage your technical expertise," that means you’ll use your technical expertise to produce a multiple of the results you could produce without that expertise, by automating, etc. Fedex has leveraged their package tracking system to lower costs, and increase offerings [web-based tracking, and now at-your-printer printing of airbills]

    If "use" is a synonym for "leverage," you can probably safely use "use."

    You don’t leverage your people unless you have a mechanism for turning 5 people’s knowledge into many more.

    You leverage an expert by having them write a column. Not by hiring them to do work.

    You don’t "leverage the power of the internet." You leverage the broad reach of the internet to aggregate customers from around the world. You leverage the speed of the internet to get product to your door faster than any other kind of ordering. You leverage the automation of the internet to … etc.

    Click here to read about “viral marketing,” another hot buzzword.

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    Returning Money to Investors: How to Calculate their actual return

    You’re giving them money, but how do you calculate their actual return?

    Your investors give you money. You give your investors money. In the end, they want a good return on the money they’ve given you. How do you calculate the return you’re providing? The number you’re after is the “internal rate of return” (IRR) of the cash flowing between you and them. Most spreadsheets have an IRR function you can use for this calculation.

    Step 1: Identify the cash flows

    First, lay out the cash flows as a series of numbers. Use negative numbers for cash you receive from the investors. Use positive numbers for cash the investors receive. Each number should represent the same time period.

    For example, if investors give you $1,000 at the start of January, and you give them $50 at the start of February, April, and June, and also return the $1,000 principal in June, the cash flows look like this:

     
    A
    B
    C
    D
    E
    F

    1

    Jan
    Feb
    Mar
    Apr
    May
    Jun

    2

    -1000
    50
    0
    50
    0
    1050

    Step 2: Use the IRR function to calculate the rate of return.

    If you’ve typed the above into a spreadsheet, the formula to calculate the rate of return is:

    IRR(A2:F2) which equals 3%

    Example #1: A bank loan

    A bank loans you $10,000. They expect $500/month payments for 6 months. They want principal repaid at the same time as the last payment.

     
    A
    B
    C
    D
    E
    F
    G
    1
    Jan
    Feb
    Mar
    Apr
    May
    Jun
    Jul
    2

    -10,000

    500
    500
    500
    500
    500
    10,500

    IRR (A2:G2) = 5%

    Example #2: Equity investment

    Investors put in $50,000 in preferred stock. They expect a $1,000 dividend each year for four years. On the fifth anniversary of their investment, they expect the company to be acquired, with their stake worth $100,000.

     

    A

    B

    C

    D

    E

    F

    1

    Now
    Y1
    Y2
    Y3
    Y4
    Y5

    2

    -50,000
    1,000
    1,000
    1,000
    1,000
    100,000

    IRR (A2:F2) = 16%

    What cash do I need to provide them to produce the return they demand?

    Often you know how much you want investors to invest, and they are demanding a certain rate of return. What cash flows do you need to provide to give them that rate of return?

    If they provide $100,000 and demand a 40% rate of return per year, that means you’ll have to pay them $40,000 each year. If you agree that they get their money in a lump sum when the company goes public, then the 40% compounds. The calculation is easy—the total due each year is the previous year’s total plus the interest (40%):

    Year

    What you owe them

    Now
    $100,000
    1
    $140,000 (100,000 + 40%*100,000)
    2
    $196,000 (140,000 + 40%*140,000)
    3
    $274,400 (196,000 + 40%*196,000)
    4
    $384,160 (274,400 + 40%*274,400)
    5
    $537,824 (384,160 + 40%*384,160)

    If you estimate the company will be worth $5,000,000 at the end of the fifth year, then the investors will need to own 10.8% of the company ($537,824 / $5,000,000) in order for them to get their 40% return.

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    The Power Focus Time: A terrifying way to make sure you’ll actually get stuff done this week.

    A terrifying way to make sure you’ll actually get stuff done this week.

    Today, I’ll share one of the simplest, most effective ways I know to make mega-progress on a project. Be warned: it‘s simple, and to most of us, it’s terrifying. Expect to scream in horror. You‘ll laugh in denial. In your shock, you will retreat into rationalization: “That’s impossible. I just couldn’t do that. Stever just doesn’t understand…” But if you follow today’s advice, you will be in for a major transformation.

    Let’s ease into it. The 50,000-foot strategy is simple: create focus time. We often get bogged down because we just don’t spend enough time in "flow" on a project…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Get a Life While You Still Have the Chance (it’s easier than you think)

    From my newsletter of December 2000

    I’ve spent the last four days bedridden, recovering from oral surgery, unable to eat, and barely able to think. It’s been wonderful. It really underscores the value of time away from work. And life balance is possible without major surgery. You just have to know how…

    Most importantly, you must decide that having a life is a priority. Many claim they value balance—they just have to work late this once… Make the decision and commit to it. Don’t wait for a brush with death to decide. My friend John needed a mid-30s heart attack to slow him down. For me, it was caring for a dying parent. Be good to yourself. Decide on your own to have a life!

    Time is precious; no amount of money can buy back time. Set firm boundaries on the time you spend at work and home. Within those boundaries, only take on as much as you can do in that time. If you decide you will work eight hours each day, turn down work that will require a ten hours a day.

    Use the 80/20 rule: you get 80% of your results from 20% of your time. Track how you spend your time, identify the tasks that produce the most results, and orient your work around those high-leverage activities. Use the extra productivity to pay someone else to do the low leverage activities.

    Respect your boundaries. When you’re playing, really play. When you’re at work, really work. Your unconscious mind will know if you’re cheating—if you truly honor your commitment to yourself, you’ll be surprised how much more you’ll get done in both places.

    If you find yourself having business thoughts during free time, buy an 89-cent notepad & pen and carry it with you. Jot down those thoughts when they happen, and go back to playing. When you get to work, start by reviewing your notepad for critical ideas.

    Read a (fun!) book, go on a trip with your family, or see a movie for pleasure at least once a month.

    Assignment: identify one high-leverage activity you do that produces lots of results. Identify one low-leverage activity that takes time but doesn’t do much for you. Arrange to have the low-leverage activity taken care of some other way, and use the time you save to do more of the high leverage activity.

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    EBITDA: The Phantom Measurement. (What’s EBITDA all about, anyway?)

    At 04:55 PM 7/3/00 +0200, a visitor asked:
    Are you familiar with the term EBITDA and do you know:
    a). Why it is used as an indicator for new-economy businesses in general?
    b). How Depreciations of <Assets directly related to earnings> are handled?

    EBITDA stands for Earnings Before Taxes, Interest, Depreciation, and Amortization. It has become wildly popular with the New Economy set. Is it useful? Well… there are many useful financial measurements that are very similar to EBITDA.

    EBIAT, earnings before interest, after taxes, is meaningful: it measures raw earning power, independent of financing sources. It measures earnings available to flow to all financial sources.

    EBT is a measure of earning power, given current capital structure, but not taking tax management into account. It measures earnings available to flow to the equity holders. When calculating return on equity, use EBT as the earnings number. The return to equity holders is the earnings after netting out interest.

    But what of EBITDA? I side with Warren Buffett in considering EBITDA to be a meaningless financial indicator that seriously distorts and misrepresents a business’s earnings. EBITDA has become popular because people want to value businesses which have essentially unviable business models. It’s often been used in biotech, as well, where companies are valued long before they’re shown to be viable enterprises.

    The theory is that depreciation is a non-cash expense, and thus should be backed out of earnings before measuring a company’s earning power. However that ignores the fact that cash actually must be spent on assets in order to run the business. Backing out depreciation without adding in cash expenses is akin to claiming that the business’s capital expenditures aren’t relevant in measuring its earning potential. In fact, the very businesses which use EBITDA are typically the ones in which the expenditures are very relevant in measuring the company’s earning potential!

    Which would you rather invest in:

    1. a business which requires $100mm in capital expenditures [which presumably you have to supply!] to produce $100,000 in earnings (but backs out depreciation and presents their EBITDA number of $10,000,000 to you)?
    2. a business which requires $10mm in capital expenditures to produce $100,000 in earnings, but leaves the depreciation in and reports an EBIT of $100,000?

    The second business will ultimately give you a far better return on your money.

    Only where the depreciation or amortization truly represents a non-cash expense does it makes sense to back it out of the equation. When a company is acquired for more than its asset value, the different between the purchase price and asset value is recorded as “good will.” The good will is then amortized over several years. It does make sense to back out this good will, as it doesn’t represent a use of the business’s cash.

    Why is EBITDA used in so many new-economy businesses? Many new-economy businesses spend much of their money on hardware and software infrastructure that’s capitalized as an asset on their balance sheet. Using EBITDA lets entrepreneurs and their bankers produce a positive number with the big up-front expenses backed out of the earnings calculation. It’s certainly not fraud, simply creative misrepresentation aimed at investors who in many cases don’t think particularly deeply about the numbers reported by a business.

    The practice is sometimes defended by claiming that a one-time large development expense shouldn’t be used to judge the ongoing attractiveness of a business. But many new-economy businesses have not demonstrated that development is a one-time expense. In fact, technology changes so fast that it is fairly certain that a whole new round of hardware and software purchases will be happening every few years.

    All this said, if you‘re raising money or going public, EBITDA subtleties may not matter. If investors are willing to give you an EBITDA-based valuation, that’s their decision. But when using your numbers to actually manage the business, remember that capital expenditures are a genuine cost. Removing them from the equation is wishful thinking, nothing more.

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    Making Space for Success: Controlling Clutter

    Clutter kills our dreams. It fogs our vision. Cleverly disguised as temporary convenience ("I’ll just put this here … for now"), clutter undermines more progress than TV, soft-money campaign contributions, and badly designed web sites put together. Who can be a visionary leader, when vision is obscured by a stack of magazines waiting to be read, twenty signature pages to forgotten contracts, a file folder of "time-critical stuff" dated 4-17-1998, and an e-mail inbox the size of Texas?

    For many of us, getting a handle on clutter is remarkably freeing…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Division of Equity: How equity gets divided initially and at harvest

    How equity gets divided initially and at harvest

    One of the most common questions I get is about how equity should be distributed. I’ll warn you in advance: there are no hard and fast rules. Equity is negotiated on a case-by-case basis, which makes it hard to give any generalizations. I’ll try to give some thoughts on what to consider when you give out equity.

    Dividing equity among founders

    Founders receive equity for what they bring to the table. How much of the company they own as a result of their contribution is purely up to the group to decide. There are several factors which need to be considered, however.

    Timing, size and duration of contribution. The earlier, bigger, or longer the contribution to the company, the more equity a founder should receive.

    Power.Equity conveys voting power and control over the business. Generally, founders who intend to stay with the business long-term should retain the most control. I have heard it recommended that one individual own at least a 51% of the company, to provide consistent decision making when resolution is needed. Equal partners, while great in theory, can destroy a company when the partners don’t agree and have no way to resolve fundamental disagreements.

    Money. Early money is a contribution for equity. Money has the side-effect of valuing the company. If you give 10% of the company for someone contributing $50,000, it implies a company value of $500,000. If you try to raise money immediately thereafter, that valuation could hurt your negotiating ability. But if substantial infrastructure has been built in the meantime, if customers have been acquired, or if more of a team has been built, then a higher angel/VC valuation is justified.

    Kind of contribution. A founder may contribute in many ways. Some bring patents or product ideas. Some bring business expertise and ongoing work to build the business. Some bring capital. Some bring connections. Some may bring big names or reputations which convey credibility with VCs and/or clients. One big name that provides instant credibility may, in fact, be worth more to the company than a founder who actually puts in the work to build the business. Make sure to understand what each founder’s contribution is, and value it appropriately.

    We have 5 founders, what do we do?

    Negotiate, big-time. Too many founders can be a big problem. As the company reaches for outside funding, you make many decisions about equity, contribution, and dilution. The more equity-holders, the more negotiation has to enter into each of these decision.

    Having several founders makes it hard to keep everyone adequately compensated. By the time of harvest (IPO or acquisition), the founding group can expect to own about 20-30% of the company. With one founder, that can mean riches. With several founders, that may mean splitting the pie into so many pieces that no one is happy with the value of their piece.

    In short, fewer major equity holders are better. If you’ve already got several, make sure that you tie each founder’s vesting to the contribution you’re expecting from them.

    How much will investors expect to own?

    The basic formula is simple: if you need to raise $5 million, and an investor believes the company is worth $15 million, you will have to give them 33% of the company for their money.

    Different investors value companies in different ways. Some look at the quality of the idea, assets, market size, and management team. Some rely on financial projections. Some simply look for “big ideas” and determine their percentage ownership purely through negotiation.

    I asked a couple VCs, some entrepreneurs who recently received funding, and an angel investor how much of a company is typically given up in the first round. While one VC has seen investments as low as 5%, the majority thought that first round investors will usually take from 25-45% of the equity.

    One entrepreneur remarked,

    The better thing to ask is: how much should management and founders try to hold onto before the IPO. Answer: as much as possible, but no less than 25%.

    The entrepreneur has an important point. If it comes down to the money (as it often seems to, these days), what matters in percentage ownership at harvest multiplied by the valuation at harvest. Owning 1% of a company with a billion dollar valuation is still more interesting than owning 10% of a company with a fifty million dollar valuation.

    What equity should part-time contributors expect?

    Not very much. The reality of the situation is that startups usually require 150% commitment by everyone involved. Venture capitalists insist equity be given in return for ongoing commitment. Even founders who stay with the company have a multi-year vesting schedule. Many VCs will not allow equity to be given to part-time employees or contractors.

    There is a one-time contribution for stock that is routinely made: giving capital itself. A cash investment for stock lets the investor own the stock free and clear, with no further contribution required. Having part-time contributors purchase stock outright may be the best way to include them in the deal.

    How can we increase the company’s valuation?

    From an interview with Ron Conway in Bankrolled by an Angel, part 3,by Lawrence Aragon, Red Herring 12/22/99.

    Angel investor Ron Conway says:

    To get a $5 million valuation, you need a great market, a great idea, a crisp business summary, a really good elevator pitch, a compelling product prototype of your software or solution, and two or three members of your management team in place. For a $2 million valuation, none of the software for the solution is written yet. It’s just a CEO without a proven track record and a market to attack.

    Q. Given the number of questions, many entrepreneurs seem to focus too much on valuation. Generally, what do you advise?

    A. If you’re building a company like Yahoo (NASDAQ: YHOO), Ask Jeeves (NASDAQ: ASKJ), or eBay (NASDAQ: EBAY), you shouldn’t worry about valuation on the front end. If you’re worried, then you probably don’t have the confidence to build a large, significant company. A CEO who’s completely stuck on valuation is a warning sign. That’s a CEO who’s confused about his role. The bottom line: if the idea is great, you’ll end up with a multibillion dollar market cap and everyone will make more money than they can ever spend.

    Rather than focusing on valuation, focus on execution.

    Q. A guy wrote that he’s worried about not having a Harvard MBA. How would you rate a college dropout with a brilliant idea, an excellent prototype, but no team? Would you fund him?

    A. Yes, but that would definitely be in the $2 million pre-money category. If the prototype is excellent, he might get a valuation of $3 million to $4 million.

    What does ownership look like after the first round?

    According to Ann Bilyew of Advent International, a typical first round is:

    • Founders-20-30%
    • Angel investors-20-30%
    • Option pool-20%
    • Venture capitalists-30-40%

    What does ownership look like at IPO?

    From an article by Anant Raut published on www.techound.com.I do not have the exact URL.

    A May 1999 study by the William M. Mercer, Inc. consulting group [showed] the Internet companies reserved 15.7 percent of their common shares for compensation, compared with traditional industry’s 10.7 percent; after their IPO’s, however, traditional industry had 5.3 percent of their reserved shares still available for option grants in the future, while the Internet 32 had only 3.7 percent to offer.

    The same study found the following distribution of median equity stakes among members of the executive team (following an IPO):

    • Founding chairman-20.4%
    • Founder-9.6%
    • Non-founding CEO-4%
    • Other executives-0.79% (0.96% before IPO dilution)

    It’s hard to quantify percentages that non-executives should expect. Variables include the age of the company, the degree of financing, and the strike price. Kersey Dastur, an independent consultant based in McLean, Virginia, has assisted a number of high tech companies in establishing stock option plans and explains, "If I am a company with no financial backing yet, I will be likely to set aside 10 percent of my company for non-executive employees because they are taking a risk working for me. I may, however, set a high strike price to ensure that the value of the company is not diluted." It is not uncommon for companies with financial backing to offer no more than 2 percent to non-executive employees, because someone else has already assumed the financial risk. Remember, these allocations are spread out across all employees so, unless you have something truly unique to offer, don’t expect a large piece of the pie.

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    Fund Raising Destroys Value! Do it wisely and carefully.

    “I just hit a major home run!” exclaimed the entrepreneur.
    “Did you ship product? Did you make your first sale? Did you get a large contract?” asked his friend.
    “No, no. Something much better: today we closed on a $20 million round of financing.”

    Congratulate yourself for raising money, but don’t think it was time well-spent. You need money to stay in business, but raising it destroys value: money changes hands, with a big chunk siphoning off to lawyers, filing fees, travel expenses, and phone calls. You’re left with less than when you started, and that’s before buying your first paper clip! Money may make the business viable, but it doesn’t make it valuable.

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Thoughts of a Business Plan Judge: Who Gets $30,000?

    A quick digression on who gets $30,000

    May 1, 2000

    The Harvard Business School and Brown University Undergrad business plan competitions are in the final stages. I read and listened to several plans, presentations, and write-ups. It sobers me to realize that $80,000 in prizes have been influenced by my thinking.

    Here is some of that thinking, made public, in case it helps you with a presentation you’re making. When I say “the best” below, I mean the best of the plans I saw. These observations may not be representative of the whole contest.

    The best-written plan was from a Brown undergrad team.

    The best demo was from a Harvard Business School team.

    The best industry research was done by an HBS team.

    The best pre-launch, idea-specific research was done by a Brown undergrad team.

    The worst plan was from an HBS team.

    The team which had their business up and running and was proving it profitable did not win their semifinal round. Maybe because their business was not sexy and high tech?

    The judging criteria contained implicit value judgments about “good” businesses. High growth, huge market cap, original ideas were given a premium. In fact, my personal favorite plan in each competition was for a limited-growth opportunity. In the Brown competition, it was a limited opportunity with a me-too product!

    (It makes sense that the judging is biased towards huge-market companies. It attracts more involvement in future contests if “our winners go on to found billion-dollar companies.” VCs and entrepreneurs are less likely to participate in a contest whose winner had a $100,000 idea, even if the plan was perfect and the idea was executed flawlessly.)

    The judging criteria sometimes judged qualities of the idea, not whether the plan handled those qualities. For example, a criterion was “originality of the idea.” Originality is fun, but it isn’t necessarily a good criterion for a business plan competition. How about: “do the entrepreneurs recognize how original their idea is[n’t] and have they taken steps to get the most out of the opportunity, given their degree of originality?” Sometimes originality is detrimental! Me-too products have produced spectacular market successes (can you say, "Windows?" "Blockbuster?" "General Motors?").

    My actual rankings reflected my feelings about the team, as expressed through their writing. The well-thought out, clear, concise plan left me with the thought that even if the idea didn’t work as expected, the entrepreneurs would find a way to make things work. Other plans had good product ideas, but wildly unrealistic marketing-speak plans left me afraid that their business judgment would be more influenced by Business 2.0 buzzwords than by their ability to respond to the real world.

    In many cases, my lack of specific industry expertise left me judging based on the research process the team seemed to use, rather than on the results of that research.

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    Operating at Your Peak; Sleep and Good Food are Underrated

    Sleep and good food are underrated

    One of my clients was feeling under the weather last week. Motivation was down, stress was up. Instead of an attitude of optimism and cheerfulness, the world was melancholy gloom. Overall, a bad scene, and not one to set a good tone within the business–a CEO’s mood can infect the entire company. The problem? He wasn’t getting enough sleep, was working through his normal exercise time, and was making up the energy deficit with coffee during the day.

    This is an all-too-common spiral. Too much work means too little sleep. Too little sleep means a drag on energy, less productivity, less creativity, and a sudden fondness for Starbucks. All that caffeine-induced energy makes it easy to work on into the night… and the whole thing starts over.

    Unfortunately, chemically induced energy isn’t enough. Our bodies and our minds need time to recharge. Sleep rests your body, and it also gives your mind time to explore and file everything that’s happened during the day. The eighth hour of REM sleep, in fact, is where much of the most intense dreaming and creativity happens. Chemicals can keep your body awake, but your mind won’t produce your best work unless you’ve had time to recharge.

    It’s all too easy to let the occasional late night slide into a habit of not taking care of yourself. Breaking the downward spiral can be mentally difficult, but it’s quite simple in practice: leave the office by 6:30 pm every night, even if stuff doesn’t get done (the world won’t end). Get a full night’s sleep. Throw away your coffee maker. And start the day with a glass of water or juice. By the next week, you’ll start feeling a lot better.

    One reader asks:

    I totally agree with it in theory, but I don’t see it being feasible for my startup any time in the near future. I was just wondering if you had insight into how other companies follow this?

    I actually do believe companies would survive. The "savings" from pushing people hard are usually short-term. You may need all-nighters in an emergency, but over time, too little sleep impairs thinking ability. In a knowledge-intensive business, poor thinking can be deadly.

    Though startups often get away with a year or two of very intense work, you’re risking burnout if it goes much longer. And burnout’s unpredictable and hard to manage. You can easily ask a healthy workforce for occasional bursts of intense work. But when someone flips into burnout, they literally can’t get started again. They stop caring, and often check out completely. At best, burnout is unmanageable, and it worst, it can be a complete disaster.

    A young workforce can take longer to burn out, but it still happens. Twenty-year olds can be hard on their bodies without feeling the effects as severely as we older folks. Several of my MBA classmates have been going full-tilt for a decade, and at least one had his first heart attack from stress and overwork (so said his doctor). These are folks in their mid-30s. That’s pretty young, career-wise.

    One way to promote health is lowering the workload. It means saying "No" to work that would hurting people’s health. It means building systems to save work, separating out the "must do" from the "we’d really like to do," and setting realistic client expectations if you’re a service business.

    But even if you don’t lower the workload, sacrificing quality of life for short-term progress may be a fantasy. The basic math suggests that damaged immune systems still don’t get the desired results. If someone loses three days to sickness that could have been avoided, that is equivalent to them having worked one hour less per day for an entire month (assuming ten-hour day, five-day workweeks)! It may be better to cut the extra hour off in the first place, and keep people in good health.

    Scenario 1 Scenario 2
    10 hour days 8.8 hour days
    3 days sick no days off
    risk of spreading sickness n/a
    low quality of life high quality of life

    The scenarios are equally productive, but scenario 2 is probably a lot more fun for the individual and the company.

    Most startups are run as pressure cookers. I suspect it’s a misguided romantic notion that confuses movement with progress. A company I worked with closely took pride in their overwork, though any experienced project manager could instantly see the overwork came from poor scheduling, poor resource allocation, and a lack of attention to infrastructure that would have sped up later projects. The haste to get early contracts out the door sacrificed the opportunity to build systems for later productivity and later quality of life.

    Because people think startups require sacrifice, they ask themselves, "How can we keep running the company the way we currently do, but avoid burnout?" The answer: you can’t. At best, you start giving out sabbaticals, which in one fell swoop lose the gains of several years’ worth of overtime. That’s the wrong question, and the wrong question will always lead to the wrong answer. The question to be asking is, "How can we run the company in a healthful way?" The answer will depend on your company, your people, and your culture.

