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The microfears that derail you are imaginary. Literally! part 2

The microfears that derail you are imaginary. Literally! part 2

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When things get stalled, as we saw in the article that answered the question What is a Microfear?, fear is often why. Not big fears; small ones.

  • We’re afraid of failing at something we want to learn.
  • We’re afraid of starting an ambitious project that might fail.
  • We’re afraid of choosing the wrong job and missing a better opportunity.

Ash realized that their business partner was no longer a good fit for the business. But they were scared to have the difficult conversation, because it might destroy the relationship.

Look carefully. All those fears are about something that isn’t happening in front of you. Every one.

Fear began as a way to save us from danger that was present and immediate. We’d spot a Saber Tooth tiger or killer jellyfish and get afraid. Very afraid. And we’d run, or fight, or freeze. As long as we chose the right one for the occasion, those reactions served us well.

Our brain still has that reaction, however, even to our own imagination. We run a mental movie of our business partner getting upset during a conversation. Then we get afraid that they really are upset. But we’re really just projecting what we think will happen. Then we get scared of our mental movie and decide we won’t have that difficult conversation.

If you aren’t making progress on Something Important, blame fear. The fear comes from your beliefs and thoughts about the future.

Fear = perceived danger + emotion

Yay, Brain!! We can anticipate problems and respond in advance.

This is a good thing!

What sucks is the fight/flight/freeze response. It helps us survive a killer jellyfish, but not much else. And it certainly doesn’t help us have a difficult conversation when we need to.

When you anticipate a problem, however, you have plenty of time to be smart about it. If you can defuse fight/flight/freeze while still knowing the problem, you can use your smarts to deal with it.

Without fight/flight/freeze: Ash imagines the business partner freaking out and … calmly calmly and carefully rehearses the conversation. Ash tries several presentations, choosing the most respectful, gentle approach. (In the real case, the partner knew he wasn’t a fit. He was relieved to discuss it and left amicably.)

Without fight/flight/freeze, you can take deliberate action. You can plan. You can take action to choose your future. You don’t have to let your emotions choose your actions:

You imagine failing at something you want to learn … and you calmly identify tutors, extra reading, and other resources in advance to help.

You’re afraid you might fail at an ambitious project … and you recruit a team with the needed skills. You do good risk management up front, making success much more likely.

You believe you might choose the wrong job … and you make a plan. You keep in touch with your other prospects so you have a backup network.

Make your fears work for you

Your brain is great at projecting What Might Happen. You have plenty of time to plan. But when your fear hijacks your thinking, you end up avoiding the very things you want to do.

  • Where are you stalled?
  • What’s not getting done?
  • Where do you shy away?

In part 3, I’ll share some tips for finding and overcoming your fears.

Why business models matter: Understanding health insurance

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When you’re making business decisions, one of your most powerful tools is to understand business models. A business model is, simply, how a company makes money. If you want an in-depth definition with examples, check out my article on business models that was written during the first internet bubble, back when PayPal was a startup, Amazon only sold books, and cameras still used film. Almost every example in the article has since captured its market or gone out of business. (Challenge goal: read the article and consider how the companies’ business models did or didn’t change, and how that led to success or doom. Hindsight is a powerful learning tool!)

Become a compulsive business model collector

Often, a company’s business model constrains what it can and can not do. That, in turn, gives it strengths and weaknesses. Learning to spot business models, and do quick back-of-the-envelope calculations on them, will help you become a ninja at spotting opportunity.

When you see a hot pretzel vendor at a ballgame, ask yourself: what’s that person’s business model? How do they make money? How much product or service do they need to sell to make that money? How much does it cost them to make it? Is it a good business? Hot pretzels being one of my favorite foods as a college student, I was astonished to learn that the hot pretzel vendor cleared a six-figure income.

When you pass the neighborhood bookstore, ask how they stay in business? What’s their business model? Why does it work for them, and not for the bookstore down the block that went out of business five years ago?

When you use Facebook, ask and consider: what’s their business model, and what does that imply about the actions they’ll take? Or eBay? Or Uber?

Business models give policy insights

In a recent Facebook flame war, we were discussing different kinds of health insurance systems. Understanding the business model of an insurance company might give you some insight into their incentives and potential actions:

Health insurance companies make money through underwriting profits (premiums minus payouts and expenses) and investment income on the premiums they collect.

Insurance must ALWAYS be priced higher than needed to pay out because all that administrative overhead, salaries and buildings, needs to be covered.

Furthermore, a for-profit insurance company wants to grow profits. That means raising revenues and/or cutting costs.

How can they cut costs? By streamlining operations and finding ways to avoid paying out on existing policies.

How can they raise revenues? By increasing premiums above what’s necessary to pay out on their pool of premiums.