    It’s possible. My formerly caffeine-addicted CEO runs two companies staffed by people in their late-30s to fifties, and they don’t need 100 hour weeks. But it takes care, planning, and constant attention to workload, infrastructure, and the like.

    So in short, I’m sure that there are limited times–especially in startups–when deadlines and circumstances demand Herculean effort. But part of building a sustainable business is learning how to channel part of that effort into systems and structures that reduce the need for such effort in the future. And even in startups, the gains from super-effort crunches are only gains in the short term. Most of them are more than made up for by decreased productivity, decreased creativity [which necessitates later rework], and time lost to sickness and required vacation.

    This month, take steps to restore your life to an upward spiral:

    • Commit to getting enough sleep every night for the next two weeks. Find out how that changes your outlook.
    • Each day, substitute a glass of water or juice when you would normally drink coffee or soda. Learn to distinguish between caffeine energy and energy from health.
    • Help your long-term balance by scheduling four weeks of vacation in 2001. Do it now. Yes, I know that "there’s no convenient time" or "emergencies happen." There’s never a convenient time, and there will always be emergencies. Schedule your vacations and stick to them, realizing that the world around you will do its best to keep you from taking them.
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    Anatomy of a Business Model: What is one of those things, anyway?

    Note: This article was written several years ago, when PayPal.com was a humble startup, Eudora Pro was still a leading desktop e-mail client, and cameras still used film.

    Q: Many people say that they want to see your business model. What exactly do they mean by that? Do they want to know your target market and strategy, or do they need financial information as well?

    A: A business model is quite simple: it is a brief statement of how an idea actually becomes a business that makes money. It tells who pays, how much, and how often. The same product or service may be brought to market with several business models.

    Here are several sample real-world scenes, showing how similar products can have very different business models.

    Consumer Reports vs. TIME Magazine

    Consumer Reports makes money solely from grants and subscribers . It has a subscription-based business model.

    TIME makes money both from subscribers and from advertisers. It has more of an advertising-based business model.

    The difference in business models tells you a lot about the two businesses. Consumer Reports is going to concentrate on selecting content which will be of high enough value that people are willing to pay a subscription fee. Since it doesn’t depend on ads for income, no one but the editorial staff influences the articles.

    TIME Magazine, on the other hand, also must take advertisers into account. TIME needs content for its readers, but it is largely concerned with growing a demographic for the advertising it sells. Since TIME makes most of its money from ads, an advertiser’s threat to pull advertising may put pressure on the magazine to pull or rewrite a story that the advertiser finds objectionable.

    Movie Theaters

    During the first several weeks of a movie’s run, almost everything in a theater’s box office goes to the film’s distributors and producers. The theater makes its money from the concession stand! The business model: sell tickets at cost, and make profit on refreshments.

    This model implies that staffing the refreshment stand should be high priority. When the theater is crowded, bring in extra staff to keep refreshments flowing. Since that’s where the money is made, losing sales from too-long lines is losing the only profitable sales the theater makes.

    A theater near my house rents second-run movies that have been out long enough for the theater to be able to keep most of the ticket revenue. They make much more of their money on ticket sales, and put far less emphasis on the refreshment stand.

    Razors vs. Shavers

    Gillette is happy to sell you their Mach III razor handle at cost, or even below cost. Because they then sell you the profitable razor cartridge refills. Again and again and again… Their business model is virtually giving away the handle and making their money from a stream of razor blade sales.

    Electric shavers have a different model. They cost a lot more than the Gillette handle. They cost enough that the manufacturer makes all their money up front, rather than from the stream of blade refill sales (electric shaver blades do wear out, but it takes a much longer time).

    Digital vs. Film Cameras

    Traditional film cameras cost a bunch of money. And then, you buy roll after roll of film to take pictures. Then you spend even more getting the pictures developed. If you’re using a Kodak camera, Kodak film, and Kodak developing, then Kodak will be very happy. Their business model makes them money from camera sales, film sales, and processing fees.

    Digital cameras eliminate film sales and processing fees. Kodak needs to find a new business model before the cameras catch on more widely. And they are working on it. They are establishing digital printing centers, where you can have your digital camera pictures printed on genuine Kodak paper. The business model that was based on film sales and processing is becoming a model based primarily on photograph printing.

    paypal.com … who knows?

    Sometimes a business’s business model is not obvious. The web site www.paypal.com allows you to send money to a friend via e-mail. The money is either charged to your credit card or taken in cash from your cash account at paypal.com The intriguing twist is that paypal takes no commission on the transfer.

    How do they make money? What’s their business model?

    I don’t know, yet. From interest, perhaps? If enough users deposit money with paypal before paying it out, they collect interest on that money until the recipient finishes the transfer. If this is their business model, then they should concentrate on increasing float: getting more interest on their money, encouraging people to fund their paypal accounts long before they will send money to friends, and encouraging people to leave the money sent to them in their account just a bit longer.

    Other models they could use:

    Charge a fixed transaction fee on each transaction. Resulting business goals: encourage lots of small transactions.
    Charge a transaction fee that is a percentage of the transfer. Resulting business goals: encourage large transfers, since they make as much as many smaller transactions, but without the overhead of doing many transactions.
    Or, since electronic funds transfers are cheaper for banks than processing check, paypal might have banks give them a percentage of the savings from doing transfers by EFT rather than by check.

    Brick-and-Mortar Brokers vs. E*Trade

    Traditional brokers make money by charging a commission on purchases and sales. The commission is a percentage of the transfer amount, so brokers may be happy with clients who trade infrequently, as long as they buy and sell enough at a time to generate a nice commission.

    E*Trade charges a low, fixed amount per trade. Their business model is to attract high-trade-volume customers. The customers are more likely to trade often when commissions are fixed and low, and E*Trade is pushing to make up in volume what the traditional brokers make by charging a percentage.

    Adware: take your choice

    First pioneered in the late 1990s by Qualcomm’s e-mail program Eudora Pro, some software lets the customer choose the business model! A customer can install and use the software for free, and ads will be shown as they use the program. Or, they can pay full price and install the program without the ads.

    For users who elect ads, the business model is that Qualcomm provides software for free to build an audience, and then gets income from advertising. They must spend their time selling ads and distributing their software widely to create the audience.

    For users who pay for the program, the business model is the same as for any shrink-wrapped software: Qualcomm gets paid up front for a product which the customer can use forever. Qualcomm then spends their time coming up with later versions which they hope will entice customers to upgrade, sending more money into Qualcomm’s coffers.

    Retainer vs. Hourly Consulting

    Some freelancers charge by the hour for services delivered. Others charge a flat fee retainer which entitles a client to a certain amount of the freelancer’s time. Once again, they deliver the same service, but the different business models will result in their negotiating businesses, administering their business, and controlling costs in a very different way.

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    Stever’s flame on why ASPs, Web 2.0, and everything new is really just old again

    It’s always something; if only it were something new.
    Stever sounds off about ASPs

    Inc. Magazine, April 2000, Alessandra Bianchi declares on page 29, “The entire software industry is about to be turned upside down [by ASPs].” ASPs, for those of you who don’t know, are Application Service Providers. They provide central services on their computer, which you run from your machine, usually through a web browser.

    Hi, Alessandra. You must be young, unfamiliar with the computer industry, and
    probably didn‘t think to talk to anyone over 23 while researching your story. Yawn. I continually wonder whether I was as myopic and self-absorbed in my 20s as the current generation of 20-somethings seem to be (at least in the Internet start-up world)? Probably not. But I’m working on becoming that myopic and self-absorbed now. Better late than never.

    So, Alessandra, come and sit upon my wizened knee. Let me share with you a bit of perspective from 23 years in the high tech industry. No, really. Come on. There’s a good little reporter. Please just humor an old fogey for a moment…

    The idea of running software on a central machine and having it delivered to distant desktops has existed for decades.

    In the 70s, it was called time-sharing, and featured “dumb terminal” (text-only) distant desktops.

    In the 80s, it was called client-server, and featured “smart” distant desktops (entire computers).

    In the 90s, it is being called ASP, and features stupider distant desktops (entire computers whose processing power is ignored except for one poorly-written Web browser).

    There’s a lot to celebrate about the last three decades of computer science, but the idea that we have a new model for software services distribution isn’t one of them.

    There are lots of good reasons to run a program on a central server:

    • You only need to upgrade the server, and all the users get the change.
    • For a big ole application, only your server needs to be huge. Your client machines can be dinky, inexpensive doo-hickeys.
    • Any data stored centrally on a server can be backed up by the server’s staff.
    • You can pay-as-you-go, so for expensive programs you rarely use (e.g. the non-professional designer who uses Photoshop once a year), it saves you money.
    • The server can collect tons and tons of personal data on you by watching everything you do with that application, and the ASP providers can sell that information to marketers and terrorists so … um, whoops. That’s not a reason to use a central server. Never mind.
    • … and that’s about it.

    There are lots of good reasons to run a program on your desktop:

    • You get to control upgrades, so some stupid unanticipated upgrade doesn‘t tank your machine and your productivity as you desperately try to untangle the unwelcome new interface, or the mush that a bug in the new upgrade has made in your locally stored data.
    • You don’t have a single point of failure. If you use an ASP for a mission-critical application and it crashes (or anything along the path between you and it crashes), your work stops until the breakdown is fixed. If your entire company uses a centralized server, a break in the network or the server can stop your entire company for a day. That costs more than just the cost to fix the system; it’s essentially your entire company’s output for the time it takes to fix the breakdown! (See The Goal for details about that last one…)
    • It runs faster. Period. The Internet, especially, is dog-slow. And the slowness can happen anywhere along the path between you and your host. With a desktop, you know how to speed it up: buy a new disk and processor. With a network-based program, there may be no way to speed it up.
    • It’s pay-once, so for programs you use often, you don’t have to worry about being reamed by deceptive pay-as-you-go fees that seem cheap until you realize that over the next two years, you will spend ten times more on the software rental than you ever would on a piece of shrink-wrapped software.
    • You can backup your data yourself, so when the central database server has a disk-destroying crash and it turns out that the support staff wasn’t actually making those backups they had promised, you won‘t lose a decade’s work.

    Once, and only once, I used Yahoo calendar for a week. My ISP was having connectivity troubles right as I had to rush out to a meeting and had forgotten where to go. Alas, my Yahoo Calendar didn’t leave me yelling “Yahoo”—it left me yelling “G*d f**king damnit!” Which wasn’t nearly as much fun.

    If you like the whole ASP model, however, then please indulge. You feel like you’re out of control technologically, now? Just wait. Hee, hee, hee. And please—send me your now-useless PC, since I really need one to use as a print server…

    Update in mid-2010: Now we have “software as a service (SAAS)” and “cloud computing.” Guess what? Same stuff, different day. Everything old is new again, only “old” in this case means two years old, not two decades old.

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    Don’t Judge a Business by its Distribution

    A folly of 1996-2000, which still doesn’t seem to be going away

    Today, Red Herring’s “Catch of the Day” missive observed its latest trend. The main headline proclaims:

    The once-hyped ASP business is wearing out its welcome, and may be in for a rough 2001.

    It’s probably accurate. Which is pretty pathetic, since there’s no such thing as “ASP Business.” But Red Herring seems to think there is, and the professional investment community happily agrees. Three years ago, B2C was sexy. Then it was B2B. Next it was ASP(1).

    But these will all fail for the same reason: they aren’t businesses. They aren’t business structures, nor are they even business models! They just describe a distribution channel. Do businesses that share a distribution channel have much in common? Fine diamonds and toilet paper both distribute through BJ’s Wholesale Club (a discount club), but few investors would consider them the same kind of business. It just doesn’t make sense.

    When talking about groups like ”the B2B companies,” the group members need enough in common that we’d expect them to behave the same way. Think Biotech. Now that’s a real industry. Different biotech companies have similar characteristics. They sell to similar customer bases, they have similar business characteristics—including huge up-front R&D investment, FDA approval process, patent-protected monopoly for 17 years for successful drugs, the need for extreme chemical expertise, etc. There’s a case that there is a real sector there.

    If you want to lump businesses together, many times you can group them sensibly: Lump businesses by customer base. Then the businesses will share the common problems of that customer base. Or group them by business model; the businesses will share financial characteristics over time. Or lump by the organizational capabilities they need—companies that all require top engineering talent will all be affected by talent availability.

    But let me suggest a shocking idea: resist the urge to lump! That’s right, don’t lump. Learn about each business individually. Consider it on its own merits. Research its market and product. Does it have a product that its market wants that creates value well over the cost to deliver the product? Will the business model produce high profits that can be reinvested in the business? Is it backed by a management team that can successfully build an organization to deliver to that market? Does the company have patents or other barriers that make competition difficult? If the answers are “Yes,” it’s probably a business worth starting. So start it. Or invest in it. Or write about it. Because it’s a real business. And it doesn’t matter if it’s B2C, B2B, or ASP. What matters is the one thing it won’t end up being—an IOU.

    (1) See asp-flame.htm for an April 2000 essay I wrote noting that ASPs were less than revolutionary. Maybe I should become a pundit. If I had $10,000,000 for every time I’ve predicted a trend correctly, I’d be rich! back

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    Organize Your Life With 2 "To Do" Lists

    It’s been a pretty busy month, and I’ve been swamped with so many TO DO items that post-it notes, scraps of paper, napkins, and dozens of other scribbled “urgent” tasks have been covering my desk. My Palm Pilot TO DO list terrifies me. Every night I prayed, “Grant me freedom! Let my Palm’s recharger mysteriously run out of power.” My prayers were answered in the book The Organized Executive by Stephanie Winston.

    Stephanie suggest a method that’s working great for me:…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Lessons from Wentworth by the Sea

    The power of dreams, community, customer service, and customer retention

    Click here to download this article in PDF format.

    Come join me at a remarkable hotel. The Wentworth by the Sea was a grand New Hampshire fixture through much of the 20th century. Home to the peace talks that ended the Russo-Japanese War, everyone who was anyone stayed there. Movie stars, politicians, the rich and famous—all could be found summering at the Wentworth. Yet the hotel gradually faded and closed its doors in the early 1980s. By the time I first saw it in 1997, all that was left was a rotted, weathered facade. You could see right through it. It was a protected historical landmark, but no one had the time or money to repair it. We sat in our car and dreamed of how wonderful it would be, fully restored.

    Last year, while surfing the Web, I found a story that the Wentworth had been purchased. It was being renovated and would be opened under Marriott’s management in May, 2003. I started calling for reservations a year in advance, and arrived on opening day, May 16, 2003, for the hotel’s first weekend in operation.

    The weekend was remarkable. Restored, the hotel was beautiful. But even better than the building and the grounds were the people.

    The Wentworth’s service was hands-down the best I’d ever had. We were very challenging guests. We forgot clothes in our car. The valet ran out and got them for us. We ran out of gas, and the concierge arranged a refill from a nearby boat marina. We wanted a special dinner on opening night, opposite a hundred person catered function, and the chef treated us to the best meal of our lives. I had stayed in Marriott hotels before and while the service was good, it wasn’t like this. The staff was going far out of their way to provide a superb experience.

    What went right

    I had to know why, so I spoke to Kris Francis, Marriott’s on-site training manager. In all the hotels she had ever opened, Kris related, the Wentworth was by far the most exceptional.

    The Wentworth was more than a hotel to people. It symbolized an era. It was a national landmark, and for years had been a site where locals would drive past and wish for its restoration. People had invested great emotional pride, longing, and energy into the building over the years.

    When Marriott announced the restoration, six years before, the hotel’s draw was so great that Marriott employees requested a transfer years in advance to help bring the building back to life. People from as close as nearby Portsmouth and as far away as Key West asked for a spot at the Wentworth. The staff ended up drawing from people for whom the Wentworth is more than just another hotel; it is part of their personal dreams. They are serving far more than just the guests—they are making their own dreams come true.

    Of course, Kris assured us, the guests were just as important. People married there decades before came back to enjoy the hotel’s resurrection. Their stories and reverence for the hotel just reinforced the staff’s dedication to making the hotel experience exceptional.

    A devoted staff gives great service. Devoted customers make the staff feel great. The staff gives better service, and the customers have a great time. The interaction becomes self-reinforcing. Once the initial delight shifts to business as usual, the Wentworth will have to continue to be run as an excellent business. But with this kind of energy behind the launch, I have few doubts that the Wentworth can be hugely successful again. Heck, I’m looking for an excuse to hold events there!

    This week’s action challenge: unite people with a dream

    What does your community long for, just beneath the surface? Find out what it would take to offer the community the dream, and engage both the people who will make it happen and the ones who will enjoy it once it’s done. It may be as huge as re-opening a grand hotel, or something as simple as setting up an old fashioned soda fountain for an evening at the local drugstore, or even just restoring a sign by the corner store. Because sometimes it’s just as important to build community as it is to build business.

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    Linking Leadership and Management with Powerful Strategic Planning

    Linking Leadership and Management with Powerful Strategic Planning

    from It Takes a Lot More than Attitude…to Lead a Stellar Organization by Stever Robbins

    Click here to download this article in PDF format.

    Leaders set direction, decide acceptable behavior (values), and get people moving towards a common dream. Managers design systems, set goals, track progress, and generally make sure things get done. You need both to create a high-performing organization: knowing where to go, and knowing how to get there.

    A lot can go wrong. Weak leadership and the organization can stagger in circles, incoherent and directionless. Weak management and an organization wastes time and money, duplicates effort, and produces far too much (or too little) paperwork. But even strong management and strong leadership can dissolve into chaos without a tight connection translating the leadership direction into management systems. A good strategic plan creates that connection and gives your business traction.

    Leadership sets the destination

    One company’s vision statement lays out the company’s purpose, vision, and values:

    “Our Business is the design and manufacture of impenetrable widgets for renewable energy source control plans. We aspire to become a leading worldwide player where customers love our products and service, and that these are provided at consistently good quality and a fair price.”

    Sounds like a great vision. It gives direction to new product development, displays values of customer-orientation and quality, and even lets us know the company’s intended markets. And like most leadership documents, it’s timeless. The company could be living this vision right now, or it could be hopelessly mired, years away from making the vision real. Or the vision might be just nice-sounding words on a boardroom wall, with no link to the business whatsoever.

    Ideally, the vision drives strategy. Most business goals serve a higher-level goal. The sales goal “land 10 new clients” is part of the higher goal, “increase market share by 5%.” Strategy sets the highest level management goal.Its guidance comes straight from the vision and mission of the company—which is where leadership resides.

    Strategy is a map for achieving the vision, but creating a realistic timetable and action plan requires a map and a route. To choose a route, you need both a destination and a starting point. Leadership sets the destination, and strategic assessment lets you know where you’re starting.

    Assessment tells where you are

    The better you know your starting point, the better you’re able to create an effective route to your destination. An assessment encompasses what you believe is important in navigating to your vision. Sure, market share and profit goals are common metrics, but aligning an organization must include internal and external assessments:

    • what organizational capabilities exist?
    • what’s your competitive positioning?
    • are partnerships in place? the right ones?
    • do you attract and retain the right employees?
    • does your culture support those employees?
    • do your profitable customers stay with you?
    • does your financial strategy deliver funding when it’s needed?
    • are operational systems delivering product and service properly?

    Organizational learning boosts impact

    A destination and starting point are enough to chart a course, but they aren’t enough to form the most effective plans. As the highest-leverage activity in a company, strategic planning is where organizational learning has the greatest impact.

    When Intuit launched the Quicken visa card, the software-only company learned a lot about what it takes to run an operational service business. The business’s infrastructure was revamped multiple times to make use of lessons learned about reliability, security, and customer service.

    No one wants to repeat past mistakes and everyone likes to repeat successes. Most organizations learn a lot, but the learning gets lost. If your strategic planning group spends time sharing lessons of prior years, you’ll end up with goals and plans that bring learning forward.

    Well-scoped goals drive success

    Set yourself up for success in your goals. If people feel chronically overworked, “stretch” goals may be stretching people too far. Be realistic about what’s possible in a year. Get productivity from ruthless focus on goals that make the most difference, not from ruthless overwork on low-value initiatives.

    Productivity goes down under too much stress or too little sleep. If 283 initiatives are essential to reaching goals, change the goals, because you can be sure they’re hopeless. People will be too stressed to do a good job, and consider 283 status meetings each week … it’s simply too horrible to think about.

    Underpromise and overdeliver—even when promising yourself.

    Plans transition you into management

    When it’s finally time to make plans, the transition to management is in full swing. It’s time for management to take the ball and run with it. All the standard planning rules apply:

    • have lots of measurable milestones
    • schedule regular re-planning sessions
    • know your critical paths
    • communicate success criteria clearly
    • coordinate between different groups
    • monitor your plan and adjust as necessary

    Leadership remains important

    Once the strategic plan is in action, the leadership direction is well on its way to becoming reality. But leadership isn’t over by any stretch of imagination. The leadership job becomes keeping a powerful presence, reminding people of the company’s ultimate destination, values, and reason for existing.

    People will get demotivated; the leader re-inspires them. Plans will drift or the world will change; the leader calls for re-examining whether the organization is still on course. The leaders provide the stability of direction and values that free everyone else to make it happen.

    Even if the world is wildly different than expected, sound strategic planning will provide the map that aligns your organization behind the leaders’ vision. An aligned, energized organization is more likely to reach the vision, and it will be more fun and more motivating along the way. And at the end of the day, aren’t our lives and work are as much about the journey as the destination?

    Putting it into action

    • Do the people in your company share a common idea of the business’s direction? If not, choose a direction and start going for it!
    • Look around at the initiatives and projects that are under way. Do all have a clear link to your company’s vision/mission? If not, fix it.
    • Do people seem overworked? Do the research to discover whether goals are poorly scoped, whether the plans to reach those goals are simply bad plans, and whether productivity is suffering from plain old overload. Incorporate that learning into your next planning session.
    • The next time you start planning, ask yourself whether you know your goals and your current situation, measured along all relevant external and internal dimensions.
    • Above all, think, then jump. Planning is important, and so is execution. Most of us prefer one or the other, and we get mired in endless plans or senseless execution. Really think about yourself and your organization and make sure you’re striking the right balance. A week of planning is more valuable than a year of action in the wrong direction.
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    Take Responsibility as a Leader Before It Takes You!

    Click here to download this article in PDF format

    We all love to take credit when things go right, and shift the blame when things go wrong. It’s especially tempting as a leader. The leader is perfectly positioned to blame just about anyone and anything when things go wrong. “The market is down.” “That clerk in accounting in incompetent.” “We didn’t count on competition.” “Regulation is unfair.” “The legal department reviewed it before I said it.” Such quotes avoid responsibility, and whether from fear or insecurity, they herald the beginning of the fall from leader to pretender…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Root Your Leadership in a Strong Vision

    You Can’t Lead if You Don’t Know Where You’re Going

    From my January 2001 newsletter.

    Here in America, it was Martin Luther King Day, yesterday. Dr. King was one of the most prominent and revered leaders of the Civil Rights movement in the 60s in America. He spoke passionately about his vision of a country in which white and black people could live side-by-side, without skin color blinding us to each other’s value. His most famous speech is his “I have a Dream” speech, which painted his vision clearly and forcefully, and remains to this day one of the most inspiring speeches I’ve ever read.

    Dr. King’s leadership was partially based on his personal charisma and inspiration, which he used to forge a vision that has long outlived him. This “visionary” style of leadership is very powerful; it gives people a powerful sense of direction along with an idea of what to expect once they arrive. Creating and conveying a vision relies on passion. If a vision doesn’t engage people emotionally, it won’t be a powerful motivator…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    How to Appreciate Your People

    Create a Culture in Which Recognition is Ongoing

    From my March 2000 Newsletter, on creating a culture motivating to employees.

    A management team was wondering how to recognize their employees and appreciated publicly. It’s a great question to be asking, and a company that does a good job will create a wonderful culture. Let‘s go one step further and ask: how can we simply create a day-to-day work environment which gives that recognition? Public appreciation is nice, but it’s infrequent and often has an aura of “special event” to it. In my experience coaching, I find that people need a boost on an ongoing basis. In the best places in my own career, appreciation wasn’t a special event—it was part of our day-to-day living.

    How to recognize your employees for doing a great job? One overlooked strategy is simply complimenting the person in the course of day-to-day work. Drop by their desk and tell them how great they’ve been. Public appreciation is great, but in my experience as a coach, I find that people also need little appreciative gestures on an ongoing basis:

    • when someone stays late, let them know you appreciate it.
    • when someone rearranges their personal life to accommodate work, thank them.
    • treat your team to a meal spontaneously.
    • give people a day off or a trip someplace cool. (needn’t be expensive, just fun)
    • buy your techies that fun new software package they want to play with [even though it has no business value].
    • listen to your employees’ opinions and consider the possibility that when you disagree, they may be right.
    • putting a huge stuffed animal on their chair to hug them when they arrive in the morning.
    • gift certificates to a movie. end meetings on time [shows respect for peoples' time].
    • never schedule Monday meetings before 10 am, or Friday meetings after 3 pm [I would suggest never scheduling ANY meetings before 10 am or after 4 pm, since otherwise you risk having your night people / morning people only half-there].
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    Balance Rights with Responsibilities

    Creating Your Bill of Responsibility

    From my April, 2001 newsletter

    Do you have a personal Bill of Responsibility, as a business leader? It’s an intriguing concept. Allow me to explain…

    In America, we businesspeople happily ask a lot from our employees. Everyone I know accepts the need for unpaid "crunch time" before a deadline, even though "crunch time" means a project management failure. And does "crunch time" become less common over time? Rarely. And we as business leaders are responsible for the failure to learn. But we expect employees to give from their personal lives to compensate for a company’s poor management.

    But we rarely hold ourselves to as high a standard…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Don’t Make the Same Old Mistakes—Make New Ones

    Failure doesn’t guarantee learning, just the chance to learn!

    As the dot-com death spiral continues, a friend said, “it was painful, but I learned a lot.’ Eager to learn without suffering the pain myself, I ask, “What did you learn?” He lists five lessons, all pretty obvious—for just $100 million (none of it his) and four years. There’s gotta be a cheaper way. We say we learn from our mistakes, but few of us really extract quality learning from our experience. If you’re going to make mistakes, make them thoroughly, and learn well from them.

    Schedule time for learning. Don’t assume it happens automatically; it usually doesn’t…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Five Great Ways to Tank Customer Loyalty Before It’s Begun

    Click here to download this article in PDF format.

    Don’t the best relationships begin with tricks, manipulation, and deception? You’d think so, from the way some companies treat new customers. We all want strong relationships; they lead to loyalty and word of mouth. The buzz builds, and soon you’re thriving. Customers stay because they love us (who can compete with love?) and Life is Good. As with any relationship, beginnings are fragile. Missteps up front can set the stage for arms-length engagement forever. Here are a few mistakes you’ve either made or been victim of, and what to do instead to have the best chances of keeping your customers.

    Mistake #1: Collecting Customer Information Before Establishing Customer Loyalty

    I needed a quote from an article in a famous business daily newspaper. The business daily was happy to let me search their last month’s archive, but first I had to register, giving them personal information up front. A common practice, but how stupid. Sure, they want to market to me. But didn’t I come to their site on my own? They have my awareness already. The free offer isn’t so free. They want contact info in return. Why would they want my info, except to send me junk mail? Oh boy, I can hardly wait!

    If you promise a free offer and want to capture customer information before you deliver, make the information capture optional. Most people will be happy to share their contact information with you. After all, they’re there because they hope you’ll solve their problem.

    Strong relationships are built on understanding each other’s needs and filling them so well both parties want to stay. At first contact, fill their needs first. Then you’ve earned the right to ask further questions and explore how to get what you want.

    This is an introduction, so ask only for information needed to deliver the free offer. If you’re mailing something, you’ll need a person’s mailing address. Ask for it. But stop there. Keep questions respectful. Quizzing someone about their household income before you know them is tasteless and rude, no matter how much you like voyeurism.

    If you ask personal questions before you’ve earned the right, people will lie. Even about phone numbers. When a stranger asks for your number and won’t take “no” for an answer, you give them a fake one. And probably a fake name. And an address in Poughkeepsie. Spending a little time to earn trust before asking is the best way to start any relationship.

    Mistake #2: Making Customers “Opt-out” of Loyalty Programs

    Unfortunately, the quote wasn’t in the one-month archive. But to search last year’s archives required signing up for a free two-week trial of the publication. My trial was active within a few hours. After finishing the search, my day moved on and the incident was forgotten. Two weeks later, a receipt arrived from nowhere informing me my credit card had been charged $30 for “change in account status.”

    “Try for two weeks and cancel before we start charging” is a great way to generate active hostility. The free trial is nice. The burden of having to remember the trial expiration is not. If a customer intends to cancel, hoping they forget the due date and get tricked into taking your product isn’t going to inspire fierce devotion and a desire to purchase more. At best, they’ll feel like they screwed up. At worse, they’ll blame you. Do you really want people choosing between shame and anger as how they feel about your company?

    The same thing happens with opt-out marketing lists. “Check here if you don’t want us to share your personal purchase data with everyone from General Electric to David Letterman.” Face it: people (except a few fanatical direct-mail marketers) don’t want more junk mail, no matter how profitable it is for you to send it. Making them “opt out” demonstrates that you act only in your own interests unless a customer takes the initiative to have their needs considered.

    The daily business site did an especially bad job, because the first reminder of the trial expiration was the charge receipt. What’s worse, the site gave no instructions for canceling a trial before it became real.

    If you’re going to offer people a trial that turns into commitment, warn them before the transition. Otherwise, people convert by fiat. If you’d rather have them convert out of enthusiastic satisfaction, spend the trial period giving them value, value, value. Teach them to use your product better. Give them tips about how many problems they can solve forever with just your product and a bag of odds-and-ends they can find around the home. Then let them know the transition is coming up, and only then start charging.

    Moving from dating to marriage should require ceremony in any relationship. Sure, if you shack up together for a while, you’re married under common law. But make sure you check in together before it becomes real. Accidental marriage is no fun for either party.

    Mistake #3: Not Planning for Separation (Loyalty isn’t always forever)

    Well, there was no obvious way to back out of my trial. The “My Account” section of the web site let me modify my account settings and include all kinds of add-ons to my subscription. There was no way to cancel, however, nor did anything in the help file mention canceling. It took a half-hour on the web site, plus calls and emails to customer service before the charge was removed.

    What were they thinking? “Gee, if we make it hard to cancel, someone who wants out will just knuckle-under and keep paying us forever?” The marketing genius who came up with that one should be put out of their misery. Making it hard to cancel won’t stop a customer from leaving; it just adds frustration. People leave for all kinds of reasons. They might come back. Don’t guarantee their last memories of you are of trickery and manipulation.

    And make it easy for customers to leave and return. Many relationships are paradoxically strengthened when the parties involved feel as if they have the freedom to leave.

    “If you want a customer very much, let them go free. If they come back, it was meant to be-treasure them forever.”

    — Random New Age Quote

    “…If they do not, sell their name and address to your direct marketing partners, because at that point, you have nothing to lose.”
    — Marketing addendum to Random New Age Quote

    Mistake #4: Making bad first impressions.

    While waiting for my subscription refund, I bought new backup software. Installing it took half an hour and then it wouldn’t run. Reading the fine print, it seems I was supposed to bring my system “up to date” before installing. In plain English: download 100 Mb of software updates from Microsoft and install them all. No way. Not until I can afford to go computerless for a week while my tech person fixes everything the updates broke. The backup software went back to the store, amidst grumbling over the lost time.

    Those pesky customers. They buy your product, take it home, and expect it to work. When they find no batteries included with their new $180 MP3-player, they curse, scream, and run out to buy the $2 extra batteries. How unreasonable can they get?

    When I worked at Intuit, we followed customers home and watched them struggle with our product from purchase until successful use. We quickly learned to streamline the purchase and installation until it was ran as smoothly as melted Velveeta on nachos . We identified everything a customer would need to use our product and make sure it was all included or clearly identified before purchase.

    Trying and buying a product is your customer’s first impression of you. Orchestrate it carefully; first impressions count. It’s worth doing whatever it takes to make their experience a joy. It may mean more work for you, but if it gets you a customer for life, it’s probably worth it. We recently bought a manual lawn mower that assembled with no tools and needed a single sheet of instructions to master. We’ve already recommended it to friends. You can bet when it needs replacing we’ll stick with the same brand.

    Remember when you picked up your spouse for your first date. Were your first words, “By the way, the car is out of gas. Here’s the gas can. Why don’t you run out and snag a gallon while I wait here with your parents?” Of course not. You are smarter than that when it comes to personal relationships. Be smart in business, too. Include the $2 batteries in your $180 MP3-player.

    Mistake #5: Invading personal space

    I signed up years ago for a marketing newsletter with a man rumored to be one of the most famous, successful marketing consultants of all time. Imagine my delight when I’ve received great offers directed to his “exclusive inner circle of personally important customers.” My delight was diminished just a bit by the letter having been addressed to “Dear Nospam-marketing@LeadershipDecisionworks.com.” Personal friends? Exclusive inner circle? I think not.

    Just don’t do it. Computers may provide “mass customization,” but your customers know that. They own laser printers, too. Fake friendliness won’t impress them. If your letters aren’t hand-signed by someone whose name they know, they won’t believe for a moment that they’re any more special than anyone else. They just believe you have a good mail merge program.

    If you waste your “Dear close friend” on people you barely know, you do a double disservice. First, you make it hard to make your true close friends feel special. How do you start the letter, “Dear close friend-no, I mean it this time, you really are a close friend”? I don’t think so. You also deliver the reek of insincere carnival con-man to your customers. They know they aren’t your close friend. Don’t insult them by presuming you can play off a relationship that doesn’t exist. If this is a new customer, don’t be afraid to admit it. After all, they’re under no illusions that you’ve been friends for life. Just say “Dear new customer, here’s a chance to meet your needs for marketing advice!” A little refreshing honesty can work wonders.

    Honesty is the foundation for great relationships. Even if you can get away with pretending closeness where none exists, think twice. If the truth comes out, it could be worse than playing it slow to begin with. Just ask any pair of identical twins who pulled the dating switch-a-roo back in high school. It might have been fun for an evening, but once the truth came out, they found themselves suddenly single.

    Business leadership is first and foremost about forging relationships. You’ll be most successful when you build those relationships to last. Customer relationships are only part of the story. You also have relationships with employees, vendors, and investors. The same principles apply everywhere: give good first impressions, answer their needs before pushing your own, respect their personal space, and make it easy for them to pull back to their own comfort level. It takes a bit longer than just charging ahead, but anticipation is, they say, the spice of life!

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    Tragedy Helps us Lead

    Terrorism can help us find our inspirational self

    Like most people, the WTC bombing left me stunned, confused, and horrified. For the last three days, I’ve watched the news, listlessly done some work, and listened in shock to our national leaders declaring war. Today, I had another shock as I listened to the radio discuss an intercepted memo, leaked from an organization with members in countries around the world. The memo laid out the advantages to killing more than 20,000 foreign civilians. It wasn’t until the end of the news report that I realized… the company was Philip Morris, analyzing how much money early smoking deaths would save the Czech Republic in federal pensions.

    As horrible as the WTC bombing was, I left lunch numbed by the behavior of our own countrymen. It is horrible to kill quickly, motivated by hatred and religious fanaticism. Is it somehow better to kill slowly, motivated by profit?

    As businesspeople, we represent our country and our values to the rest of the world. Diplomats talk to other diplomats. Businesspeople reach everyone.

    Whether you read my list as an entrepreneur, as an aspiring leader, or just as a bystander, take this opportunity to dig beneath your outrage. Beneath it all, you’ll find what you Stand For. Was your sense of security shaken by the bombing? Then you stand for Security. Were you filled with fear for your children, then you stand for Safety. Were you upset by the lives cut short? Then you stand for Leading a Fulfulling Life.

    As a future leader, entrepreneur, manager, or human being, begin incorporating your values explicitly into your life. Stand For What’s Important. Ask daily how you can contribute to Security around the world. Question how you can do your part to help people be Safe. Help those around you Lead Fulfilling Lives. Whatever you Stand For, bring it into your life, every day.

    You truly rise above yourself and begin to create a stronger, more powerful world when you operate from and act on your values. As horrible as this disaster has been, use the horror to find the good. Find your passion. Live it. Inspire those around you, and create a better world. There will always be those who bring pain to the world. Be someone who brings progress and advancement.

    Best wishes,

    Stever

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    Management Skill vs. Leadership Skill

    A growing business needs both Leadership and Management to thrive

    The best companies have managers with strong leadership skill and superb management skill. But when chaos strikes, you can’t always concentrate on both. (It might even be a luxury to concentrate on either for more than an hour at a time!) But what are you losing when you neglect one or the other? Both are essential for keeping a solid foundation during rapid change. But how?

    Processes Must Adapt as Business Grows

    Management helps the business grow.

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Step up to Leadership in Times of War

    Click here to download this article in PDF format.

    The war has begun. Times are scary. People are angry, frightened, uncertain, and need direction. For most people, uncertainty makes them feel afraid, anxious, and helpless. People just can’t go about their lives as normal. They may put on a brave face, but they won’t be concentrating, they won’t be committed; they’ll just be going through the motions. In the coming weeks, people will need leadership more than ever. Your opportunity will be helping employees, families, and communities keep their center and live their lives while the drama unfolds around the world.

    Help manage emotions using empathy

    First of all, let people vent. People need to talk about what’s happening to deal with the feelings. Some people need a lot of time to process strong emotion, possibly days or weeks. Others can get up and keep going after a day or two. There’s little to be gained by letting people wallow excessively in emotion, but listening to them empathetically can make a huge difference.

    To listen empathetically, acknowledge the events that brought up the emotion and asking about the feelings. You aren’t seeking to understand or fix; just to be there with a person in their feelings. “When you hear war has broken out, do you feel afraid?” Let them talk. If they mention their family, follow up with: “When you think about the future, are you concerned for your children?”

    The key is to inquire with genuine concern(1), but let them direct the conversation. Keep your attention on the events and the feelings, rather than getting sucked in to analysis or attempts to comfort. Don’t take sides! Everyone has strong feelings about the situation, and your leadership task is giving people what they need, not engaging them in political debate.

    Whether their fears are grounded doesn’t matter; emotion is rarely swayed by logic. Just be there, emotionally. It may take 30 seconds or three hours, but you’ll see a physical shift when your listener has had enough empathy to start moving through their feelings.

    Provide certainty by facing the truth

    Once their immediate fear is past, people need to re-establish a feeling of certainty. You can’t give certainty about the world, but you can give them certainty about values, goals, and local concerns. Forget statements like, “Don’t worry, it will all be over in a week.” That may or may not be true, and they know it. Tell the truth, and give certainty in the form of a role model who sees the world clearly and still moves ahead with life: “We’re at war. We don’t know the outcome. We don’t even know the timeframe of the outcome. But we can take control of our own lives, here and now.”

    Help people take control in their lives

    After re-steadying, people will want to regain control of their lives. Find chances for them to take small, meaningful actions, maybe around work, but if not, then around home or community. If your town is like many, people may be afraid of terrorist attacks, yet towns may have few resources in place. For instance, here in Boston, a fire chief said yesterday that the fire department doesn’t know how they would find out about any attacks, except by listening to the radio. This would be a great opportunity to take a half-day off, go to Costco, and help people put together water supplies, dried fruit, etc. They could create a phone tree, and take a proactive hand in feeling safe. Just make sure you’re providing opportunities for people to have control over some aspect of their situation.

    Shift attention to the positive future

    Once the immediate fears are past, it’s an ideal time to shift people’s attention to the future they will be part of creating.

    Start talking about future dreams. You’ll know their concerns by this time, so enlist them in speculation and brainstorming about the kind of future they would be excited about and committed to achieving in the workplace (or in the world!)

    Help them take steps here and now to continue living their lives in the service of that larger vision. If your company is devoted to creating intimate lifelong banking relationships with your customers, start asking people, “What does this mean in the world as it’s unfolding? What can we do to make this come about?” But stay aware that this isn’t a planning exercise so much as a way to direct attention towards a bright future.

    Ultimately, that’s the most precious thing you can offer your employees, your families, and your communities. You can’t promise a specific future, but you can promise a possibility of future greatness. You can help people take control in small ways, and move on from their fear and anxiety. Because the people around us need direction. They want someone they can count on. Be that someone. Provide the stability, empathy, and direction, and use the current crisis to forge a stronger community.

    (1) One of the best techniques for empathetic listening I’ve ever found is called Nonviolent Communication, available at http://www.nonviolentcommunication.com. This article mentions two of the four steps of the full NVC technique. back to article

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    How Junior Programmers May be Setting Your Strategy

    Companies spend megabucks on beautiful, well-designed web sites that end up losing customers, thanks to technical decisions made by the designers and programmers. Is some consulting firm’s junior programmer really the one you want making your strategic customer acquisition and retention decisions? With a little understanding of the interplay between technology and customer experience, you can start engaging your web developers in supporting your business with smart technical decisions.

    The problem is that the world is diverse.

    The web has developed dozens of technologies to help build bigger, more beautiful web sites. You will recognize some of the terms: "layers," "cookies," "javascript," "java," "style sheets," "flash," "shockwave."

    Unfortunately, these technologies just don’t work on all versions of all browsers. I use Netscape for Windows and IE on the Mac. Two or three times a day, one of them reports a Javascript error and asks "Do you want to keep running scripts on this page?" C’mon, get real. How in the world does any user know whether to answer YES or NO to that, or what the implications are for my purchase?

    Furthermore, some users disable cookies, Javascript or Java. I’ve heard companies pooh-pooh those users and say, "Well, I’ll just require you to enable cookies/Javascript to view my site." Uh, huh. When was the last time you were willing to reconfigure your browser on demand? Hard-core customers will do it. But those sites will lose customers who don’t know how, don’t want to be bothered, or aren’t allowed to change their system. Befuddled users don’t hang around to complete their purchase, they just leave. At best, the site loses one sale but the customer returns. At worst, the customer leaves forever.

    So why do these technologies end up in web pages?

    Flash sells. Look at any television commercial. When a designer is pitching a site laden with cool stuff, the management reviewers like it. It’s jazzy. It’s cool. It’s like a high-end ad. And that’s the wrong criteria to be using to design your web site.

    Customers don’t care much about cool looking sites. They care about sites that get them the information or products they want. Yahoo is the most popular site on the web. It uses no fancy features, and it’s downright ugly. But it gets people what they came for. And that’s a much harder outcome for a graphic designer to pitch.

    The programmers push the leading-edge technology, too. Take it from an ex-programmer: web site—even large database driven sites—require very, very basic programming, if any at all. The latest version of Quicken is about 10,000 times more sophisticated than 99% of the commerce sites in existence.

    So most competent programmers find web sites kinda, well, mind-numbingly boring. But add in layers and flash, javascript and Java and Lingo, and suddenly the complexity is back to the point where it makes the job fun. Besides, all the advanced technology really *does* make certain things easier to program, and trying to use basic HTML to accomplish those same things just isn’t nearly as engaging.

    Specific Problems

    Here are some places in your site to dig to find out if you’re using these technologies:

    1. Disable Javascript in your browser. This is the biggie. If your site isn’t usable with Javascript turned off, that could be a problem. Especially click on [SUBMIT] and [OK] buttons. Many sites have buttons that, for incomprehensible reasons, only work if Javascript is enabled.

    2. Do you have Javascript running that makes sure the user types the right things into fields? If so, you just paid your programmers to do the same thing twice, because the data is almost certainly validated once it gets to your server, as well. You now have the maintenance expense of maintaining both the Javascript checks and the server-side checks. Yowza!

    3. If you use Java, you’ll lose everyone who keeps Java disabled for security reasons.

    4. Do you use layers or style sheets? Many sites do. They make some aspects of site creation much easier. They also tend to break in various browsers and look awful. Modern tools like Dreamweaver give a designer everything they need to create a consistent look and feel in basic HTML that works in all browsers. If your designers simply must use style sheets or layers, test the site in a wide range of browsers to make sure it looks decent across the board.

    (And note that your designers will point out how convenient style sheets are, since you can revamp the whole look of the site by changing just the style sheet. But balance that against the increased testing and QA costs of making sure the style sheet solution works everywhere your customers are.)

    The business question to be asking

    The decision to include these technologies in a site is simple, when approached in business terms:

    Is the expected increase in business from the Javascript/Flash/etc. more than the cost of losing even 1% of your visitors due to incompatibility or security concerns?

    For most sites I’ve visited that use these technologies, the site would be equally useful without the technologies. So there’s no incremental gain from using them, while there is a risk of losing a customer. In a dramatic example of this, a site (let’s call them "GenericSTORE.COM") recently lost my $400 purchase when their Javascript consistently crashed in both Netscape and IE browsers. Their order desk was closed, and my special coupon expired the next day. I’ll now buy from a competitor, and if that competitor does a good job, they will probably have a new customer for years.

    How much did that flashy bit of Javascript cost GenericSTORE.COM? Quite a lot.

    There are certainly times when the extra technology helps. A highly-technical web-delivered product probably requires advanced technology by virtue of the kind of product it is. But most sites simply don’t.

    As a businessperson, make sure your programmers understand the business case behind the technology. They’ll fight tooth and nail. They’ll say things like, "But Javascript is so basic, 99% of the browsers are compatible…" Yet if it’s that basic, why did GenericSTORE.COM’s scripts fail? And why do people continue to experience incompatibilities? And can we really expect customers to turn Javascript on, if their system manager requires that they keep it disabled? And more to the point: what is the lifetime value of the customers who have the 1% incompatible browsers, and is the extra Javascript functionality really worth losing that much money?

    What’s the solution?

    One solution is to test your site in as many browsers and environments as possible. Test in Netscape, all versions 4 and above. Test in AOL. Test in Internet Explorer (4,0, 5, 5,5, 6). Test in Opera. Test in Omniweb. Test test test. Test with Javascript turned on. Test with it off. Ditto for Java. Test.

    Another solution is to have a site that uses very minimal technology. The HTML on my site works on every browser in use today. Only Netscape 1 and 2 would have trouble with the pages. The site uses Javascript to highlight menu items, but it still works fine with Javascript disabled. Yes, achieving this degree of accessibility has meant sacrificing some of the neato-cool features I could have added to the site. But look at it this way: no matter what browser you’re reading this on, you made it. It works. And you’re here.

    So make your site simple and accessible. If you’re tempted to use technology that might lose even a single customer, ask yourself how much you’re losing with that customer, and whether it’s worth the extra bell and whistle. Amazon.com manages to do a hundred million dollars’ worth of business with a site that uses no Javascript and can almost survive with cookies disabled. When your site is rock-solid, your customers will love it, and at the end of the day, they’re the ones who keep you in business.

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    Don’t let bad IT decisions hold your company hostage

    Click here to download this article in PDF format.

    Business leadership isn’t just about people. It’s also about process and systems. Your computers are part of your processes, and these days, they’re too critical to be treated as casually as you’d treat a screwdriver. Yet few business leaders know anything about them, and they happily delegate strategic, life-or-death technology decisions to IT folks who haven’t a clue about business.