(They can also find ways to increase their investment income, but that’s longer-term and much less under their control. They can even play in the the $1.2 quadrillion derivatives market, which no one really understands, and Warren Buffett considers a ‘Weapon of Mass Destruction’.)

Now, when we formulate our own opinions about healthcare policy (which we all do, rather than simply parroting our favorite pundit, right?), we can at least understand that the business model of insurance companies constrains their actions.

Your assignment:

Every time you interact with a business today, ask yourself:

  1. How do they make money? Where does their cash come from?
  2. In order to make that money, how much do they have to spend, and from where?
  3. What are the levers that their business models allows? What are the risks and benefits of their model?

Pretty soon, you’ll discover you can spot opportunities to bring business models to places they’ve never been used. Often, you’ll discover there’s a reason they weren’t used there. But other times, you’ll find that a shift in business model just might make you the next PayPal.

If you want to read more about [my thoughts on the insurance example implications, keep reading…

Health Insurance Business Models Drive Policy

IMPORTANT DISCLAIMER: This is intended as an example of how understanding a business model leads to confidence in predicting the behaviors of people who use that model. This post reflects my layman’s understanding of insurance business models. If anyone knows better, please please correct me.

For you gentle readers who also don’t know the inner workings of the industry, read this to understand how a business model leads to predictions of behavior. Do not read this for accurate information about the insurance industry.

For-profit health insurance companies must overcharge

I’m guessing that competition will not produce efficient health insurance. Health insurance companies make money only two ways: through underwriting profits (premiums minus payouts and expenses) and investment income on the generated float.

Insurance will always be priced higher than needed to pay out because all that administrative overhead, salaries and buildings, needs to be covered.

Furthermore, as long as we have a market that defines “healthy” profits as profits that grow yearly, there will be ever-increasing pressure to raise profits. That means raising revenues and cutting costs.

You can only cut costs so far on the admin side. But you can reduce your payouts by writing ever more complicated policies that in fact cover less and less. You can also challenge payouts, make the reimbursement process deliberately more cumbersome, lower the ceilings of what you will cover, etc.

And of course, regulation caps permitting, you can always raise revenue by raising premium prices.

Every year, due to the market expectation of continually growing profits, all these forces will come into play. (Premium prices will rise, and people will blame Obamacare or the lack of Obamacare or greed or whatever. It’s just the way growth-oriented markets work.)

Any for-profit insurance company will feel all those forces as a simple matter of doing business. So any for-profit insurance company in a competitive market will be pressured over time to do these things.

Even if their investment income is reliably positive, they can’t control that nearly as quickly, easily, and reliably as all these other forces. And if the company is heavily invested in derivatives (which Warren Buffett calls “Weapons of Mass Destruction”), well, at some point there may be a “correction.”

There are competitive pressures at play, as well. Price wars. When a competitor lowers premium prices below the actual rational value for a given policy, a company is pressured to match that pride and write unprofitable policies in order to compete … resulting in pressure to make up profits from one of the other sources1.

That’s why private mutual insurance companies are a good thing. They still have these pressures, but at least the policyholders own the company so the company’s goals are more aligned with the goals of its members.

  1. This is one source of Warren Buffett’s wealth. When he acquire an insurance company, he gives them permission to stop pricing policies below expected payout values, even if there’s a competitive price war going on. ↩︎

The Fourth Circle of Focus: Scaleability

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In my article on focusing your life around what you’re good at, what’s needed, what you love, and what’s scaleable, the “what’s scaleable” is a piece that’s new to me, and may be new to you. It’s worth talking about, though.

Four intersecting circles

The Myth of Hard Work says that if you work hard, you’ll get ahead. And if you work harder, you’ll get aheader. If you work super-hard, you’ll be Bill Gates. (And if you work hardest of them all, you’ll be Batman.) Sadly, that’s wrong.

The Industrial Revolution enabled fortunes to be made because it allowed scale. A lone blacksmith could only make a single horseshoe an hour. In a horseshoe factory, however, a lone machine operator can make dozens of horseshoes an hour. What makes the riches possible is that machines and technology allow us to scale.

Scaleability matters to whatever you do

When I’m working with a coaching client around any project that involves a lot of people (generally it’s a business), we often spend some time honing in on scaleability. The business buzzword “leverage” comes into play here. We look for ways they can scale their results without scaling the work and cost to the same degree.

Some businesses don’t scale well at all. To add one more diner’s worth of revenue, a restaurant needs more kitchen capacity, more food, more server capacity, and time to cook that diner’s meal. Some of those elements can be squeezed out. By offering a limited meal, cooking in advance, and dispensing with servers, fast food restaurants can serve more customers with fewer resources. But even so, scaling still requires a lot of effort and systems.