    A few weeks ago saw one of the largest email virus outbreaks ever. Fortunately, it didn’t do nearly the damage it could have done. But ladies and gentlemen, we are all at risk. You may be a non-techie, but if you’re reading this, your organization isn’t. You use computers and they are part of your critical infrastructure.

    Bad decisions cost more than you think

    If an avoidable virus or IT glitch stalls your company for a day, how much does that cost? Simple. It costs the entire cost of your company for a day. Not just the salaries of the IT folks who have to clean up the mess, but the salaries of everyone who can’t work because their computers are screwed, plus the utility bills, etc. Add on salaries for the time it takes people to get back to where they were before the virus attack. And if your IT infrastructure halted commerce, add on the value of all the lost orders. Now you have the cost of a bad IT decision.

    IT costs are rarely allocated wisely

    If you’re a senior executive and you make a bad call, you live with the results. In fact, if life throws you a curve ball, you live with the results. Your new distribution channel didn’t reach the market you wanted? Oops. That’s time and money down the drain, it shows up in your bottom line, and it gets factored into your evaluation.

    But not true of most IT departments. They get to make lousy decisions at bargain basement rates. You see, few companies charge back the cost of IT failures to the IT department. Let’s think about a virus outbreak. IT folks must run virus removal software over your network and clean up the servers that got screwed. Fine, that gets charged back to IT. But the salaries of the non-IT employees during their downtime, and the cost of the rework they have to do all gets allocated back to their departments. So what incentive does IT have to really take the time to understand the security issues? Very little. Most likely, they’re evaluated and paid for the projects they have to build, but aren’t charged for the business impact of what they don’t build that they should. As a result, the emphasis is on rolling out new stuff, not protecting the business.

    To be fair, this isn’t IT’s fault. Most IT organizations are chartered as development organizations, with no emphasis on security or preventing problems. Few engineers have the training or big picture to make good security decisions. But guess what–it’s our fault, too. We who build the organization must make sure IT has enough staff with the security skills and judgment to build a solid IT infrastructure. If computer security isn’t on your hiring radar screen, put it there, or be prepared to pay the costs.

    (Speaking of which… A misconfigured web server can expose all kinds of great company documents to the web. See: http://www.securityfocus.com/columnists/224 for a column describing exactly how to get really juicy internal information almost instantly using only Google.)

    IT decisions ignore the cost of failure

    "If I buy this lottery ticket, I’ll win a million dollars!!!" — Anonymous

    We make lots of our decisions because we think they’ll get us what we want. We set our goals that way: "Go build a system that can style my hair, read my email, and coordinate meetings over the internet while singing Broadway showtunes." But every decision is a double-edged sword (even the decision not to decide). We rarely consider the downside of a decision beforehand, unless it’s blindingly obvious and catastrophically unpleasant.

    When your IT team is choosing solutions, chances are, they’re asking, "Which solution meets our needs?" Also have them ask, "What is the cost of this solution failing?" Microsoft products have a huge advantage: they’re standard, they allow interoperability, they’re pretty, and, as they used to say about IBM , "nobody ever got fired for buying Microsoft" (though they should have). The downside, however, is products like Outlook are buggy and contain huge security holes. Several of the most destructive viruses have exploited holes in Outlook and Internet Explorer1.

    Upgrading can kill your company

    Microsoft has certainly endorsed a dangerous trend: software that requires activation to install and run it. More and more, it’s not enough that you purchase software and install it with a serial number they give you; you must also be connected to the internet or call their telephone activation center to activate the software when you run it.

    The reason for this is simple: the software publishers basically don’t trust their users, and want to monitor every installation of the software closely. It makes sense from their point of view, as long as you assume your users are out to screw you. But from our point of view, this trend is dangerous.

    The first of these activation schemes was Adobe Corporation’s "Type on Call." They would sell you a CD full of fonts, and you would call Adobe to "unlock" fonts you had purchased.

    Over the years, I purchased over $2,000 worth of fonts from Adobe. That really isn’t as many as it seems, as some of the nicer faces cost upwards of $500 to purchase all the different weights and styles. My corporate identity was built using the Adobe fonts.

    Then a couple of years ago, I bought a new computer. I went to install my Type-on-Call fonts and discovered that the activation servers had been shut down. Adobe had decided to discontinue the service, and suddenly I was no longer able to access fonts I’d paid dearly for. No one at Adobe was able to help, until bombarding the upper management with letters led one marketing manager sent me a CD-ROM of the fonts in question.

    Herein lies the danger: in the interests of their fraud protection, you are integrating the business fortunes and decisions of the software vendor into your infrastructure. If they go out of business, get acquired, or just decide to stop supporting their service, the next time you need to install their software, you can’t do it. If that software is critical to your business, you’re just plain out of luck2.

    And even if they’re still in business, it’s still a business burden for you. You won’t always have a net connection when setting up a new machine. Sometimes–for security reasons or otherwise–you might want to install your software with your new machine disconnected from the network. Whatever the case, you’ll now have to jump through activation hoops2. Windows already takes way too long to reinstall, thanks to its convoluted architecture. If you have to make activation phone calls and convince the $3.95 /hour clerk on the other end that you own the software you’ve already bought and paid for, you’re spending more of your time and money just to satisfy their paranoia.

    Of course, no company would ever use this as a technique for forcing you to upgrade. Microsoft, for example, would never abuse their activation system by dropping activation of old products, forcing you to upgrade to a new version. But if a Microsoft doobie reads this article, watch out, they just may change their mind.

    Avoid Outlook like the plague

    Most of the windows vulnerabilities and worms have spread through Outlook and its address book. I don’t know why Outlook is so remarkably poorly written, but it really doesn’t matter. Every security-conscious technologists I know uses Eudora or a text-only mail reader of some sort. Most won’t even allow Outlook to be installed on their machine. I’m sure Microsoft is working to resolve all problems in Outlook, but if the development team couldn’t avoid the problems in the first place, I don’t have much faith in their ability to catch all the potential problems in retrospect.

    Back up regularly, off-site

    It’s amazing how many companies have no regular backup regime in place. Back up regularly to write-once media (e.g. CD-R), so even if a virus invades, it can’t destroy your backups. Make sure to keep an off-site copy of your backups, just in case. I’ve seen companies lose man-months of work because they didn’t do regular backups. IT isn’t pretty.

    I used to back up to CD-R until my drive self-destructed a couple of months ago. Now, I back up every night over the Internet, using an encrypted connection to a secure data center that can be accessed from anywhere in the world. It’s a great service that costs about the same as doing my own physical backups. I liked it so much I became a distributor. Check out:

    http://www.ezbackup.com/leadership
    if you’d like to download a 30-day free trial.

    Teach people: don’t open attachments

    Yes, the software designers could have made viruses harder to spread, but this week’s attack was an email attachment that requires people click on it to open it. When someone succeeds in getting people to violate their own security, it’s called "social engineering." The latest virus was a masterpiece of social engineering.

    It was also a testimony to how little we’ve educated people about computers over the last five years. The rule is simple: never open an attachment you didn’t expect beforehand, even if it’s from someone you know. Period. Never. If the message appears to be an error message, don’t click. Is it a "cool screen saver?" Resist the impulse. How about "The latest version of that document you requested."? Punt. On the other hand, if you asked for a Monday status report from Sue Jenkins, and the attachment is "Sue Jenkins’s Monday status report.doc", you’re probably safe.

    Don’t let IT set strategy by default

    There have been a number of business failures due to strategic inflexibility caused by inflexible software and/or hardware systems. For further reading, see my essay "Are Your Junior Programmers Determining Corporate Strategy."

    Learn how to use IT well

    Like it or not, we’re living in a world pervaded by information technology. I’ve outlined a few major gotchas, from business to technical, that you should have some awareness of if you’re leading an organization. But the time is past when we could afford to ignore technology. It’s changing industries, it’s changing businesses, and it’s making us powerful and vulnerable in ways we must master if we’re to succeed in our organizations.


    A postscript for the techie reader

    Yes, I know perfect security is impossible purely through software. In fact, good security usually has to be built into a system’s design from day one. But most of the viruses we’ve seen over the last four year could have been prevented through better design. Microsoft could have created a sandbox mechanism and launched attachments in a sandbox. They could have created a security model that required downloaded code to request privileges before being able to do anything malicious. They could stop embedding full programming languages in all their products, with security turned off by default. And they could certainly use a separate stack and data space so stack overflows aren’t an invitation to run arbitrary code. They could even code in a post-1980 language that detects attempts to overflow the stack and doesn’t let it happen! They could even have created a firewall that blocks unexpected outgoing connections.

    By the way, these aren’t fanciful ideas. All of them have existed in past systems or exist today. Tiny Personal Firewall gives you the sandbox. Zonealarm, the firewall. Java gives you buffer overflow protection. And disabling active scripting, ActiveX, and deinstalling VBScript at least helps with the programming language problem.

    1. Microsoft likes to claim, "because we’re ubiquitous, hackers target us especially." That’s true. But I’m an ex-techie. I’ve looked at a lot of the failures. They’re due to bad programming practices and poor design. I would like to think that if they know they’re target #1, that would make them extra vigilant about such practices. back

    2. Volume purchasers can often get non-activation-required versions, but smaller businesses are out of luck. back

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    A Rant About CEOs Who Don’t Know

    Click here to download this article in PDF format.

    Warning: This isn’t an essay. It’s a rant. Don’t look for deep logic, well-thought-out arguments, or statistically supported statements. Think of this as an amusingly public catharsis from someone who’s horrified, outraged, offended, dismayed and (let’s be honest) just a wee bit jealous because I haven’t yet found a way to get rich regardless of whether or not I do a good job.

    White collar crime pays. It pays very, very well. Just ask Kenneth Lay, Michael Milken, Ivan Boesky, and a whole host of others. And to top it off, a lot of the horrifically unethical behavior isn’t actually illegal. We just trust good people not to do bad things. And our trust gets betrayed. Even when the behavior is illegal, penalties may be large in absolute dollar numbers, but they’re laughably small relative to the crime(1).

    We pay salary for adequate performance, except for CEOs

    If an engineer in a company suggested, “Yes, you’re paying me $90,000 salary, but I need an additional 500,000 stock options on top of that to motivate me to finish my project,” we would want to fire them just to make a point. The reason we pay them anything is to get their job done. We only pay a bonus if they perform exceptionally well, and even then, we wouldn’t pay an engineer a 500,000 share bonus.

    Yet we consider it completely reasonable for a CEO to ask for a huge option pool on top of an already over-the-top salary, just as a base part of their job. There are occasional lame justifications “We need to give those levels of option to attract a good CEO.” Sorry. I just don’t buy it. Yes, some percentage of CEOs are really that good. But most aren’t. Let’s have them start working for base salary, and award them options only when they prove they’re worth their already-bloated salary. Warren Buffet manages dozens of businesses, replacing option grants with performance-based bonuses. Maybe the richest investor in the world has insight we should pay attention to?

    But with the CEO, let’s add an additional stipulation. In a company that can reinvest its free cash in revenue-producing activities, its revenues will rise every year as retained earnings are reinvested, regardless of any actions on the CEO’s part.

    That mean we can expect share price to rise by roughly the company’s ROE every year. So a CEO whose options have a set strike price can do nothing and still collect their obscenely bloated bonus. Fair? I think not.

    The CEO should get their base salary for doing their job adequately. They should receive a bonus only if the company does substantially better than expected, and expectations should include the internal equity compounding.

    So what is a CEO’s job, anyway?

    Legally, a CEO’s job is making a company successful: crafting strategy, building a senior team, creating a culture, and yes, making money for shareholders. If they don’t do all four, they aren’t meeting the minimum job requirements. If the CEO isn’t keeping the company profitable, they aren’t even earning their salary much less their bonus.

    Rogue’s Gallery

    So let’s just explore some recent shenanigans of those wacky corporate CEOs. In each case, the defendant was accused of wrong-doing, and their excuse was, “Golly shucks, I just didn’t know what was happening with my company. Sorry boss.” To the best of my knowledge, not a single one offered to return any of the money they received in salary, stock, or bonus which they were awarded for doing a supposedly stellar job:

    Kenneth Lay. CEO of Enron. Made hundreds of millions from selling stock while restricting his employees from selling their 401(k)-owned shares while the price plummeted. Claimed his understanding of accounting and complex financial transactions was “vague at best.”(2) Uh, huh. Is this a man who deserves the rewards associated with being CEO of a $101 billion company? A man who has a “vague understanding” of his company’s main business, which involves over 3,000 financial partnerships?

    Jeff Skilling. Founded the trading arm of Enron and served as its COO and CEO. Built the organization from scratch. Did the hiring, set the goals, determined the culture. Had full responsibility for its performance. Was happy to take bonuses and stock worth tens (hundreds?) of millions, essentially claiming responsibility for that performance. When Enron collapsed under the weight of more than 600 off-balance-sheet partnerships, Mr. Skilling’s defense(3), according to a Feb. 7, 2002 article in Time, was “I was not aware…” “I did not believe…” and “I did not have any knowledge…”

    Jeff, babe. Your job was knowing. You built the company and didn’t know? C’mon. You’re an ex-McKinsey consultant and a Harvard MBA, and you didn’t notice something was a bit odd? Perhaps when your Board of Directors two times voted to suspend your company’s ethical guidelines to allow certain deals(4), you might have taken note. As CEO, COO, and founder of the division, perhaps you have heard of the Board of Directors?

    Chief C. Gregory Earls, chairman and CEO of U.S. technologies is charged with misappropriating $13.8 million and criminal charges of securities, mail and wire fraud(5). He says “It’s ludicrous. I practically have no assets right now.(6)” Earls said in a telephone interview. “If I stole $15 million, where is it?” Well, apparently at least $500,000 of it was happily posted by Earls for a personal-recognizance bond so he doesn’t have to wait for his trial in jail. Great use of that bonus money, isn’t it?

    Earls bypassed the “I don’t know” defense, in favor of the “charges are substantially embellished” defense. It’s a shame he can’t say “charges have no bearing on reality.” A wishy-washy response like that suggests that Mr. Earls’s benefits, perks, and job title are perhaps also “substantially embellished”(7) from where they should be.

    Henry C. Yuen, former CEO of Gemstar-TV Guide (and once named America’s Most Successful Asian Executive) was fired after the SEC recommended jail time for his refusal to testify in an investigation into the company’s accounting practices. I guess this isn’t “I didn’t know,” but rather, “I really don’t want to help you know.” In any event, he may be about to waltz off with a $30 million cash severance(8). That will buy a lot of tvs, and probably a lifetime subscription to tv guide. The $30 million must be his reward for doing such a good job that the SEC wanted to review his books in sheer admiration. And by the way, he stays on the payroll for the time being. Doncha love it? Other people’s employment is linked to the company’s ability to pay and the quality of their work. And we wonder why the rank and file are a tad cynical?

    My Favorite “I Didn’t Know”

    My favorite, I’ve saved for last. Just for jollies, let’s keep him anonymous for now.

    John Doe of XYZ corp received $60mm in cash, stock, etc. when he left his company. The company had loaned him $24 million to buy company stock, and forgave the loan when the stock price dropped. His latest achievement: selling 120,000 shares of stock last August, less than one month before they didn’t meet analyst expectations and the stock dropped. He claimed he “had no insider knowledge” he said. Um, really? As CEO, a mere three weeks before the announcement, he didn’t know that his company would miss the projections that he promised Wall Street? Once again, the defense is basically, “I did nothing wrong. I was just incompetent.”

    Well, surprise! John Doe of XYZ, is really John Snow of CSX, the new Treasury Chief of the United States. I’m sure he will do just fine at the new job. And if there are any important issues that crop up at the treasury, the rest of us can sleep easy knowing that he’ll be able to give us three weeks’ notice(9).

    Return to my tamer article on how you can use ignorance to get ahead—only with ethics and integrity!

    (1) At the Harvard Business School conference on April 22, 2003, “Restoring Confidence in American Business,” a major SEC player pointed out that Michael Milken paid almost a $1b fine for his 1980s market manipulations. That sounds impressive until you realize he still walked away with more than a billion. Yes, a billion-dollar fine is high, but is it enough, given that the criminal still has enough left to support 5,000 people for life? back to article

    (2) Ken Lay’s Best Defense, Forbes, 2/13/02. back to article

    (3) Skilling: The CEO Who Wasn’t There, Time Online, 2/7/02. back to article

    (4) The Role of the Board of Directors in Enron’s Collapse, report by Senator Joe Lieberman, 5/7/2002. back to article

    (5) U.S. Technologies Assets Frozen, Washington Post, 3/14/03. back to article

    (6) Earls Faces Additional Charges of Defrauding Investors, Washington Post, 3/25/03. back to article

    (7) U.S. Technologies CEO Accused of Fraud, by Erin McClam, Associated Press, 3/24/03. back to article

    (8) Fired Gemstar exec may get $30M, Reuters CNN Money, 4/23/03. back to article

    (9) Public Citizen Seeks Government Records on Treasury Secretary Nominee, Public Citizen web site. 12/12/02. back to article

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    A Tribute to Ignorance: Your Greatest Leadership Tool

    Click here to download this article in PDF format.

    It’s shameful; the business community neither understands nor respects ignorance—one of your most powerful tools as a business leader. The last two years have seen ignorance vastly misused by heads of companies and their advisors(1).

    Oh, we’ve seen certainly seen ignorance galore. CEOs happily accepting $100,000,000 bonuses when times are good, yet declaring “I didn’t know there were problems” when their company tanks a month later. It’s hard to imagine a company owner who would reward that management with anything other than a pink slip, delivered with a swift kick to the private parts. If you’re going to use ignorance, don’t hide behind it as an excuse when things go wrong; use it to build something great.

    Before you can get dumbness working for you, you have to conquer the fear of ignorance. It terrifies us, you know. Many people would rather die than admit they don’t know something. But taming the fear is easy. You don’t need a ropes course, or a month-long vision quest. Your demons are simply memories, right now. Probably memories of grade school. Third grade. When you were taunted mercilessly for saying “I don’t know” when a teacher asked a particularly tricky question. Or was it the parents, disappointed when you said “I don’t know.” Either way, get over it. That was decades ago. Now, you’re grown up. As kids in school, “I don’t know” gets us punished. But in the real world, “I don’t know” is the norm, and it brings great power.

    Ignorance frees you to move

    You see, the moment you say “I don’t know,” you’re safe. You can venture into the unknown and if things don’t work out, you’re blameless. In fact, you’ve already pointed out that you didn’t have the answers; but hey, you were willing to try anyway! You may try and fail, but you stepped up and gave it a shot. And that’s cool(2).

    “Giving it a shot” includes doing what’s new, unusual, and out-of-the-box. When you purposely put yourself outside your realm of expertise, your full creativity can come out for the problem at hand.

    And in the unlikely event you fail miserably, rather than collapsing in a gutter and living a life of utter desolation, you can use it as a learning opportunity and move on. Have you ever worked with someone who confidently drove their team/business/life off a cliff, because they were flat out wrong yet never questioned themselves? “I don’t know” saves you from over-confidence. When you know you’re in uncharted territory, you know to expect the unexpected (and learn from it).

    Of course, even in uncharted territory, you always stride forward confidently; that’s what leaders do. But if you know the path is uncharted, you’re ready to change direction if it ends up leading straight off a cliff.

    “I don’t know” unleashes leadership

    One reason most people are afraid to say “I don’t know” is they think it means they’re somehow less than they were. Nonsense! It may create a bit more humility, but that’s a good thing. Humility gets your ego out of the way, making room for other people and their ideas.

    Now, many of us are proud of having a mind like a steel trap; I know I am. But have you ever caught your leg in a steel trap, especially one of their own making? Ouch. It’s not pretty. Even if you have a mind like a steel trap, it’s not your ideas that will take you to the top; other people’s ideas will make you successful.

    You’re a leader. Leaders, by definition, bring out the greatness of everyone around them. Key words, everyone around them. You won’t lead by doing everything yourself. You must let others contribute, even if you can do the job better. Proclaiming ignorance—even when you may know the answer—tosses the problem back to your team. If they whine, take the bait: step in and coach them. But don’t solve the problem for them; coach them to develop the skill to solve the problem.

    (Yes, yes, of course you could have done the job yourself in half the time, but this way, you’re building an organization that will complete the next job for you, while you spend your time on much Greater Concerns.)

    Oddly, people will respect you for taking this approach. Admitting your ignorance builds respect. It shows you have the strength of character to admit you’re not perfect, and if accompanied by confident delegation and coaching, it turns into a development experience for those around you. And best of all, delegating will give you time to lose sleep over strategy, instead of just daily emergencies.

    Sometimes, you need to know

    Have I convinced you, yet? Good. But remember to use common sense. Sometimes, it is your job to know the answer. CEO should know how their company is doing at any moment. The VP of Sales should know the names of the three biggest customers. Functional specialists should know their content areas. If you find yourself saying “I don’t know” about things you should know, go set up systems to stay informed.

    But otherwise, say “I don’t know.” Say it proudly. Say it with confidence. You’ll discover it’s a powerful phrase that, used correctly, will unleash your creativity, give you the freedom to experiment, and help you build a strong organization rather than carrying the load yourself.

    Action steps

    1. Are you afraid to say “I don’t know?” If so, start saying in about unimportant stuff and watch the reactions of those around you. You may be surprised.
    2. Choose a problem you’re stuck on in an area you know. Now clear your mind, say “I don’t know,” and approach the problem from a mindset of knowing nothing. Play with the problem. Engage your creativity. Find out what happens.
    3. What are you doing because you’ll the best job, even though there are better uses of your time? Look in the mirror, laugh, and say, “I don’t know how to do that any more.” Then stop knowing, find someone else and let them take over. It will drive you nuts, but enjoy it.

    (1) I feel strongly about this topic. Strongly and with much random angst. See my essay “A Rant About CEOs Who Don’t Know” for a thoroughly irrational diatribe on CEO behavior. back to article

    (2) Have you seen American Idol, yet? It’s a dreadful tv show in which hundreds of talented (and thousands of untalented) singers get made into losers—nationally. But as much as I ridicule the washouts in fluorescent spandex, they had the guts to go for it in front of fifty million people. And that’s worthy of respect, spandex or no. back to article

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    Creating Your Identity as a Leader

    Becoming a Leader is a matter of identity, not position.

    Eric was about to scream. His latest plan somehow wasn’t moving forward. Once again, his employees left the planning meeting and went right back to what they were doing, as if his presentation hadn’t even happened. Eric didn’t realize that being “the boss” didn’t make him a leader. You can be a good CEO by mastering the job requirements. Leading people is not so clear cut. Leadership isn’t a job; it’s relationship. Without followers, you can’t lead. Cultivate the relationship beginning with yourself; create an identity of leadership.

    Leave Your Follower Mentality Behind

    The first step is deceptively simple: choose. You probably said “Yes” to your job as a conscious decision. Now decide you will begin leading…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!” Click here to purchase.

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    Motivating employees: Bring Out the Best in Everyone Around You

    Motivating employees: Bring out your team’s best by setting expectations—Yours!

    Who have been the leaders in your life? The people who expected you to give your best, and usually knew you could do far more than you imagined. Leaders expect the best in ways that transcend merely making demands: they expect you to exceed your limits, and somehow in their presence, you do. It’s no coincidence. Positive expectations are powerful, and you can use them to help those around you break through their own barriers…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!” Click here to purchase.

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    The Myth of Digital and Technology Convergence

    Click here to download this article in PDF format.

    I am looking at a full-page ad in the Wall Street Journal. Samsung Electronics Vice-Chairman Yun is proclaiming himself “An Ardent Promoter of Digital Convergence.” Run, don’t walk, to sell your Samsung stock. Because despite a decade or two of hype, digital and technology convergence just don’t exist … and they’re irrelevant.

    When two products converge, so the theory goes, you end up with a combined product that is somehow “the product of the future.” We have vague images of this new combined artifact taking over the world. But let’s get concrete: name two product categories that have successfully converged. Now name two more. You probably can’t, because products grow by differentiating, not converging.

    Once upon a time there was a Model T. It came in a variety of colors (black). It came in a variety of styles (one). Then some bright marketer realized, “Hey! I’ll bet Rich people would pay more for diamond-studded seats.” Thus was the upscale car was born. Color was added … and radios … and intermittent windshield wipers. The market expanded by reaching more people, and reaching more people means creating versions of the product that reach different market segments.

    A Case Study in Digital Convergence: TV and VCRs Converge (NOT!)

    Consider why the TV/VCR convergence never took off (if you currently own a TV/VCR combo, please accept on faith that you’re the only person in your town who does). TVs come in many sizes. They come with many features. The features set the price and desirability. My friend Kevin paid thousands for a surround-sound capable, high-definition plasma display TV, with picture-in-screen. I paid two-hundred dollars for a TV large enough to use as a table without ever removing it from its box. Since I really need a table, I’ve never bothered to discover its other features.

    VCRs offer variety, too: super-fast motion, slow motion, freeze-frame, dubbing capability, remote control, on-screen programming, automatic bar-code programming, etc.

    So what does the TV/VCR convergence look like? The manufacturers choose one model of TV, one model of VCR, combine them, and voila! The result appeals to the one market segment wanting those TV features and those VCR features—a tiny subset of the TV and VCR markets.

    The converged product will always offer less variety than the individual products. To offer the same variety, the converged product would need to come in models offering all the combinations of the original products’ features. If there are five VCR models and ten TV models, it would take 50 different VCR/TV combos to give consumers the same feature combinations. Manufacturers would go nuts trying to create that many product lines.

    Converged products are best thought of as a niche version of the component products. A TV/VCR combo is really a TV with an extra VCR thrown on. Or maybe it’s a VCR with a free TV. Either way, it’s a subcategory of both, not a separate category.

    Converged Products are Hard to Use

    People like easy-to-operate tools. Even if a combined product meets a market need, it will be harder to use than the originals. A personal digital assistant (PDA) / cell phone combo needs the controls of a PDA, the controls of a cell phone, and controls for the interaction between the two devices (for example, a new control telling the PDA to dial a phone number). Most VCRs can barely be programmed by people with a Ph.D.; converged devices have no hope of being easier.

    In the mid-1990s, home computers came able to function as a computer, FAX machine, answering machine, and voice-mail system. I only know one person who actually used their computer as an answering machine. Most people told me it was too complicated to figure out how to use the combined capabilities; far easier to have a separate answering machine.

    You Can’t Upgrade a Digital Convergence

    After technology convergence, technologies promptly march on. The separate technologies keep evolving … separately. Cell phones get color, digital networks, downloadable ring-tones, and interactive games. PDAs develop more memory, plug-in cards, and direct connect capabilities with home computers. The owner of a PDA/phone combo can’t upgrade just the phone or just the PDA to get the new features they want. What was once ground-breaking becomes the biggest impediment to moving to better technology.

    Technology Convergence Happens, Just Not Where We Thought

    If convergence is really a myth, why doesn’t the myth die? Because convergence is real: markets may not converge, but technologies do. If you’re reading this article online, you’re almost certainly reading it on a machine that right now can do everything a home computer, fax machine, telephone, television, and stereo can do. The technology has been converging for quite some time.

    Technological convergence can lead to great manufacturing efficiencies. I once consulted for a company that produced one high-end product. They released a low-end model by using a cheaper plastic casing and flipping an inside switch to disable some of the features. The manufacturing and inventory efficiency from having a single design was so great it didn’t make sense to have a separate low-end model!

    Alas, pundits, vice-chairmen of the board, engineers, and business writers continue to mistake technological convergence for market convergence. They believe one leads to the other. But belief doesn’t make it so: the behind-the-scenes technological development has little direct effect on how the markets develop. Tech convergence may give us more choices, more markets, and more variety, but it will do it through market expansion, not market convergence.

    Swiss army knives haven’t, don’t, and will never replace screwdrivers or knives. The technology has converged, but markets don’t care. Markets want variety: more price points, more colors, more features, and more upgrade options. Samsung may get great efficiencies from convergence, but at the end of the day, the only markets they’ll dominate with convergence are narrow niches in much larger markets.

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    Remember community in the rush to riches

    Click here to download this article in PDF format.

    It’s the holiday season, and in theory, we’re all caring for our Fellow Person. Actually, most of us are frantically shopping, hoping that the Christmas season is profitable, dreading that visit to our parents, and generally letting the happiness of business crowd out the happiness of those of us who comprise the business.

    To make matters worse, in the midst of my frenzy of buying, someone had the audacity to ask what were the best presents I’ve ever received in my life. I thought about it. All the best presents I’ve ever received were gifts you can’t buy. One of my favorites was a totally unexpected friendship card waiting for me by a crackling fireplace in the ranger’s station at the top of Mount Greylock (the highest mountain in Massachusetts). To this day, I have no idea how the card got there! And the best present I’ve ever given? A surprise party to my partner, who had never before had a happy birthday celebration. In both cases, the cost was nominal. The warmth, love, and companionship was off the charts.

    Think about that. Community. People. Relationship. Those are the things we look back on that really give us joy. So how does economics and money fit into this? Surely, it must. Though according to Dr. Martin Seligman, former president of the American Psychological Association and happiness researcher, once you’re above the poverty level, there’s no correlation between money and happiness. But our business behavior can certainly affect community, people, and relationship.

    Business and Social Responsibility—the ability to respond—are linked

    I had to take the light rail last week from Newton Center back into Boston. Newton Center’s small subway depot has since become a chain coffee shop. Although this subway stop requires an unusually large amount of change for a single trip ($2.50), the cash register proudly proclaims, “No change for subway customers.”

    I guess I just don’t understand the business rationale. Most retail businesses would kill for an entire community’s worth of foot traffic each day. You want change for the subway? Sure! Just wait by our warm, delicious impulse-buy products and we’ll make change once you’re at the register.

    Maybe they’re afraid it will be hard to supply the change. How hard is it, really? They get change regularly from the bank for their register. Next time, just stock up on quarters. It really isn’t that much additional trouble. Two additional customers a day (at gourmet-coffee prices) would pay for a part-time employee whose sole job is to do the subway change run every morning.

    But to me, there’s a deeper issue: it’s one of community and friendliness. When a store only gives change to purchasers, neighborhood residents and regular travelers won’t stop in. That means they won’t interact, and that much more community gets lost in the race to make Economic Decisions the Be-all and End-all of our existence.

    Why not give change because it’s a nice thing to do? Or because it’s the only way for your clerks, who work 60 hours a week to pay their rent, to meet other people from the neighborhood face-to-face?

    It’s the little courtesies, the little interactions, and the smiles as we join each other in our daily business that tie us together as a community. Between our walkmans, net connections, and other “time saving” devices, we’ve eliminated much of the casual communing people once enjoyed. Rather than hanging signs rejecting our community members if they won’t buy from us, why not seek to build a community where people like each other so much they want to do business?

    Start now. And it’s a great time of year to try out the theory that community matters. You have a built-in excuse: if someone notices you putting people and relationships first, you can always blame it on the holidays.

    Remember Community in the Rush to Riches

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    Warren Buffett on CEO Measurement

    Reprinted from the 1988 Berkshire Hathaway Annual Report.

    Their performance, which we have observed at close range, contrasts vividly with that of many CEOs, which we have fortunately observed from a safe distance. Sometimes these CEOs clearly do not belong in their jobs; their positions, nevertheless, are usually secure. The supreme irony of business management is that it is far easier for an inadequate CEO to keep his job than it is for an inadequate subordinate.

    If a secretary, say, is hired for a job that requires typing ability of at least 80 words a minute and turns out to be capable of only 50 words a minute, she will lose her job in no time. There is a logical standard for this job; performance is easily measured; and if you can’t make the grade, you’re out. Similarly, if new sales people fail to generate sufficient business quickly enough, they will be let go. Excuses will not be accepted as a substitute for orders.

    However, a CEO who doesn’t perform is frequently carried indefinitely. One reason is that performance standards for his job seldom exist. When they do, they are often fuzzy or they may be waived or explained away, even when the performance shortfalls are major and repeated. At too many companies, the boss shoots the arrow of managerial performance and then hastily paints the bull’s-eye around the spot where it lands.

    Another important, but seldom recognized, distinction between the boss and the foot soldier is that the CEO has no immediate superior whose performance is itself getting measured. The sales manager who retains a bunch of lemons in his sales force will soon be in hot water himself. It is in his immediate self-interest to promptly weed out his hiring mistakes. Otherwise, he himself may be weeded out. An office manager who has hired inept secretaries faces the same imperative.

    But the CEO’s boss is a Board of Directors that seldom measures itself and is infrequently held to account for substandard corporate performance. If the Board makes a mistake in hiring, and perpetuates that mistake, so what? Even if the company is taken over because of the mistake, the deal will probably bestow substantial benefits on the outgoing Board members. (The bigger they are, the softer they fall.)

    Finally, relations between the Board and the CEO are expected to be congenial. At board meetings, criticism of the CEO’s performance is often viewed as the social equivalent of belching. No such inhibitions restrain the office manager from critically evaluating the substandard typist.

    These points should not be interpreted as a blanket condemnation of CEOs or Boards of Directors: Most are able and hard-working, and a number are truly outstanding. But the management failings that Charlie and I have seen make us thankful that we are linked with the managers of our three permanent holdings. They love their businesses, they think like owners, and they exude integrity and ability.

    Reprinted with permission from Warren Buffett from Berkshire Hathaway
    annual report, 1988

    Copyright © 1988 Berkshire Hathaway and Warren Buffett.

    Warren Buffett on CEO Measurement.
    Reprinted from the 1988 Berkshire Hathaway Annual Report.

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    What is a CEO’s job?

    This article is now available in its original 4-part publication. You can find the first segment at: ceojob1.htm.

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    Posted in CEO, Entrepreneurship, Leadership | 13 Comments

    The Joys of Power Yoga

    I’m a big advocate of life balance. Yoga is often held as a good way to relax, become flexible, and build balance for overstressed professionals. Since I like to put my money where my mouth is, I decided to try it. Being generous, I thought I would share the experience. After all, misery loves company.

    It’s better than weights

    Until three weeks ago, I went to the gym. The results were decent, but my muscles are tight enough to play violin with my thighs. My physical therapist decreed, “Build strength and flexibility! Try Yoga.” At first, my vanity refused. A brawny manly-man like me, doing a sissy-man workout like yoga? Not likely. But then I took a good look at two guys in yoga class. They look strong. They look flexible. And rather than the muscle-bound “hours at the gym” look, they actually look healthy. Most importantly, they looked like they stepped out of an Abercrombie & Fitch catalog. Suddenly giving yoga a chance seemed … necessary.

    It’s great in the summer

    At Baptiste Power Yoga, it’s summer year-round. Even in summer. They keep the room heated to 85 degrees. When I walked in, people were stretched out on their mats, already looking exhausted. Class hadn’t even begun. They claim that heat promotes flexibility; when your body collapses from heat exhaustion, formerly impossible poses become trivial.

    It’s the heat and the humidity

    Did I mention heat and forget to mention the humidity? They keep studio nicely humid. So humid, you sweat. A lot. Not sissy-boy sweat, like you might get running a marathon, or a 3-minute mile. No. This is real sweat, manly sweat. Enough to soak two beach towels through and through. Rivers of sweat which carve canyons in the wooden floor. Enough sweat to make your fingers into prunes. If I’d had any room left for conscious thought at the end of class, I would have been totally grossed out. As it was, the sweat gently cushioned my fall as I collapsed on my mat.

    It’s all about posing

    So what do you actually do in practice? Mostly you do what they euphemistically call “poses.” Most “poses” are based on medieval torture devices, minus the spikes. You gently flow into a pose and hold it. What could be simpler? Alas, the poses were invented by a placid 13th-century monk with a well-hidden sadistic streak. Assuming you can get into the position (I kid you not; he actually said, “Now gently allow your foot to drift up and across your back and touch the top of your head”), holding it is the fascinating part.

    Try this: bend at the waist and put your hands flat on the floor, keeping your feet flat on the floor as well. Make sure your back, neck, and arms are in a line. You’re making a big triangle, with the floor as the base of the triangle and your hips at the point. Use a mirror to make sure your butt’s way up in the air and all the lines are straight. Simple, eh? Now hold that for five minutes. Keep those heels on the floor. Keep those hands on the floor. Press down through the heels and palms. Straighten your back. And breathe gently, enjoying life.

    Congratulations. You’re in “downward dog.” What could be easier? After about a minute, you’ll start to pant, easily. Arf. Arf. After two minutes, you’ll be about to collapse. But you’ll be so placid, you won’t be able to tell which body part is weakening. Maybe they all are. At three minutes, you’ll start howling. Now, you’re fully in touch with your inner dog. When your muscles give out totally, collapse into my favorite: “child’s pose.” In a cruel twist of fate, the English word “child” is Sanskrit for “collapsed in a senseless, gasping heap of sweat.”

    Yoga masters hold these poses for decades. It isn’t common knowledge, but the word YOGA itself stands for “Years of Gravitational Agony.” For obvious reasons, you won’t find this in the brochure.

    It’s something everyone can do

    They say Yoga is about process,not results. There is only body, awareness, and breath. We don’t compare ourselves to others. That could get discouraging. The young man behind me is doing a perfect “downward dog,” but has lifted one leg, bent it at the knee, and is managing to rotate his torso 270 degrees with flat palms and feet. And he’s smiling. shudder And pay no attention to the 90-pound woman to my right, who bounces onto one foot and bends so far backwards she can lick the middle of her upper back—as she massages her scalp with her other foot. While the rest of the class tosses their legs deftly behind their heads, I’m working to get my hands behind my head. But I’m OK with that. Really.

    It’s good for you

    That 90-pound woman is typical. It’s always 90-pound women who swear by Yoga. There’s a reason. They used to be 215 pound men. Yoga did that to them. It’s relentless, brutal, and takes no prisoners.

    But you know what? In six weeks, that could be me, licking my upper back. It might take a special effects crew and dim lighting, but it could happen. After going four times a week for three weeks, I’ve realized that the human body, when subjected to absurd torture, can compensate. My energy level is up, my posture is better, and I’m walking better. I’ve lost about 1/2 inch of waistline, and my abs are becoming visible for the first time in my life. I’m noticeably more flexible, more relaxed, and am moving more fluidly. I have never done anything which has had such a profoundly positive effect in so short a time. And that keeps me going. And as they claimed, the more I go, the easier it gets. After three or four months, I expect to be able to make it through the entire class without taking a break.

    The body is what I really want. A yoga body looks naturally trim and fit. Frankly, it looks healthy without being excessive. And a yoga master can lick the back of their kneecaps from a standing position. That has possibilities.

    I’m convinced! Sign me up!

    Give it a shot. It really is amazing. But if you’re going to try it, commit for a few weeks. Make sure you do enough to get to the point where you begin to experience moments of being able to relax and breathe. The first few weeks are tough, but there’s definitely light at the end of the tunnel. You won’t be able to see it—the backs of your knees will be blocking your view—but you’ll be able to feel it. And your life will never be the same.

    You can find Baptiste Power Yoga at http://www.baronbaptiste.com.

    Author’s note: The woman licking her back was an exaggeration, but not by much. The heat, sweat, and spending a third of the class time collapsed in a heap are all accurate. For now.

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    Building an Internet Business

    Roles, processes, and concepts to know if you’re going to be starting your own Internet business.

    Internet businesses are the hottest startups around in late 1999. What makes them unusual is that they’re technologically based business, yet the founders come from marketing, strategy, or other non-technical fields. The technology is simply an infrastructure issue, but it’s a big one.

    This paper outlines some of the basic concepts for aspiring web entrepreneurs: How does the web site design process work? What are the design and technology roles that need to be filled in a company? And how does the type of your business affect your technology needs? There’s also a resource or two for web design.

    How does the web site design process work?

    Five skill sets are needed to construct a web site. Sometimes you will have different people for each skill. Less common is finding one person with multiple skills. It’s almost impossible to find a single person who can do all phases of development. (Which is why a site designed by a one-man shop usually looks as if it were designed by a one-man shop.)

    Graphic design: the look and feel.

    The most visible part of the site design is the graphical look and feel. This includes the color choices, the graphics, logos, and shapes that appear on the screen, and the positioning of the design elements on the screen.

    Graphic design is best done by someone trained in graphic design (or has a naturally good eye). Web sites designed by non-designers look that way. And they don’t look professional.

    Graphic design is enough for producing great looking print media, but graphic design is not enough when you are building a web site.

    User Interface design: the sequence of screens and controls.

    Web sites, unlike print media, are interactive. A graphic designer can make the page look pretty, but they may be clueless when it comes to interface design. An interface is the set of controls, links, and buttons that a visitor to the site will use to navigate around the site.

    Interface design is all about cuing the visitor how to use the site. Where on the screen will controls be? Where will menus go? How does your visitor know to click somewhere? For example, it would be an interface design question to decide that main menu choices are always visible along the left edge of the screen. And subchoices appear along the bottom. Interface design also includes deciding when to use buttons vs. checkboxes vs. type-in boxes, etc. to interact with the user.

    Good UI design involves usability testing, as well. Usability testing tries to make sure that a site really is easy to use, often by having real customers experiment with the site while being watched by the team designing the site.

    As a general rule, the only authority on a site’s usability is the your target population. The team that works on the site is far too close to it to know how intuitive it will be to a new visitor.

    Information architecture: the path through the site.

    While the interface design dictates navigation within a page, information architecture decides how a visitor will navigate around the site. Information architecture chooses the main menu choices—how many, and what they are. Information architecture design uses the business goals of the company along with usability considerations to decide how to divide content across the web site.

    During an information architecture discussion, decisions would be made such as whether a site should be organized around constituents or functionality. For example, an information architect could propose the following different ways to organize a travel agency‘s web site. In each case, the site has the same functionality, but getting to the functionality would be a very different experience for the user:

      Organization 1 Organization 2
    Business goals
    • Reduce staff phone time.
    • Encourage people to think about vacation packages.
    • Provide immediate, quick information.
    • Establish personal relationships with clients.
    Main menu
    • Vacation packages
    • Business trips
    • Personal trips
    • Make reservations
    • Search for a flight
    • Contact an agent
    How visitors contact agents

    Three menu clicks:
    1. vacation package
    2. custom vacation
    3. contact agent

    One menu click:
    1. contact an agent

    HTML and programming: the clockworks inside

    Once the site has been mapped out and the design finalized, the images and text that make up the design have to be created and put together into HTML (the computer markup language used to create web pages).

    If the site is more than unchanging pages of text (“static pages”), then the programming and HTML writing is the site is made “active“ and able to do something more than be a color brochure.

    System integration: connecting elsewhere

    Often a web site may have to connect to other computers. System integration is the process of establishing the links between your web site and other systems, and making sure that the right data gets sent between the systems at the right time. For example, a web site that does catalog sales may take orders from the internet and enter those into the catalog‘s manual order entry and financial systems.

    What are the roles that need to be filled?

    The different web site design phases described above are typically done by different people. You can have one person perform more than one of the tasks, however. Or, you can skip tasks to bring your site to market more quickly.

    Most one-person or very small web design houses provide mainly graphic design or programming expertise. If you use such a shop, make sure you think about the information architecture, usability, and interface design yourself. With very few exceptions, programmers make lousy interface designers—they aren’t very good at understanding how the rest of us think(1). And graphic designers, while they can create beautiful things, don’t always have a good sense for how a user will move through a site interactively.

    You can hire a high-end web design shop such as Zefer, Viant, or Scient. These firms will do a business case analysis and create a site whole information architecture, user interface, and graphic design combine to support your business case. They will also charge as much for your twelve week web design project as it cost to launch the entire company. Of course, they‘ll have it done in twelve weeks, while bringing the expertise in-house will take much longer.

    If you do choose in-house development, you will need the following roles filled. One person may fill multiple roles:

    Artistic director
    The artistic director controls the ultimate graphic design, “look and feel” of the site. An artistic director usually has a background in graphic design.
     
     
    Graphic designer
    The graphic designer actually creates the design for your pages. It‘s a good idea to make sure you use a graphic designer who is familiar with the constraints of the web. Online design has different requirements than paper design, thanks to considerations like download times and restricted color choice. (See the book The Non-Designer’s Web Book by Robin Williams for more details.)
     
    User interface designer
    A user interface designer may come from a training or design background. Make sure they understand what makes things easy to use, especially on the web. Ask them what they think of Jakob Nielsen and his AlertBox usability column. If they say “Jakob who?” be skeptical.
     
    Information architect
    User interface designers will often give a lot of thought to information architecture, as well. A background in writing or editing can be helpful for an information architect, since writing involves organizing information over several pages into a logical presentation sequence.
     
    Programmer (Java, JavaScript, C++, etc.)
    Whether you need a real “heavy-hitting” programming staff depends on the complexity of your project. If your site interfaces with many outside systems and requires a lot of customer programming, it will pay off to hire some really top notch programmers (and be prepared to pay top dollar for them; every web site builder in the world wants these people right now).
     
    If your system has many links to outside databases and systems, look for someone with prior experience in systems integration. If the system will be largely self-contained, you probably want someone with database and programming expertise.
     
    Database programmer
    I’m not sure this is a separate position. But if you are doing heavy database work (millions of transactions a day), you will be using specialized, high-end databases. These databases often require specialized knowledge to set up and use. While most good programmers can eventually pick up the knowledge, having someone who has mastered them before can be helpful.
    HTML coder
    HTML coding is a junior job. The trick with HTML however is that it’s tough to get things to look right on all browsers. A layout that looks great on Netscape 4.6 might look horrible on Internet Explorer 5.0. Ask prospective HTML coders about what they do to make their layouts look good on all platforms. If you want to be really tricky, ask them why it’s a good idea to have no line breaks inside a <td> tag in Netscape. If they have an answer, it’s a good sign.
     
    System administrator
    A system administrator keeps your machines and internal network up and running. They do things like install software, help you when your machine mysteriously crashes, and set up your email system. By the time you have 15 people in your company, you will probably need a full-time system administrator.
     
    A common mistake Internet startups make is to have their programmers serve as system administrators. In fact, the two have overlapping but distinct skill sets. And system administration is rather generic, while the building of your web site is unique to you. Get a separate system administrator. You will be glad you did.
    System architect
    This is the person who has the overarching technical vision for how all the pieces go together, programming wise. It is typically a single person, and usually a senior software engineer. It is rare in a startup to have a system architect who is not also writing code (though it certainly happens).
     
    Project manager
    Probably the least appreciated technical position is project manager. Hire someone who has run technology projects before, and can also understand the business goals and objectives. Hire someone who has the strength of will to say “Not until our next release cycle” to you when you rush in with a “must-have” feature at the last minute.
     
    High tech projects are utterly notorious for being over budget and very late. Several books have been written about the subject and still no one listens, because managers generally don‘t want to accept that something as ephemeral as programming can take that much time. A good project manager will help you balance your optimistic goals with the reality needed to make sure you have a product to ship.
     
    A good project manager will be able to tell you about “QA” (quality assurance), release management, where common pitfalls are in technology projects, and how to schedule a tech project.
    (You may wish to read the Inc. Technology article on hiring technical people for your business.)

    How does the type of your web site affect your technology needs?

    The more complicated your web site, the more you will need sophisticated technical people. In increasing order of complexity, here are the kinds of site you might create.