The internet allows unprecedented scale

The internet’s joys and woes come from the fact that it makes new kinds of scale possible. Craigslist, a single website, can handle all the classified ads. All of them.

How does your business scale? In non-information company, growing a business requires resources up front. If Ben and Jerry’s wants to add a new product like Oreo Ice Cream cake, they have to buy honkin’ truckloads of Oreos, then find customers for all that delicious Oreo goodness.

But in information businesses, growth happens by reaching more people.

How the internet enables scale

Before the internet, some people who sold information sold it in physical form, books and reports. Scaling required more physical resources. Other people sold it electronically, but charged for the access points. Bloomberg made his billions by renting out Bloomberg terminals, over which he was able to cheaply send his real product, the information.

The internet provides a common access point that anyone can use: the web. And everyone already has the physical stuff they need to read the information, monitors and computers. So internet businesses don’t require hard, upfront investment to scale.

That’s why, when revising our company strategy, we shifted from a coaching-driven model to an online course driven model. It fulfills that fourth circle. It scales better.

A 20-minute video about online businesses and scale

I’m helping my mentor Danny Iny achieve scale by introducing him and his products to my list. I happen to believe very strongly in him and what he has to say, so we’ve become affiliates. We introduce each others’ products and services to our audiences, allowing us to reach more people without the kind of investment that would be needed for a traditional business to scale. (WalMart, for instance, grows by having to buy or rent a new store location. Then they have to sweep it. And then hang curtains. And get the utilities connected… Who wants to work that much?)

Danny has a video that lays out the fundamentals of why online businesses are a good thing from a business perspective. Danny grew a seven figure business in just a couple of years, and I’ve found his grasp of business to be superb.

Danny’s video explains the fundamentals of online business. You can check it out here:

Entrepreneurs aren’t primarily risk-takers; their main mindset is something else entirely

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Entrepreneurship isn’t about taking risks

Entrepreneurship is all the rage these days, and I’ve had a lot of people ask me if they have “the right personality type” to be entrepreneurs. They think entrepreneurship is about risk-taking. Entrepreneurs must love risk, right? Since obviously, corporate employees love safety, and they’re the opposite of entrepreneurs. This sounds like a great story and a great rationale. It’s just wrong.

Entrepreneurs generally are not huge risk takers. Indeed, non-monetary considerations are often more important. In fact, many entrepreneurs try to minimize risk. What makes them different from corporate employees is that entrepreneurs maximize experimentation.

A business starts with an idea for a product or service that benefits some market: pink widgets. The business launches the widgets, trying to sell them to football players. No one buys. So they make some blue widgets. Some football players buy, but unexpectedly, many teenage goth girls buy. The next year, the company tries selling blue widgets to teenage goth girls in a different country. They sell tons. They’ve found their product (blue widgets) and their market (teenage goth girls). Now they expand into more and more countries, creating billions of the same products to sell to the same market.

In the early lifecycle, the startup is rapidly experimenting and testing the product idea and the market. Once they’ve found the combination that works, the mindset shifts from rapidly-experiment to scale-the-business. Scaling requires getting good at doing the same things over and over and over. Suddenly, it’s all about doing the same thing over and over, getting better as it goes.

This is a profound shift. Experimentation needs quick decision-making, creative thinking, and a willingness to cut corners as long as you get the learning you need. Scale requires rigor, process improvement, and a willingness to have single-minded focus, and tweak the details so you can be as efficient at mass-production as possible.

That is what you need to assess when deciding whether to pursue something entrepreneurial. Yeah, it’s risky if you don’t control your costs. But that’s only part of the equation. Think less about taking risks, and more about doing experiments. Because at the end of the day, entrepreneurship is about minimizing your risk while maximizing the learning you get from rapid experiments with your product and market.

Punt resolutions; use strategy, instead!

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It’s January, and we all know what that means: time to set New Years resolutions that we’re going to break! The main things resolutions are good for is causing the gym to get way too crowded for the first six weeks of the year. You have a tool at your finger tips that will do far more for you than simply setting resolutions.

Skip your resolutions and set strategy, instead.

A strategy is a 50,000-foot view of your life or business. A good strategic plan gives you a roadmap for where to put your time and effort this year. It tells you what to say “yes” to and what to say “no” to.

As you know from my article on how vision and mission relate to strategy, your strategy for a year answers the question, “How can we further the company vision, given the realities of the markets, customers, and resources under our control right now?” Strategy is how vision plays out in today’s real world context.

But when you’re setting your strategy, make sure to approach it from both the outside and the inside.