    Brochures. An online brochure is the simplest site to create. You will need good design talent, but the only technical talent you will need is an HTML coder.

    Off the shelf shopping carts. A simple ordering system created with off-the-shelf software will require a programmer, but probably a junior programmer will suffice.

    Your own application. If you’re doing something that involves custom development, you will almost certainly need a project manager and at least one good programmer. Even if you are outsourcing your development, don’t underestimate the need for a full-time person whose job it is to manage the project.

    An application that integrates with legacy systems, or systems owned by other companies (your clients’ or partners’ systems). Applications with a high system integration component often require a full complement of technical talent: project manager, system architect, senior programmer, junior programmer, and HTML coder.

    What are resources for web projects?

    For web site usability, the best site on the Internet may well be Jakob Nielsen’s AlertBox site. It has more research-supported information about how to make your site usable than any other site around. Nielsen also has an article describing how you can do usability testing quickly and cheaply.

    For graphic design, check out A List Apart, a site devoted to understanding graphic design on the web.

    For usability testing, check out the company User Interface Engineering at www.uie.com.

    For HTML tricks and tips, Dave Siegel’s web design page is a good one (though somewhat dated).

    Good Luck!




    (1)
    If you’re a programmer, please don’t take offense. I was a programmer for 14 years, myself. I’ve met a couple good programmers / UI designers, but most of us are just too close to the programming to understand what truly is and isn’t easy for other people to use. return to text

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    A Venture Capital panel discussion Q&A, by Stever Robbins

    Answers to some questions about venture capital

    This page contains several different Question & Answer sessions with Venture Capitalists.

    Panel discussion of women Venture Capitalists

    Venture Capital is one of the sexiest forms of financing a business. It’s also one of the most expensive. I attended a wonderful presentation last night where a panel of VCs answered questions about their business. Many of the questions were things that people ask me when considering whether and how to pursue venture money. The answers to these questions come from Karin Kissane of TTC Ventures, Marcia Hooper of Advent International, and Vernon Lobo from Mosaic Venture Partners. I am extremely grateful to them for their excellent presentation.

    What do VCs look for in a business plan?

    VCs are searching for a business opportunity. Your plan has to convince
    them that you have what it takes to turn an idea into a breathing,
    viable enterprise:

    • Management Talent
    • A good market
    • A product
    • Support networks (e.g. other VCs, professional contacts, employees, etc.)
    • Deal Structure

    The biggest convincers for a business plan reader are demonstrations of your competence. If you have a management team with real experience who have successfully launched a company in the same industry, you’ll be credible. If you have customers who have paid money for your product, you’ll be credible. If you have a clear presentation of your opportunity that shows you have a deep understanding of what it will take to make the business succeed (strategically and tactically), you’ll be credible.

    If all you have is a good idea, no paying customers (or just letters of intent with no money behind them), no prior experience as an entrepreneur, and a shallow plan, you aren’t likely to make it past the first cut.

    But I don’t know how to put together financials. Who knows how much I’ll sell?

    Your business plan isn’t a crystal ball. You aren’t expected to predict the future. You’re expected to understand the size of the opportunity. If your product is useful at most to 1,000,000 people, they will pay 10 cents for it, and they only ever buy one, the total the company can ever make is $100,000 with 100% market penetration. Not a terribly attractive opportunity.

    That said, decent financials show that you understand how the opportunity will unfold and what it takes to make it happen. By all means, bring in professionals to help you do the financials if you aren’t comfortable doing them yourself.

    Should I have someone write my business plan for me?

    VCs understand that not everyone is good at everything. When it comes to putting together detailed financials, or polishing the actual writing, bring in help. But when it comes to understanding your business-the market, the customers, and the product-you need to demonstrate that you understand the opportunity. Look for comparables.

    I’m a visionary. I don’t have time for all that business plan and market research stuff. I just have a great idea. What should I do?

    Team up with someone who has the skill to do all that thinking. VCs won’t invest in a team that doesn’t have time to scope out their opportunity. You don’t need to be the research arm of an investment bank, but you do need to show that you know who your market is, how it is segmented, the size of your opportunity, who your competitors are, and why you will succeed in that environment.

    I don’t know who my competitors are.

    Then find out. Buy competing products and investigate the manufacturers. Do web searches. Call reference librarians. And think broadly about who your competition is. Rolex doesn’t compete with Timex. Rolex competes with Mercedes Benz. Because Rolex isn’t in the watch business, they’re in the luxury status symbol business.

    But we only need 10% of the market to be profitable…why won’t they fund me?

    The other 50 funded companies who are developing competing ideas also need just 10% of the market apiece. Unfortunately, that adds up to 500% of the market. Is this a market you want to enter? If so, you need a persuasive case that you have a real advantage over those other companies. Otherwise, you’re just another generic gamble.

    How long a time horizon do VCs have for their investments?

    It used to be 7-10 years. Then it shortened to 3-5. In recent years, it’s become 1-5. It varies dramatically. One thing is sure, though: as internet time has begun to pervade the economy, VCs are expecting a quicker and quicker harvest.

    In part, it is a function of where in the fund cycle the investment is being made. If it is at the beginning, there is obviously a lot more time than if it is the last investment in the fund. Although investors are always impatient, my [Vernon Lobo’s] personal bias is not to have funds come back as quickly as you have described. If I believe additional shareholder value, (in excess of a hurdle rate) can be created by continuing operations, I’d rather wait

    How big an investment do VCs make?

    Bigger all the time. More people have been investing in VC funds, and they have made huge sums which they are reinvesting. With such large funds, they opportunities to invest $3-$5 million at a time, in order to keep all that money productive. If you need less money, Angel Investors may be the way to go.

    In addition, it may be better if the $3-$5 million is is staged in. I find that some entrepreneurs decide to ask for $5 million because they think that is what they have to ask for to get the VC’s attention, when all they really need to get going is $1 million. In the end, it is probably better for the entrepreneur (from a dilution standpoint), to take less up front, and stage in the capital, (as long as they meet their plan).

    How big an opportunity do they need?

    Many VC’s now are looking for a company that can grow to become at least $100 million (if not several hundred million) in revenue, and hopefully many multiples of that in value! If it doesn’t have that kind of potential it is not that exciting.

    What kind of return do VCs need?

    VCs need a high rate of return. Remember their business-they have investors that they are responsible to. With NASDAQ producing 50% returns, to be competitive, VCs need to offer their investors 70-80% returns.

    But the situation is even worse. VCs have their share of failed investments. Their successful investments have to pay for the failed investments too, driving the returns they need on any single venture even higher.

    On the other hand, one VC takes issues with the whole ideas of “target return.“ He writes, “We don’t have a “target” return. We don’t target a return any more than the entreprenuer does. When she/he starts a business, they usually don’t lay out a target return. Our philosophy is to become partners with the entrepreneur, so our objectives are the same…. We hope to make a lot of money!”

    What do VCs want in a CEO?

    Sales skills, the ability to attract the right team, an understanding of customer and markets, and flexibility. The business plan will change as the business and markets develop, and a CEO needs to be able to spot opportunity and steer the business to a successful (though perhaps unexpected) conclusion.

    What’s the competiton for VC funding?

    Advent International receives 10,000 business plans each year. They fund 30. You do the math.

    What’s the best way to submit a plan to a VC?

    Personal connections. One panelist couldn’t think of any unsolicited plans that her firm had funded. Another said some unsolicited plans had been funded, but she couldn’t remember who.

    In short, work your network. The impression they gave is that unsolicited plans are virtually a waste of paper. But VCs do talk to each other. If you get your plan in one door, even if it doesn’t fly there, it may get passed around to other firms who will want to invest.

    Do I have to tell VCs which other funding sources I’m talking to?

    Nope. Keep ‘em guessing. Late in the process, they will have to know so they know who their co-investors are. But there’s no need to be too specific in the early discussions.

    What if a VC is already funding a competing venture? Will they sign a nondisclosure before looking at my plan?

    Nope. You have to trust them. They have incentive to Do The Right Thing; their reputation is all they have. But legally, you’re on your own. They may sign an NDA (non-disclosure agreement) if you have a compelling trade secret, or late in the due diligence process.

    An executive summary is a good way to summarize your opportunity without giving away proprietary details. Since a VC isn’t likely to read a plan in great detail if the executive summary doesn’t grab them, spend enough time on the summary and if you can pique their interest without revealing trade secrets, the NDA may be possible later.

    How many VCs should I bring into the deal?

    More VCs mean more connections and more resources for you to draw on. Two or three is a good number to have on board.

    What should I look for in a VC?

    Look for personality and fit with the partners who will be on your board. Personality clashes have destroyed companies; it’s better to wait for a good fit than to accept quick money with someone you can’t work with.

    It is also perfectly acceptable to ask your venture capitalists for references. Ask for:

    • a current portfolio entrepreneur
    • a past entrepreneur whose company failed
    • a past entrepreneur whose company succeeded
    • a past entrepreneur who got booted from their company by the VC

    Good Luck!

    *****

    Red Herring Interviews

    Red Herring has published some excellent interviews with Venture Capitalists about what VCs look for in a plan. In addition to VentureCoach VC Q&A, check out:

    Benchmark Capital’s Andy Rachleff interview parts 1&2:
    http://www.redherring.com/insider/1999/1124/vc-vcps.html
    http://www.redherring.com/insider/1999/1201/vc-vcps.html

    Divine Interventures’s Mike Santer interview 1 & 2:
    http://www.redherring.com/insider/1999/1117/vc-vcps.html
    http://www.redherring.com/insider/1999/1120/vc-vcps.html

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    Things I’ve learned about stock … the hard way (this is a paper I wrote for a friend in the late 90s)

    Click here to download the PDF file of Things I’ve learned about stock … the hard way (this is a paper I wrote for a friend in the late 90s).

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    Things to Know about Stock vs. Options

    This page is based on personal experience, and is based on what I know of American tax law. I am not a lawyer, however, and can not claim that this information is currently accurate. Use it at your own risk.

    See also a paper on stock I wrote for fellow employees of a company several years ago. It covers a bit more material, and goes into more depth on some topics.

    Terms to know

    stock Ownership of part of a firm.
    options or ‘non-qualified’ options The right to buy or sell stock at a predetermined price. For example, you might have an option that gives you the right to buy IBM at $100/share, even if it’s selling for $150/share..
    strike price The price at which an option lets you buy stock. In the above example, $100 is the strike price of the options.
    market price The price at which stock is selling on the open market. In the above example, $150 is the market price of IBM stock.
    vesting You rarely receive stock or options all at once. Rather, you receive shares/options as you meet certain milestones. Stock whose milestones you’ve met are considered “vested.”
    vesting schedule The schedule over which shares or options vest. Often, a person receives a certain number of shares each quarter or each year. A typical vesting schedule might be, ËYou receive 10,000 shares over 4 years. 2,500 shares vest on your first anniversary, and the remaining 7,500 shares vest in equal monthly amounts for the following three years.Ó
    dilution When new shares are issued in a company, it ËdilutesÓ the value of the existing shares. For example, if you own 100 shares of a company with 1,000 outstanding shares, you own 10% of the company. If the company issues an additional 1,000 shares to investors, there are now 2,000 outstanding shares. Your 100 shares are now only 5% of the company. This is called dilution.
    registered shares When a company is public, its shares are registered with the SEC. Private companies issue non-registered shares, which often can’t be sold or turned into money.
    incentive stock options (ISOs) Options which get special tax treatment: they create no tax event when exercised, but are taxed when the stock is sold. if the stock is held for more than a year, they are taxed at the long-term capital gains rate, rather than the normal income rate.

    When exercised, ISOs can subject the owner to the “Alternative Minimum Tax,” which can be substantial.

    You can get paid in stock or in options. If you get paid in stock, you actually receive shares of a company’s stock. If you get paid in options, you receive the right to buy the stock later, at a set price. If the stock is selling on the open market for more than the strike price, you can exercise the option, buy the stock for the strike price, and then sell it immediately for the market price, pocketing the difference as profit. The lower the strike price, the more profit you make.

    Options are often issued with a strike price equal to or 10% lower than the market value of the stock at the time the options are issued. That means that the maximum profit the option holder can realize is movement in the stock price after the time options are issued.

    Cash flow & liquidity

    With stock, there are no cash flow concerns. Once you own the stock, you own it. With options, however, you need to come up with the money to exercise the options. This isn’t always easy. If you have 10,000 options with a strike price of $5, it will require $50,000 to exercise those options and buy the underlying stock.

    “But why is that a problem?” I hear you ask. “After all, you’d only exercise options if the stock were selling for more than the option strike price. Can’t you then just sell enough of the stock to cover the $50,000?” Ah, if only it were that easy…

    Liquidity

    You can’t sell stock in a non-public company. So unless your company is publicly traded, the stock you get (either directly or by exercising options) is just pieces of paper, unless the shareholder’s agreement gives you permission to sell it to third parties. Rarely—and never in a venture backed by professional investors—will you be given that ability.

    As I write this (8/99), there is also a holding period on shares of stock in non-public companies. The holding period can range from 6 months to 3 years. Even if the company goes public during that time, the holder of pre-public shares can’t sell until their holding period expires. The intent of this is to prevent monkey business in which insiders are allowed to purchase pre-public shares immediately before an IPO and then turn right around and sell them. In fact, there is currently a strong movement in congress to eliminate the holding period.

    [Author’s editorial opinion: eliminating the holding period will probably encourage all kinds of game playing and profit-taking. Philosophically a believer in businesses being value-creators, rather than transient-paper-profit creators, I favor keeping the holding period. Yet as someone who may someday be in a position to benefit from its elimination, I find my principles put sorely to the test.]

    Tax implications

    To make matters worse, taxes can cause a cash flow issue in all of this. Here’s a summary of how the taxes work:

      early tax hit later tax hit
    options

    When you exercise the options, the difference between the option strike price and the market price of the stock is treated as normal income, taxable at your full tax rate.Your full tax rate can be quite high, once state and federal are both taken into account.

    For example, if you exercise 10,000 options to buy XYZ at $5, when the stock is selling for $7, that counts as $20,000 of taxable income even if XYZ is a non-public company.

    When you sell the shares you acquired by exercising your options, any up or down movement in the share price since the date of exercise counts as a capital gain or loss. Capital gains/losses are taxed at a much lower rate than ordinary income.

    If you later sell your XYZ shares for $9, that counts as a $2 capital gain (the fair market value was $7 when you acquired the shares).

    incentive stock options No tax hit when exercised.

    Possibly subjects you to the alternative minimum tax (AMT).

    When you sell the shares, the difference between the strike price and the share price is taxed. If the shares have been held for less than a year, the normal income tax rate is used. If they have been held more than a year, the capital gains rate is used.
    stock

    If you are receiving actual stock shares that vest, the moment they vest, the amount vested becomes treated as normal income, taxable at your full tax rate.

    When you sell your shares, you realize a capital gain or loss on any movement in share price from the time that you acquired the shares.

    The big "gotcha" type tradeoffs:

    If you want compensation that vests over time in a private company, stock may be a poor choice. As each block of stock vests, it constitutes taxable income equal to the fair market value of the stock at the time of vesting (not at the time the contract is written). So if the company is doing really well, the 5,000 shares that vest this quarter could be worth $10/share, giving you $50,000 of taxable income. But since the company is private, you can’t sell the shares to pay the taxes. You have to come up with the cash to pay the taxes some other way.

    Options are more palatable, but they introduce a quandry. In a private company, you would like to exercise your options as soon as possible. You will start the liquidity counter ticking early, so your holding period will be over by the time the stock is tradeable. And if your options are not incentive stock options, they will generate a normal income tax rate hit. You also want to take that hit (which happens at exercise time) on as low a stock value as possible, and have most of your gains happen as a capital gain or loss.

    But on the other hand, you might not want to exercise your options until the company goes public. The shares you receive from the exercise will be fully liquid, and you can trade them immediately. But your entire gain (market price minus strike price) will be taxed as normal income. That can be a huge incremental tax burden.

    Whether to exercise options while a company is still private is a complicated, individual question. The answer depends on your regular tax brackets, your capital gains brackets, how long you think it will be until the stock goes public, and how much money you have to pay taxes on the options exercise.

    Other Questions

    What if the company never goes public?

    Well, then you have to find someone to buy your shares if you want to make any money off them. Sometimes the shareholder’s agreement will let you sell your shares to anyone, while other times it only lets you sell your shares back to the company or to other shareholders.

    What happens if more stock is issued to give to new investors?

    Your shares get diluted. If you are in a very powerful negotiating position, you may be able to get an anti-dilution provision, which lets you maintain your percentage ownership in the firm even when new shares are issued. If this is your first job out of college, don’t bother asking.

    What if the company gets bought out while I own options or stock?

    This depends on your agreement and the terms of the sale. An IPO or acquisition can drastically change a company, effectively making it a different place than you signed up to work in originally. If you can swing it, the safest thing to do is to require that your options or shares vest immediately upon a public offering or acquisition.

    How much should I ask for?

    As much as you can get. A few very, very rough rules of thumb: by the time a company goes public, the VCs and investors will own around 70% and the original owners and employees will own around 30%. What matters is not how many shares you have, but what percentage of the company now and at IPO/acquisition time you own.

    If you believe that the company will be worth $100,000,000 someday, and you will own .5% of the company at that point, your share will someday be worth $500,000. If you took a $20,000 pay cut for 5 years in exchange for that equity, you essentially exchanged a guaranteed $100,000 salary for a risky $500,000 in stock. It’s up to you to decide if that tradeoff is worth it.

    Think this through! I have seen people take a $30,000/year pay cut in exchange for stock that was worth $60,000 after two years. They effectively traded salary for equity without getting enough stock to compensate them for the risk they took or for the fact that it took two years before they saw the money.

    Keep in mind that subsequent funding rounds will dilute you. What matters is the percentage you own when the company goes public or is acquired. The percentage you own today may be less relevant.

    They offered 3,000 options. Is that a good deal?

    Maybe. It depends what percentage that is of the company. If there are 30,000,000 outstanding shares, you’ve been offered .01% of the equity. If the company is the next AMAZON.COM, you’re set for a lifetime if you’re a careful investor. If the company is Joe’s Garage and Fried Chicken Joint, you might want to reconsider. (See the essay on Equity Distribution to get an idea of what percentages are good percentages.)

    Remember: it’s the percentage you own, not the number of shares that matters! If they say they can’t reveal how many shares are outstanding, or won’t tell you what percentage ownership your shares represent, run, don’t walk, in the opposite direction. You are investing your time and reputation with the company. Any aboveboard company would instantly reveal those numbers to a monetary investor. If they won’t reveal them to you, it’s probably because they are making a lousy offer.

    Without knowing the percentages, you can not evaluate the value of your options. Period. Companies split their stock immediately before going public, or they reverse-split their stock, to adjust the share price. You may have 30,000 options today, but a pre-IPO reverse split of 1-for-2 will leave you with just 15,000 shares after the IPO. (This happens. It’s rare, but it happens. Two companies whose IPOs I’ve been privvy to had pre-IPO reverse splits. One was 2-for-3, the other was 1-for-2 reverse split.)

    Once you know what percent you own, find the value by multiplying the expected company valuation by your percentage ownership at IPO. Remember that the IPO itself dilutes all shareholders. Then multiply the result by 2/3 to find out how much you’ll have once you’ve paid your taxes.

    I’ve heard companies say, “The percentage doesn’t matter. After all, regardless of percentage, 3,000 shares when the stock hits $100/share, is $300,000.” True. But how do you know that 3,000 shares today will still be 3,000 shares at IPO? And what would the whole-company valuation have to be to justify a $100 per-share price? That’s why it makes more sense to talk company valuation and percentage ownership at IPO.

    Does the company care if they give me stock or options?

    They may, but if they do, it is only because of the accounting treatment or administrative overhead of giving out stock. Either way, they are giving you ownership or an option of ownership in the company.

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    Anecdote on Quality of Life

    The American businessman was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

    The Mexican replied, “only a little while.”

    The American then asked why didn’t he stay out longer and catch more fish?

    The Mexican said he had enough to support his family’s immediate needs.

    The American then asked, “but what do you do with the rest of your time?”

    The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, senor.”

    The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City where you will run your expanding enterprise.”

    The Mexican fisherman asked, “But senor, how long will this all take?”

    To which the American replied, “15-20 years.”

    “But what then, senor?”

    The American laughed and said “that’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”

    “Millions, senor? Then what?”

    The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

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    Pull Leadership Manifesto

    Leadership isn’t about giving orders. It never has been. It’s about making yourself so attractive that people want to follow. This Manifesto lays out how you can stop pushing your agenda and instead become a “Pull Leader.” Download the manifesto in PDF form from this link: http://www.steverrobbins.com/resources/pull-leadership.pdf.

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    Mastering Overwhelm at Work!

    My name is Stever Robbins, and I’m here to confess: I’m an overwhelm wimp.

    Give me more than three things to handle at once and pop, my head explodes. It’s not just me?everyone seems to be suffering from daily overwhelm. At best, we flounder. At worst, we shut down entirely. You can’t be effective running ragged, living surgically connected to your cell phone, and cutting short every meeting because you’re way too on-the-run. If being the center of attention makes you feel important, go for it. Personally, I’d rather be sane.

    I’ll warn you in advance: this article is about what’s good for you, not what’s good for business. How can you take care of yourself amidst the chaos?

    Surviving in the moment

    When overwhelm crashes down, your emergency rip cord is to physically take a break. Grab something to eat, walk around the block, and get away! Breathe deeply, with a long, slow exhale. And lean forward. I don’t know why, but leaning into overwhelm makes it less overwhelming.

    Once you’ve calmed a bit, consider taking longer-term steps to recover your life. Overwhelm comes from too much, too fast. The solution is learning to say “no,” keeping firm boundaries, and going easy on yourself when you are not superman or woman.

    If you choose sanity, step one is changing your thinking. Rather than worshipping productivity and efficiency, remember that there’s more to life than living it efficiently. There’s family, quality of life, joy, love, spirituality, and community, for starters.

    Some of the following anti-overwhelm suggestions will be heretical. They’ll actually suggest that you reduce your productivity. After all, do you want to be highly productive, or do you want to have a life? You can’t do both.

    The root problem is that our tools have become too good. We’ve made our lives so very efficient with our cell phones, PDAs, and e-mail. But does your Palm Pilot make you more efficient? If so, just wait. Expectations will expand to include your increased productivity. You’ll quietly lose your relaxation and recharge time, sacrificed to the Gods of efficiency.

    Remind yourself on a regular basis that while a Blackberry tempts you with “efficient” e-mail handling, resist! It slowly infiltrates your life, demanding you to respond to e-mail at any time of day or night. Take it on faith that labor-savings devices demand that you labor more.

    “But,” you cry, “I can multitask, getting more done quickly!” Multitasking is a myth. At least, quality multitasking is a myth. If you have several simple, brainless tasks, maybe you can do a couple at once. But if you need reflection or depth, forget it. Attention Deficit Disorder is a problem for people precisely because much of modern life really does demand more than ten seconds of sustained attention. Multitasking is a chance to accomplish many things poorly, all at once. It takes nine months to make a baby, and it takes focused concentration to make great breakthroughs.

    You’ll probably notice that many of my suggestions can result in slower career growth, less productivity, decreased efficiency.

    In the people realm, multitasking can be deadly. Consider this: Effective leaders connect with their followers. When someone comes to you for direction and motivation, talking while checking your e-mail won’t inspire loyalty and commitment. If you’re not committed enough to give someone your full attention, why should they be committed to you?

    The emergency solution

    Our whole economy seems “just-in-time,” with lag times and delays removed. Here is one illustration. Recent banking deregulation allows checks to clear instantly, eliminating the “float” that provided many businesses with a few additional days of wiggle room to finance cash flow. Now, everyone must be that much more vigilant about their cash.

    Just-in-time brings its own problems, too. Problems can happen, just-in-time. When one piece of our tightly coupled, precision system falters, the entire thing can come tumbling down. We risk utter collapse if we stop if even for a minute. Not exactly a recipe for sanity.

    So make use of it: Become emergency driven. If the overwhelm is too great, rather than trying to avoid emergencies, orient your life around them. Ignore your inbox. Choose what you’ll let go, and then let go of it utterly and completely. What’s important will resurface as emergencies. Trust me, there will be some Type-A person in the next cubicle who will raise the alarm when a discarded initiative becomes critical. Then you can step in, do the work, and be a hero for saving the day. Sure, you can get promoted by doing it right the first time (assuming you work where such things are noticed), but you just may save your personal life by not doing it until it’s important.

    It’s always possible that you have enough time to do everything, but just aren’t organized. I’ve spent four decades searching for the perfect organization system. The closest I’ve found is David Allen’s Getting Things Done: The Art of Stress-Free Productivity. He lays out a system that empties your inbox daily, turning items into “To-Do’s” and ensuring things get done. Of course, he doesn’t have much to say about what you do when you commit to too much that it takes a full workday just to process your inbox.

    That’s because, as with technology, better organization will often result in temporary savings followed by increased expectations. This, you can control. Get yourself organized?but don’t tell anyone. Scatter books around your office and season the scene with old folders with papers spilling out of them. Then empty your real inbox (hidden in the corner behind the potted palm) daily, and enjoy an organized life.

    Just enough

    You’ll probably notice that many of my suggestions can result in slower career growth, less productivity, decreased efficiency. That’s right. In fact, here is the most powerful strategy of all: Settle for just enough. Unless you’re living in a really different world from me, you can’t have it all. You have limited time and attention. You can’t spend it all trying for “the most” in every category. Figure out what “enough” is and make that your target.

    Just enough applies to money, too. If you’re driven by money, decide in advance when you can ease up. A real estate investor I know never set an “enough” goal for herself. The last time I saw her, she had been a millionaire for twenty years, and worth over $50 million. Was she enjoying life? Hardly. By not deciding what was enough, she was pushing herself as hard as if she were still working on her first million.

    Just enough applies to title and status, as well. An executive vice president of a several-hundred-person company decided that she hated her job. So she decided to downshift to a director-level position that gave her just enough status. It worked like a charm. She later downshifted again, spending a year climbing Mount Kilimanjaro and leading safaris in Africa. “Just enough” gave her the freedom to create a much richer life.

    Just enough information

    This is big. In our Brave New Economy, information is plentiful, cheap, and usually irrelevant. Lots of information is useless; the right information is invaluable. In preparation for a client meeting, someone will often circulate a dozen pages of client “data dump” the night before. Overwhelming, certainly. But is it worth reading? Who knows?

    Don’t just accept information. Start by choosing some good questions, ask them, and collect just enough information to get a good enough answer. You’re not shooting for a perfect decision every time; you want just enough good decisions so you still reach your goal.

    Your intuition may be helpful in defining this elusive “enough.” The COO of a company may find she can begin to make the right decision most of the time with just 30 percent of the information she normally would collect.

    Scheduled maintenance

    One thing you should have “just enough” of is work itself! In the book The Power of Full Engagement, author Tony Schwartz points out that regulating your energy is key to being productive. That means taking frequent work breaks to rest, relax, and recover. The same holds true writ large; schedule vacations throughout the year, and make sure you take them. When on vacation, leave your Internet connection and cell phone at home. Never, ever call into the office.

    The last way to reduce overwhelm is to make frequent use of “no.” Say it when someone tries to obligate you for something you don’t have time for. Say “no” when your boss sets targets that can’t be reached without burnout. Say “no” when someone wants your feedback for the tenth time on the same memo?tell them, “it’s GOOD ENOUGH.”

    “No” is hard for most of us to say. We like to feel appreciated and useful to others. But far better to say “no” many times and concentrate on a few great wins than to say “yes” after “yes” after “yes” and deliver poor results.

    If saying “no” doesn’t work, take a drastic course: Let go. Stop caring. If your environment is demanding too much of you, let go of it. (And if you’re a leader, don’t put your people in the position of having to make this choice!) In a choice between sanity and emotional buy-in, choose sanity.

    Detaching doesn’t have to mean that you do less work. In fact, if you detach in just the right way, you can start delegating out work you previously guarded with your life. Find someone who can do the work better, then let them go at it. The key to delegation, however, is striking the balance between sharing the burden and caring enough to make sure things get done.

    At the end of the day, it’s not like there’s much choice. You will reduce your overwhelm. Either you’ll do it voluntarily and deliberately, or you’ll do it when you collapse with a nervous breakdown. You owe it to yourself to take control of your own life and make the hard choices now, when they’re uncomfortable, but doable. Something’s got to give. Don’t let it be you.

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    Mastering Email Overload

    From Harvard Business School’s Working Knowledge
    October 25, 2004

    Being at or near the the top of your organization, everyone wants a piece of you. So they send you e-mail. It makes you feel important. Don’t you love it? Really? Then, please take some of mine! Over 100 real e-mails come in each day. At three minutes apiece, it will take five hours just to read and respond. Let’s not even think about the messages that take six minutes of work to deal with. Shudder. I’m buried in e-mail and chances are, you’re not far behind. For whatever reason, everyone feels compelled to keep you "in the loop."

    Fortunately, being buried alive under electronic missives forced me to develop coping strategies. Let me share some of the nonobvious ones with you. Together, maybe we can start a revolution.

    The problem is that readers now bear the burden
    Before e-mail, senders shouldered the burden of mail. Writing, stamping, and mailing a letter was a lot of work. Plus, each new addressee meant more postage, so we thought hard about whom to send things to. (Is it worth spending thirty-two cents for Loren to read this letter? Nah….)

    E-mail bludgeoned that system in no time. With free sending to an infinite number of people now a reality, every little thought and impulse becomes instant communication. Our most pathetic meanderings become deep thoughts that we happily blast to six dozen colleagues who surely can’t wait. On the receiving end, we collect these gems of wisdom from the dozens around us. The result: Inbox overload.

    ("But my incoming e-mail is important," you cry. Don’t fool yourself. Time how long you spend at your inbox. Multiply by your per-minute wage(*) to find out just how much money you spend on e-mail. If you can justify that expense, far out—you’re one of the lucky ones. But for many, incoming e-mail is a money suck. Bonus challenge: do this calculation companywide.)

    (*) Divide your yearly salary by 120,000 to get your per-minute wage.

    Taming e-mail means training the senders to put the burden of quality back on themselves.

    How you can send better e-mail
    What’s the best way to train everyone around you to better e-mail habits? You guessed it: You go first. First, you say, "In order for me to make you more productive, I’m going to adopt this new policy to lighten your load…" Demonstrate a policy for a month, and if people like it, ask them to start doing it too.

    • Use a subject line to summarize, not describe.

    People scan their inbox by subject. Make your subject rich enough that your readers can decide whether it’s relevant. The best way to do this is to summarize your message in your subject.

    BAD SUBJECT:

    GOOD SUBJECT:

    Subject: Deadline discussion

    Subject: Recommend we ship product April 25th

    • Give your reader full context at the start of your message.

    Too many messages forwarded to you start with an answer—"Yes! I agree. Apples are definitely the answer"—without offering context. We must read seven included messages, notice that we were copied, and try to figure out what apples are the answer to. Even worse, we don’t really know if we should care. Oops! We just noticed there are ten messages about apples. One of the others says "Apples are definitely not the answer." And another says, "Didn’t you get my message about apples?" But which message was sent first? And which was in response to which? ARGH!

    It’s very, very difficult to get to the core of the issue.

    You’re probably sending e-mail because you’re deep in thought about something. Your reader is too, only they’re deep in thought about something else. Even worse, in a multi-person conversation, messages and replies may arrive out of order. And no, it doesn’t help to include the entire past conversation when you reply; it’s rude to force someone else to wade through ten screens of messages because you’re too lazy to give them context. So, start off your messages with enough context to orient your reader.

    BAD E-MAIL:

    GOOD E-MAIL:

    To: Billy Franklin
    From: Robert Payne
    Subject: Re: Re: Re: Please bring contributions to the charity drive

    Yes, apples are definitely the answer.

    To: Billy Franklin
    From: Robert Payne
    Subject: Re: Re: Re: Please bring contributions to the charity drive.

    You asked if we want apple pie. Yes, apples are definitely the answer.

    • When you copy lots of people (a heinous practice that should be used sparingly), mark out why each person should care.

    Just because you send a message to six poor coworkers doesn’t mean all six know what to do when they get it. Ask yourself why you’re sending to each recipient, and let them know at the start of the message what they should do with it. Big surprise, this also forces you to consider why you’re including each person.

    BAD CC:

    GOOD CC:

    To: Abby Gail, Bill Fold, Cindy Rella
    Subject: Web site design draft is done

    The Web site draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.

    To: Abby Gail, Bill Fold, Cindy Rella
    Subject: Web site design draft is done

    AG: DECISION NEEDED. Get marketing to approve the draft

    BF: PLEASE VERIFY. Does the slogan capture our branding?

    CR: FYI, if we need a redesign, your project will slip.

    The Web site draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.

    • Use separate messages rather than bcc (blind carbon copy).

    If you bcc someone "just to be safe," think again. Ask yourself what you want the "copied" person to know, and send a separate message if needed.Yes, it’s more work for you, but if we all do it, it’s less overload.

    BAD BCC:

    GOOD BCC:

    To: Fred
    Bcc: Chris

    Please attend the conference today at 2:00 p.m.

    To: Fred

    Please attend the conference today at 2:00 p.m.

    To: Chris

    Please reserve the conference room for me and Fred today at 2:00 p.m.

    • Make action requests clear.

    If you want things to get done, say so. Clearly. There’s nothing more frustrating as a reader than getting copied on an e-mail and finding out three weeks later that someone expected you to pick up the project and run with it. Summarize action items at the end of a message so everyone can read them at one glance.

    • Separate topics into separate e-mails … up to a point.

    If someone sends a message addressing a dozen topics, some of which you can respond to now and some of which you can’t, send a dozen responses—one for each topic. That way, each thread can proceed unencumbered by the others.

    Do this when mixing controversy with mundania. That way, the mundane topics can be taken care of quietly, while the flame wars can happen separately.

    BAD MIXING OF ITEMS:

    GOOD MIXING OF ITEMS:

    We need to gather all the articles by February 1st.

    Speaking of which, I was thinking … do you think we should fire Sandy?

    Message #1: We need to gather all the articles by February 1st.

    Message #2: Sandy’s missed a lot of deadlines recently. Do you think termination is in order?

    • Combine separate points into one message.

    Sometimes the problem is the opposite—sending 500 tiny messages a day will overload someone, even if the intent is to reduce this by creating separate threads. If you are holding a dozen open conversations with one person, the slowness of typing is probably substantial overhead. Jot down all your main points on a piece of (gasp) paper, pick up the phone, and call the person to discuss those points. I guarantee you’ll save a ton of time.

    • Edit forwarded messages.

    For goodness sake, if someone sends you a message, don’t forward it along without editing it. Make it appropriate for the ultimate recipient and make sure it doesn’t get the original sender in trouble.

    BAD FORWARDING:

    GOOD FORWARDING:

    To: Bill

    Sue’s idea, described below, is great.

    From: Sue

    Hey, Abner:

    Let’s take the new design and add sparkles around the border. Bill probably won’t mind; his design sense is so garish he’ll approve anything.

    To: Bill

    Sue’s idea, described below, is great.

    From: Sue

    Hey, Abner:

    Let’s take the new design and add sparkles around the border…

    • When scheduling a call or conference, include the topic in the invitation. It helps people prioritize and manage their calendar more effectively.

    BAD E-MAIL:

    GOOD E-MAIL:

    Subject: Conference call Wednesday at 3:00 p.m.

    Subject: Conference call Wednesday at 3:00 p.m. to review demo presentation.

    • Make your e-mail one page or less.

    Make sure the meat of your e-mail is visible in the preview pane of your recipient’s mailer. That means the first two paragraphs should have the meat. Many people never read past the first screen, and very few read past the third.

    • Understand how people prefer to be reached, and how quickly they respond.

    Some people are so buried under e-mail that they can’t reply quickly. If something is important, use the phone or make a follow-up phone call. Do it politely; a delay may not be personal. It might be that someone’s overloaded. If you have time-sensitive information, don’t assume people have read the e-mail you sent three hours ago rescheduling the meeting that takes place in five minutes. Pick up the phone and call.

    How to read and receive e-mail
    Setting a good example only goes so far. You also have to train others explicitly. Explain to them that you’re putting some systems in place to help you manage your e-mail overload. Ask for their help, and know that they’re secretly envying your strength of character.

    • Check e-mail at defined times each day.

    We hate telemarketers during dinner, so why do we tolerate e-mail when we’re trying to get something useful done? Turn off your e-mail "autocheck" and only check e-mail two or three times a day, by hand. Let people know that if they need to reach you instantly, e-mail isn’t the way. When it’s e-mail processing time, however, shut the office door, turn off the phone, and blast through the messages.

    • Use a paper "response list" to triage messages before you do any follow-up.

    The solution to e-mail overload is pencil and paper? Who knew? Grab a legal pad and label it "Response list." Run through your incoming e-mails. For each, note on the paper what you have to do or whom you have to call. Resist the temptation to respond immediately. If there’s important reference information in the e-mail, drag it to your Reference folder. Otherwise, delete it. Zip down your entire list of e-mails to generate your response list. Then, zip down your response list and actually do the follow-up.

    • Charge people for sending you messages.

    One CEO I’ve worked with charges staff members five dollars from their budget for each e-mail she receives. Amazingly, her overload has gone down, the relevance of e-mails has gone up, and the senders are happy, too, because the added thought often results in them solving more problems on their own.

    • Train people to be relevant.

    If you are constantly copied on things, begin replying to e-mails that aren’t relevant with the single word: "Relevant?" Of course, you explain that this is a favor to them. Now, they can learn what is and isn’t relevant to you. Beforehand, tell them the goal is to calibrate relevance, not to criticize or put them down and encourage them to send you relevancy challenges as well. Pretty soon, you’ll be so well trained you’ll be positively productive!

    • Answer briefly.

    When someone sends you a ten page missive, reply with three words. "Yup, great idea." You’ll quickly train people not to expect huge answers from you, and you can then proceed to answer at your leisure in whatever format works best for you. If your e-mail volume starts getting very high, you’ll have no choice.

    • Send out delayed responses.

    Type your response directly, but schedule it to be sent out in a few days. This works great for conversations that are nice but not terribly urgent. By inserting a delay in each go-around, you both get to breathe easier.

    (In Outlook, choose Options when composing a message and select Do not deliver before. In Eudora, hold down the Shift key as you click Send.)

    • Ignore it.

    Yes, ignore e-mail. If something’s important, you’ll hear about it again. Trust me. And people will gradually be trained to pick up the phone or drop by if they have something to say. After all, if it’s not important enough for them to tear their gaze away from the hypnotic world of Microsoft Windows, it’s certainly not important enough for you to take the time to read.

    Your only solution is to take action
    Yeah, yeah, you have a million reasons why these ideas can never work in your workplace. Hogwash. I use every one of them and can bring at least a semblance of order to my inbox. So choose a technique and start applying it. While you practice, I’ll be on vacation, accumulating a 2,000 message backlog for when I get home. If you want to know how well I cope, just send along an e-mail and ask….

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    You’re living under a magnifying glass!

    Leadership Under a Magnifying Glass

    “Why don’t my people just do what I say?” It’s a common refrain among my executive clients. Life at the top would be so much easier, if only “they” would “get it.”

    In fact, your employees probably are doing what you say. You just may be saying things you don’t intend. It’s often not your broad proclamations that give direction; it’s the little things you do that have the biggest impact.

    Your actions encourage and discourage behavior

    Remember when you were a front-line employee. Executives’ actions were relentlessly scrutinized…

    This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

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    Posted in CEO, Entrepreneurship, Leadership | 2 Comments

    Monthly Leadership Q&A Column, Harvard Business School Working Knowledge

    Stever’s monthly column, the Leadership Workshop, on Harvard Business School’s Working Knowledge website had a wonderful run for several years. You can view the archives at http://www.steverrobbins.com/hbswk

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    Statistics on Startup Success, by Stever Robbins

    How likely are you to go public, anyway?

    “We have the greatest e-commerce idea in history. We’ll be the Amazon.com and e-bay of industry X. We plan on raising venture capital in the next three weeks, and we will have our initial public offering within 18 months…by the way, do you know where we could find some good technical people, and maybe a CEO?”
    —Several anonymous entrepreneurs

    The sentiment I hear from new entrepreneurs is wonderfully optimistic. Incredibly inspiring, visionary, and touching. It’s especially touching in its naivete. Here are some statistics forwarded from a friend of mine in the financial services industry. Think about them before you blithely declare your intent to IPO in the next 18 months…

    The number of listed companies is:

    NYSE – 3,088
    NASDAQ – 4,895
    AMEX – 786
    TOTAL 8,769

    Interesting Fact There are currently 10,719 mutual funds available for investment, almost 2,000 more than there are stocks to buy!!

    The number of IPO’s over the last several years:…

    This article is continued in the Entrepreneur’s Companion volume 1. Click here to purchase.

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    What does a CEO do? A CEO Job Description (part 4: keeping your competence)

    Part 4: Coaching tips to stay sane and skillfull at the top of the heap.

    These coaching assignments will help an executive avoid some of the pitfalls of the CEO job. They are simple, easy, and won’t take much time. They’ll help a CEO stay connected with workers, keep herself humble, and increase her learning while becoming more successful. The suggestions strive to be quick and easy to do, while still producing real results.

    Make Space to Practice These Assignments

    Set aside 5 to 10 minutes, daily, to developing as a leader and human being. This will be the time you think about the below topics and set your mind for the day. Schedule the time if necessary. Just make sure that you do what’s right for your growth.

    Pace yourself. Life is long. Adopt these suggestions one or two at a time, and practice until you make them your own. Then move on. Forcing won’t help; this is about developing at your own natural rhythm. Do one assignment for a few weeks, then move on to another. Keep the ones that work for you and drop those that don’t.

    Staying connected with “the little people”

    Cultivate an attitude of respect—your respect for them. The “little people” are the ones turning your vision into reality. Meditate on this for a few minutes and ask yourself whether you can their jobs as well as they can. If you can, then you’re not hiring the right people—go change that! Otherwise, once a day, go talk to one of your low-level employees—someone more capable than you in their area of expertise—and learn from them. Choose a different person each day. Get as close to the front line workers as possible.

    Listen with an open mind and learn. Learn about their job. Ask what works for them and what doesn’t. Above all, listen to their comments without judgment. Your goal is to connect with their experience of the world, not impose your own. Learn about their life. Find out what motivates them. Why did they come work for you instead of somewhere else? Simply by spending a few minutes understanding their life, you can greatly increase your appreciation of how they’re different (and similar!).

    Share your vision and job with them, from a position of service. Pretend that your job is to make this person a success. Ask them how their job fits into the work the company does. If they don’t know, take on the responsibility of helping them understand how their job links to the vision. Clarify any confusion they may have about where the company is going. And ask them what you can do to help them succeed at doing their best. Then do it.

    Staying humble

    Acknowledge, often! Without your employees, your dreams and plans wouldn’t amount to much. Take every available opportunity to acknowledge the contribution of those around you and give them credit, especially in public. Feedback is rare in most companies, and positive feedback is rarest of all(1).

    “Get” that it’s all your responsibility. When things don’t go the way you want, take responsibility—whether or not it’s your fault. The mindset of responsibility will put you in a much more powerful place than the mindset of blame. Regularly review circumstances asking, ”What could I do differently (or stop doing) to make a positive difference?” Identify the action and then take it. You’ll be surprised how much more power you have over externalities, operating from responsibility rather than blame.

    Gather honest advisors to held you accountable for your behavior. Sometimes a Board of Directors will give honest feedback, but they are removed from your day-to-day behavior. Actively solicit feedback from third parties: friends, peers, associates. Share your issues and how you’re handling them, and ask for an honest assessment. Everyone in a comany is accountable to someone for their behavior, except the CEO. Make yourself accountable as best you can.

    Identify your limits. Ask, “can someone else in the world do my job better than I am currently doing it?” If the answer is Yes, seek out that person and ask for their guidance in getting better. If the answer is No, validate that answer by asking your advisors, competitors, suppliers, customers, and employees. Many companies have crashed and burn because they believe they were the best, for no good reason but pride and ego.

    Create measurable performance criteria for your executive team, including yourself. Make sure people within the organization know your goals, and know what you can be counted on to do. Hold yourselves accountable. If you don’t meet your goals, withhold your bonus, take no raise, and treat yourself exactly as you would treat an employee who missed their targets. It sends a powerful message to the company than you’re serious about performance.

    Ask your direct reports, your Board of Directors, and anyone else you work with for feedback a couple of times a year. You can use a 360-degree feedback process or simply ask in an e-mail. It’s a lot easier to hear feedback on your performance if you’ve explicitly asked for it.

    Videotape yourself receiving bad news. Watch the videotape and decide whether or not you would want to work for that person. If the answer is No, learn to chill when you hear bad news.

    Learning well

    Study excellent CEOs. Call a CEO you admire and invite them to lunch. Exchange tips and adopt tactics that others have found useful. Read books like First, Break All the Rules, which are broad-based studies of habits of top-performers. Adopt at least one new habit a month.

    Create systems for gathering feedback. Interview customers, competitors, analysts, and others in your industry to know how your company and products are perceived. Make sure you’re gathering feedback that will disconfirm your beliefs about the world, as much as confirms it. For example, if you think you’re #1 in your market, don’t just ask customers why they like your products. Ask what other products they use, and how your products fall short.

    Spend time learning about the fundamentals of a CEO’s job:

    • Setting strategy. The strategy and vision for the company determine where everyone will focus their efforts. Find a vision and strategy and use it to align your entire company.
    • Creating the corporate culture. Your culture will determine what people do and don’t try, who will stay, who will leave, and how business will get done. Culture starts with you. Decide how you want people to act and start modeling the behavior publicly.
    • Capital allocation. Every dollar you raise and spend should produce more than $1 of return for the company, or it’s a waste of money. Learn how to make these judgements.
    • Hiring and Firing. The job of executives is primarily team and culture building. Hiring and firing are must-have skills. Read, take classes, and review past hiring successes and mistakes. Do whatever you can to hone your abilities.

    Raise the Bar

    Hold yourself to higher standards next year than you did this year. Challenge yourself to learn to get more done with fewer hours and fewer resources whie creating a more balanced life for yourself.

    These are just a few of the things you can do to increase your chances for success as a senior executive. I also believe in working with a coach to identify and overcome (or compensate for) blocks in your performance. Success can be had with many different skill sets. The more you learn about yourself and your capabilities, the better you will be able to shape a job that works for you. The more you learn about the capabilities of those around you, the better you will be able to build teams that produce spectacular results.

    Do Great Things!

    (1) Social psychology has shown that rewarding desired behavior is far more effective than punishing bad behavior or non-performance. For reasons that aren’t entirely clear, our culture has evolved around using punishment as the main way of controlling behavior. Unfortunately, punishment doesn’t work very well. Interestingly, animal trainers have known this for years. For an excellent book on the subject, check out Don’t Shoot the Dog by Karen Pryor. back

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    What does a CEO do? A CEO Job Description (part 3: pitfalls) by Stever Robbins

    Part 3: Pitfalls and solutions for the CEO.

    A CEO can tank a company by not understanding their duties, or failing to set up good measurement systems. But it’s also true that the job itself can screw up the person, as well. It’s said that power corrupts, and few positions are more powerful than CEO. While the USA may be a democracy, our companies are legal dictatorships with the CEO calling the shots(1). While she may be having a great time playing Boss, the position may be taking a very human toll.

    It’s all too easy for the CEO to become a … jerk(2)  … without realizing it. They can forget—if they ever knew—what it was like to have a boss. They are free to ignore feedback that they don’t want to hear, and no one will call them to task for it. They can bypass the chain of command when they want to meddle. They can give themselves raises and genuinely believe they deserve it. And most dreadfully, they can forget what it is like to be “one of the little people”:

    worker I have to leave early today.
    CEO Why?
    worker To pick up my kids from daycare.
    CEO Oh… looks genuinely perplexed … Why
    don’t you have your nanny do that?
    worker I don’t have a nanny.
    CEO Oh… wanders away with a mildly confused expression

    The worker was an incredibly productive person. She worked harder than the CEO, got more done, yet couldn’t have afforded a nanny if her life depended on it. The CEO didn’t intend to be a jerk, but his lack of empathy didn’t win many supporters.

    A CEO can become arrogant by externalizing blame

    Having no day-to-day accountability for her actions can also turn a CEO sour. When things go wrong, she can blame everyone around her without facing her own shortcomings. “My employees just don’t get it,” proclaims the CEO, never thinking for a moment that she is the one who hired them. Did she hire incompetents? Or has she failed to communicate goals consistently and clearly? “Market conditions have changed.” she declares. A nice excuse, but isn’t it the CEO’s job to anticipate the market and position the company for success under a variety of scenarios? Without someone to keep her honest, she can gradually absolve herself of all responsibility.

    Believing in a title can lead to overconfidence

    Arrogance also threatens a CEO. “Because I am CEO, I must know the business better than anyone else.” It has been said, but it just isn’t true. No CEO can be an expert in all functional areas. A CEO who is doing her job is spending time with the big picture. If she knows the details better than her employees, she’s either hiring the wrong people or spending her time at the wrong levels of the organization. It’s appropriate for a CEO to manage operations if absolutely necessary, but she should quickly hire good operational managers and return to leading the whole business.

    If she also comes to believe that the CEO title grants infallibility, watch out. Even the Pope is only infallible a couple of times each century. But CEOs can reinforce their delusions of grandeur by giving themselves higher salaries (surely she deserves it! After all, salary benchmarks show how underpaid she is) and more perks. Then when layoffs come, the CEO wants applause for having the moral strength to make “hard choices,” quietly overlooking how her own poor decision making led to the need for layoffs.

    CEOs can stop learning well

    Of course, once infallible, there’s no more to learn, and a CEO may quietly stop learning. Without daily oversight and high quality feedback on how she does her job, she can mistakenly believe her actions lead to success. In reality, she may be doing the wrong thing, but her staff may be working around the clock to cover for her.

    Furthermore, sins of omission aren’t penalized. A CEO who does an adequate job, but far less than she could/should have done—goes unnoticed. In hindsight, XYZ Software(3) could have had a $1 billion market niche, and gone public with a valuation of tens of billions. Instead, it stuck to one product, had little understanding of its markets, and ignored competition. Yet it still went public in a $300-million IPO. Was management penalized for a lack of vision and market responsiveness? Hardly! The top managers walked off with $60 million apiece, reinforcing the notion that they had done a great job. Yet with a slightly grander vision, the company might have been 10 or 100 times its size.

    Setting vision is the CEO’s job, but nothing tells her if her sights are too low. She isn’t penalized for missing the grander vision. Such sins of omissions are a CEO’s worst enemy. She can be lulled into mediocrity by not knowing what would have been possible. The four-minute mile was considered impossible…until Roger Bannister ran it. Now, it’s commonplace. Likewise, a CEO may limit herself by not realizing she can do her job better.

    Though salary benchmarks are common, performance benchmarks are surprisingly rare. Quality learning demands a CEO benchmark herself against other superb CEO’s. Her central learning question is not “are you doing a good job?” but “are other CEOs doing a better job and if so, how can you learn to measure up?(4)

    … What’s a CEO to do? Check out part 4, which details specific coaching tips to help executives stay sane and successful.

    (1) Ok, ok. Technically the Board of Directors has hire/fire authority over the CEO, but the Board can’t control day-to-day operations. And while there are certainly boards that replace inept CEOs, it takes sustained incompetence over a long time to move a board to action. So for practical purposes, the buck stops with the CEO. back

    (2) Her employees may use less diplomatic terms. back

    (3) Names are changed to protect the innocent. back

    (4) An excellent book on management best practices is “First, Break All the Rules” available by clicking here to go to the books page. back

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    What does a CEO do? A CEO Job Description (part 2: measuring success)

    Part 2: Measuring your success as a CEO.

    Knowing the job description is a good first step for a CEO, but to know how she’s doing, she needs to design her own measurement system.

    Unlike inconvenient lower-level jobs, no one tells the Chief Executive how she’s doing. Do managers let her know she’s undermining their authority, making poor decisions, or communicating poorly? Not likely. Even when a CEO asks for honest feedback, the fear is there: non-flattering feedback may stall a promising career[1]. Even when a company uses 360-degree feedback, no one penalizes the CEO if she doesn’t act on the feedback.

    The Board of Directors supposedly oversees the CEO, but they are far removed from day-to-day actions. Over time, they can evaluate performance, but they look mainly at share price and company strategy. They are rarely interested in—(or qualified to comment on!)—the CEO’s daily behavior.

    But the CEO’s daily behavior will make or break the company! The CEO’s duties don’t change because they are unmeasured. Indeed, lax measurement makes it easy for the CEO to feel confident, even when she shouldn’t. Good feedback is the only way to know what’s working, but share price simply doesn’t do it. External measures measure the company, not the link between the CEO’s actions. A low share price tells her something’s wrong, but it doesn’t help her figure out what.

    By measuring her performance based on her duties, a CEO can learn to do her job better. As explained in part 1, the CEO’s job is setting strategy and vision, building culture, leading the senior team, and allocating capital. The last of these is easy to measure. The first three are more of a challenge.

    How does a CEO know she’s doing the vision thing? It’s hard. Having vision isn’t enough—that just takes a handful of mushrooms and a vision quest. Communicating the vision is the key. When people “get it,” they know how their daily job supports the vision. If they can’t link their job to the vision, that tells a CEO that her communication is faulty, or she hasn’t helped her managers turn the vision into actual tasks. Either way, a CEO can monitor her success as a visionary by questioning and listening for employees to link their jobs with the company vision.

    Culture building is subtle, the culture a CEO sees may be very different from the culture of the rank-and-file. One company had a facilities policy that all equipment within 450 feet of the senior management offices was kept in top working order. Senior managers saw a smoothly running company, while everyone else saw neglect and carelessness.

    Surveys about openness, values, and morale can be used to develop a measure of culture. The questions to ask aren’t rocket science. The book First, Break all the Rules gives a great questionnaire for measuring overall culture. Also, check turnover. When 95% of your workforce says they can’t wait to get to work, something is going right. If people rarely leave, and if it’s easy to attract top talent at below-market prices, you can be sure the culture plays a large role. If people leave (especially your top performers), again—look to culture. And don’t underestimate the power of walking around and counting smiles. If people are having fun, it will show.

    The CEO’s success at team-building can often be measured through the team. Teams usually know when they’re effective. They can also rate their team using assessments that measure specific behaviors. For example, “I can trust my teammates.” “My teammates deliver their part of the project on time.” “Every member knows what is expected of them.” Regular team self-assessments can help the CEO track the team’s progress and hone her abilities to keep the team running smoothly[2].

    Easiest to measure is a CEO’s capital allocation skill. In fact, financial measures are the ones made public: earnings and share price. But how can a CEO link those to her actual decisions? Working with her CFO, a CEO can devise financial measures appropriate to her business. Sometimes traditional measures are most appropriate, such as economic value added or return on assets (for a capital-intensive company). Other times, the CEO may want to invent business-specific measures, such as return on training dollars, for a company which values state-of-the-art training for employees. By monitoring several such measures, a CEO learns to link her budget decisions with company outcomes. Ultimately, the CEO’s should be creating more than a dollar of value for every dollar invested in the company. Otherwise, her best bet is to return cash to the shareholders for them to invest in more productive vehicles.

    In startups, earnings begin low to nonexistent, and share price is more about salesmanship and vision than earnings. So the CEO gets almost no useful feedback about her capital allocation wisdom. She doesn’t know whether a dollar spent on a slightly nicer-than-necessary copy machine is wasted or is a wise investment in a long-term. Careful attention to the design and tracking of financial measures can help her prepare for the transition to an earnings-driven company.

    In his 1988 Annual Report, Berkshire Hathaway chairman Warren Buffett included an excellent essay on CEO accountability. Click here to read Mr. Buffett’s observations on CEO measurement.

    … in part three: “gotchas” of the CEO job.

    [1] The CEOs don’t help the problem. Many of my CEO clients highlight the value of honest feedback from their coach. Yet they complain about employees who disagree with them, just don’t “get it” or don’t have enough information “to understand the real issues.” In a coaching call, they can hear feedback and consider it. At work, they treat disagreement as dissension, and then wonder why everyone’s a “Yes man.” back

    [2] There are dozens of team effectiveness surveys. You can start by checking out http://www.cambriaconsulting.com, http://www.ccl.org, and http://www.pfeiffer.com. back

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    Hints on Writing Business Plans

    Taken from a write-up I did for Wharton’s entrepreneurial community

    Rather than attempt a comprehensive write-up of creating a new venture, which would fill several books, here are some practical, immediate tips you can apply. At the end of this article is a URL you can use to ask further questions, publicly or privately.

    DISCLAIMER: I’m an angel investor and coach, not a VC. The below is based on my experience reading and responding to business plans. I can’t guarantee that VCs pay attention to all the same things.

    What investors are looking for in a plan

    Investors—whether angels or VCs—are looking for the same things when reading a business plan. They want to know how big the opportunity is, whether this is the right team to exploit the opportunity, who the competition is, what the risks are, and why they can expect this team to implement successfully.

    Your job in writing the business plan is to address these questions convincingly and clearly.

    Also make sure to check out Notes from a VC Panel Discussion.

    Tips on Opportunity Recognition

    The size of the opportunity depends on the market

    “Opportunity size” is a very rough concept; there is no precise definition. You can think of it as roughly the number of potential customers times the expected percentage who can be captured as customers times their average purchase times their average purchase frequency. You can find huge opportunities by selling small things to many people over and over, by making huge sales to a few people, or anywhere in between. Know why your opportunity is the size that it is.

    For example, RenalTech is a company which manufactures filters for dialysis machines. There are 320,000 people on dialysis in the United States. If they know how many filters per year those patients use, multiplied by the price per filter, they can have some idea of the size of their opportunity.

    Choose a huge market

    Especially in the internet world, venture capitalists are looking more at the market than at the detailed specifics of your financials. Choose a market that is big enough to be an obvious good opportunity.

    A business which targets teenage girls who listen to music and has a reasonable chance of capturing 90% of the girls that are online is a huge opportunity. A business which targets net-savvy SAAB mechanics who need prosthetic limbs is not.

    Find a business with great fundamentals

    Choose excellent business models which have sound business fundamentals:

    • lack of competition
    • recurring revenues
    • low fixed costs
    • low asset requirements
    • a compelling reason other than “brand loyalty” why customers will stay with you once they join

    If your business requires $30 million worth of advertising on an ongoing basis to keep bringing people back to the site, make sure to factor that into your pro formas.

    You can think of product ideas as being either candy, vitamins, or pain killers. Candy is fun, but a luxury. Vitamins keep you healthy. Pain killers ameliorate an immediate problem. VCs like to invest in pain killers. If possible, addictive pain killers. People in pain are strongly motivated to buy, which isn‘t necessarily true of people buying vitamins.

    If you like risk, ignore the fundamentals

    In late 1999, plans don’t need a sound business model to attract capital. Plans with no business fundamentals and inexperienced 27-year-old management are raising money with valuations of $12 million. The IPO market is also going crazy: WebVan just went public on revenues of $395,000, losses of $35.1 million, and they have a market capitalization of $8.45 billion.

    The market’s faith is keeping these valuations afloat, betting that (a) losing huge money building a brand will someday turn into much huger profits; and (b) someone will buy the business for its strategic/intangible value, rather than its cash-generating value.

    If you’re comfortable making those bets, go for it. And of the 60,000 companies started this year, one or two will likely see those bets pay off.

    Know why customers stay

    If you show growing revenues year after year, but your customers have no natural reason to stay with you beyond a single purchase or two, think through why you expect the revenue number to grow. Are you somehow encouraging more purchases, or are you managing to attract completely new customers to fill the shoes of old ones?

    Prepare to throw several ideas away

    Discard non-superb ideas, ruthlessly. VC firms read 10,000 business plans a year to find 20 good investments. Warren Buffet waits years to find a single investment that meets his standards. You’re investing your time, energy, and reputation for years. You own it to yourself to have high standards.

    Many entrepreneurs get an idea or two, latch onto them, and then rationalize away any serious holes in their plan. If you don’t go through a couple of ideas before settling on one, you’re either very lucky or your standards for a good opportunity are too low.

    Research the competition, even in the pipeline

    At the very least, do an internet search for similar ideas and companies. There are few things more embarrassing than presenting a business plan for a “new concept” only to find that concept up and running elsewhere.

    And remember, there may be competitors who haven’t launched, yet. Have a plan to deal with the possibility that such competitors will crop up.

    You always have competition.

    Your competitors aren’t always in exactly the same business; they may not even be companies. Scott Cook, founder of Intuit (maker of Quicken) defines the competition for Quicken as being a pencil and paper checkbook. And using that definition, Scott has built a company that has dominated every financial software market it has entered.

    To find your competition, ask the question: if people don’t have our product/service, what will they do instead to meet their needs? That is your competition.

    Tips on Writing Your Plan

    Let your elevator pitch drive…

    This article is continued in the Entrepreneur’s Companion volume 1. Click here to purchase.

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    Growing Pains: Getting a Business Through It’s Awkward Stages, Boston Business Journal, Sept. 2003

    Boston Business Journal, Sept. 2003

    Stage 1: you have an idea. Stage 2: you’ve developed the business. Stage 3: you’re making money, it’s for real, you’re successful … so why is everything sudden chaos? This article helps you understand that Stage 3 entrepreneurship requires real changes in how you do business.

    Read the full article in Boston Business Journal at
    http://www.bizjournals.com/boston/stories/2003/09/22/smallb2.html.

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    Think Before Mixing Business, Buds, and Blood, Boston Business Journal, Dec. 2003

    Boston Business Journal, Dec. 2003

    Thinking of going into business with friends and family? Think twice. It may not be the smooth ride you imagine. Read Stever’s Boston Business Journal article Think Before Mixing Business, Buds, and Blood.

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    Making the Jump From Workhorse to Leader, Boston Business Journal, Oct. 2003

    Boston Business Journal, Oct. 2003

    This article can be found in the Boston Business Journal’s web site at: http://www.bizjournals.com/boston/stories/2003/10/20/smallb3.html.

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    Activation Required software poses a serious risk to your business

    Click here to download this article in PDF format.

    Think twice before buying “activation required” software.

    Microsoft has certainly endorsed a dangerous trend: software that requires activation to install and run it. More and more, it’s not enough that you purchase software and install it with a serial number they give you; you must also be connected to the internet or call their telephone activation center to activate the software when you run it.

    The reason is simple: the software publishers don’t trust you. They think you’re a thief, and want to monitor every installation of the software closely. It makes sense from their point of view, at least, if one assumes that customers are basically immoral, unethical criminals out to steal anything they can. But as customers, the activation trend is more than just unfriendly; it’s outright dangerous.

    The first of these activation schemes was Adobe Corporation’s “Type on Call.” They would sell you a cd full of fonts, and you would call Adobe to “unlock” fonts you had purchased.

    Over time, I purchased over $2,000 worth of fonts from Adobe. My corporate identity was built on those fonts, some of which cost upwards of $500 for all the different weights and styles.

    Then a couple of years ago, I bought a new computer. I went to install my Type-on-Call fonts and discovered that the activation servers had been shut down. Adobe had decided to discontinue the service, and suddenly I was no longer able to access fonts I’d paid dearly for. No one at Adobe was able to help, until bombarding the upper management with letters led one marketing manager sent me a cd-rom of the fonts.

    Here’s the danger: in the interests of their fraud protection, you are integrating the business fortunes and decisions of the software vendor into your infrastructure. If they go out of business, get acquired, or just decide to stop supporting their service, the next time you need to install their software, you can’t do it. If that software is critical to your business, you’re just plain out of luck.

    And even if they’re still in business, it’s still a business burden for you. You won’t always have a net connection when setting up a new machine. Sometimes—for security reasons or otherwise—you might want to install with your new machine disconnected from the network. Whatever the case, you’ll now have to jump through activation hoops. Recently, Act 2005 required me to call an activation number, only to get a recorded message that all operators were at home preparing for a severe weather alert. So now, my business gets stalled by severe weather 3,000 miles away. Great.

    Windows already takes way too long to reinstall, thanks to its convoluted design. If you have to make activation phone calls and convince a $3.95/hour temp that you own the software you’ve already bought and paid for, you’re spending more of your time and money just to satisfy their paranoia.

    And speaking of paranoia, they don’t trust you yet they expect you to trust them. They want you to let their activation program connect freely to the net. For all you know, their activation process also sends your financial data along with your activation code. Trust should be two-way, don’t you think?

    Of course, no company would ever use this as a technique for forcing you to upgrade. Microsoft, for example, would never abuse their activation system by dropping activation of old products, forcing you to upgrade the next time you buy a new computer. But if a Microsoft doobie reads this article, watch out, they just may change their mind.

    “But,” you say, “I don’t mind upgrading.” Fine. But what if the new version conflicts with something you currently run? Current versions of my contact manager program don’t work smoothly an older calendar utility I use. I’d rather not upgrade the contact manager because the calendar integration is too important.

    And though vendors don’t like to face it, software dies out. Some of the best software I’ve ever used (and continue to use) has been discontinued over time. If it had required activation, I’d be out of luck, forced to use inferior software. Some great software has started requiring activation, so I’m sticking with the last version I could install at will:

    • Windows 2000. XP requires activation.
    • PGP 8. pgp 9.0 requires activation. Funny that a company supposedly devoted to their customers’ integrity has a policy that could jeopardize a customer’s entire business!
    • Quicken and Quickbooks require activaton.
    • Macromedia Dreamweaver MX. MX 2004 requires activation.
    • AdSubtract Pro 2.55. AdSubtract Pro 3 requires activation.
    • Act! 6.0. Act 2005 is a definite improvement, but requires activation.
    • Most Adobe products now require activation.

    It’s a sorry world when vendors so callously disregard the business integrity of their customer, but as a customer, be wise and pressure vendors to sell us software that works the way our businesses require.

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    What does a CEO do? A CEO Job Description (part 1: duties) by Stever Robbins

    Part 1: Responsibility, duty, and all that…

    Note: You may also wish to read The Executive Mind-Set, which discusses executive jobs and the special skills needed to hold them.

    This essay is written using “she” to refer to CEOs. There is no deep agenda hiding here. I’m in the business of helping people think outside the box, and gender is an obvious place to start.

    Admit it. We all feel a touch of awe when someone has it: the CEO title. The power, the salary, and the chance to Be The Boss. It’s worthy of awe!

    Too bad so few CEOs are good at what they do. In fact, only 1 in 20 are in the top 5%[1]. Many don’t know what their job should be, and few of those can pull it off well. The job is simple—very simple. But it’s not easy at all.

    More than with any other job, the responsibilities of a CEO diverge from the duties and the measurement.

    A CEO’s responsibilities: everything, especially in a startup. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, creation of company culture, human resources, hiring, firing, compliance with safety regulations, sales, PR, etc.—it all falls on the CEO’s shoulders..

    The CEO’s duties are what she actually does, the responsibilies she doesn’t delegate. Some things can’t be delegated. Creating culture, building the senior management team, financing road shows, and, indeed, the delegation itself can be done only by the CEO.

    Many start-up CEOs think fund-raising is their most important duty. I disagree. Fund-raising is necessary, but the CEOs contribution is in building a superb business with the money raised.

    What is the CEO’s main duty? Setting strategy and vision. The senior management team can help develop strategy. Investors can approve a business plan. But the CEO ultimately sets the direction. Which markets will the company enter? Against which competitors? With what product lines? How will the company differentiate itself? The CEO decides, sets budgets, forms partnerships, and hires a team to steer the company accordingly.

    The CEO’s second duty is building culture. Work gets done through people, and people are profoundly affected by culture. A lousy place to work can drive away high performers. After all, they have their pick of places to work. And a great place to work can attract and retain the very best.

    Culture is built in dozens of ways, and the CEO sets the tone. Her every action—or inaction—sends cultural messages (see “Life Under a Magnifying Glass”). Clothes send signals about how formal the workplace is. Who she talks to signals who is and isn’t important. How she treats mistakes (feedback or failure?) sends signals about risk-taking. Who she fires, what she puts up with, and what she rewards shape the culture powerfully.

    A project team worked weekends launching a multimedia web site on a tight deadline. Their CEO was on holiday when the site launched. She didn’t call to congratulate the team. To her, it was a matter of keeping her personal life sacred. To the team, it was a message that her personal life was more important than the weekends and evenings they had put in to meet the deadline. Next time, they may not work quite so hard. The emotion and effect on the culture was real, even if it wasn’t what the CEO intended. Congratulations from the CEO on a job well done can motivate a team like nothing else. Silence can demotivate just as quickly.

    Team-building is the CEO’s #3 duty. The CEO hires, fires, and leads the senior management team. They, in turn, hire, fire, and lead the rest of the organization.

    The CEO must be able to hire and fire non-performers. She must resolve differences between senior team members, and keep them working together in a common direction. She sets direction by communicating the strategy and vision of where the company is going. Strategy sets a direction. With clear direction, the team can rally together and make it happen.

    Don’t underestimate the power of setting direction. In 1991, at Intuit’s new employee orientation, CEO Scott Cook presented his vision of Intuit as the center of computerized personal finance. Intuit had just 120 employees and one product. Ten years later, it’s a billion-dollar company with thousands of employees and dozens of products. Worldwide, it is the winner in personal finance, bar none. The success is due in no small part to every Intuit employee knowing and sharing the company’s vision and strategy.

    If vision is where the company is going, values tell how the company gets there. Values outline acceptable behavior. The CEO conveys values through actions and reactions to others. Slipping a ship schedule to meet quality levels sends a message of valuing quality. Not over-celebrating a team’s heroic recovery when they could have avoided a problem altogether sends a message about prevention versus damage control. People take their cues about interpersonal values: trust, honesty, openness—from CEO’s actions as well.

    Capital allocation is the CEO’s #4 duty. The CEO sets budgets within the firm. She funds projects which support the strategy, and ramps down projects which lose money or don’t support the strategy. She considers carefully the company’s major expenditures, and manages the firm’s capital. If the company can’t use each dollar raised from investors to produce at least $1 of shareholder value, she decides when to return money to the investors. Some CEOs don’t consider themselves financial people, but at the end of the day, it is their decisions that determine the company’s financial fate.

    Click here for part 2: how CEOs are measured.

    [1] Pay no attention to the math background peeking from behind the curtain… back

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