Look Outside to Set Strategy

Your strategy depends on what’s going on outside your company walls. You need to develop a plan that makes you more desirable to customers than any of your competitors. That means knowing:

  • How do your customers think of you? What product category do they put you in? (Don’t assume you know. A yacht isn’t necessarily a vehicle. Rather, it may be a status symbol.)
  • Who else is in that product category? If you’re a yacht, are you competing against Toyota and JetBlue (transportation) or are you competing against Jetstream and Sotheby’s (status symbols)?
  • What advantage do you have over your competitors?
  • How can you best communicate that advantage to the market?
  • Who has the power in your ecosystem, and how can you increase your power?

One of my favorite books on external strategy is Co-opetition by Adam Brandenburger and Barry Nalebuff. If you’ve ever heard of Michael Porter’s “Five Forces,” Co-opetition goes one step further and deepens the model. Just the way Brandenburger and Nalebuff define competitive and complementary relationships is worth the cost of the book.

Strategy Looks Inside

Looking outside is only half of the equation. You also need to look inside when you formulate your strategy. If strategy is vision made real now, part of “now” is the resources you have under your control. You need to take stock of your resources and decide which resources will form the foundation of your strategy.

When you make ultra-yachts, two of your assets are your customer list (oodles and oodles of rich people), and your yacht design capabilities. If you base your strategy off your customer list, you will expand into other products and services that your current customers might want. Like platinum dinner place settings. If, however, you base your strategy off your design capabilities, you might instead expand into other kinds of yachts, or other sea-faring vessels.

My favorite book on internal strategy is Top Management Strategy by Tregoe et al. The book is 30 years old, but is pretty much just as relevant today as when it was written.

Treat yourself to a 3-martini lunch

If you don’t have a formal strategy session planned, then at least take a long lunch. And over lunch, review the vision/mission for your venture. Why are you in the game in the first place? Then ask yourself how that gets expressed in the world of 2017. Review your external factors—competitors, customers, suppliers, and so on. Review your internal resources, and decide which you plan to base your strategy on.

Then go for it. Give shape to your plans for the next year. Make sure to build in time to review and course correct, and get your year off to a good start. A New Years resolution might only last a couple of weeks, but a good strategy will support you for a year.

Leading by Example: Walking Your Talk … Under a Magnifying Glass

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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. A late arrival, a smile, or a nod could introduce chaos. A CEO I worked with was looking over his marketing department’s latest campaign. He frowned at a storyboard before strolling away.

Unknown to him, the team saw the frown, scrapped the campaign, and spent the weekend reworking everything from the ground up. When he found out, he was flabbergasted. He never thought a simple frown would change the team’s direction.

Your reactions to employees and their work will send signals. Remember this! If you notice yourself frowning or smiling, nodding or shaking your head when it may send the wrong message, stop. Think about the message you may have sent, and say or do whatever it takes to make sure your audience knows your intent.

Watch your words, too. A joke may not be a joke. A consulting firm’s Managing Director smiled and quipped “Remember, if you’re not here Sunday, don’t bother coming in Monday.” He was smiling. Everyone knew he was joking. And as one team member later told me, “I felt like I had to come in Sunday. Sure, he was joking. But he’s the Managing Director. Maybe it’s not 100% a joke.”

You lead by demonstration

Of course, the Managing Director was there Sunday, thus insuring everyone would know weekend appearances are mandatory. Your actions will, by demonstration, always be the most significant way you communicate standards of behavior and priorities to your company. The Managing Director cared deeply that his people have an outside life, and said so on many occasions. But his coming in on weekends spoke louder than his words in signaling acceptable behavior.

What you don’t do also matters

What you don’t say out loud, the actions you don’t acknowledge, and the signs you don’t show send powerful messages, as well. The messages sent by omission are harder to detect. After all, there‘s nothing there to examine! But there are things your employees might expect that aren’t forthcoming.

If you don’t acknowledge people, it can send a message that you don’t value their contribution. Different people need different acknowledgment. For some, it’s public recognition. For others, it may simply be mentioning “Hey, you did a really great job.”

If you don’t give feedback when someone does a poor job, you send the message that their performance is fine. If someone is screwing up, they deserve to know as early as possible. Otherwise, they’ll walk away with a message that does neither of you any good.

Common courtesy is increasingly rare, and its absence communicates a subtle lack of respect or lack of individual concern. A simple “Please,” or “Thank you” with a smile and direct eye contact takes only a couple of seconds. If you don’t have time even for that, then people will (rightly!) conclude they aren’t important enough to warrant your attention.

Making decisions in isolation quickly lets people know you don’t trust them. I have worked with companies in which the senior managers are very open with their big decisions, and other companies in which “we can’t tell them that” is a common refrain. As far as I can tell, involvement signals faith that your employees have something of value to contribute. When that involvement is missing, the message of distrust is loud and clear.

Not sharing bad news sends the message that everything is fine. It’s easy to keep bad news quiet, for fear of hurting morale. But framing bad news as a reason to rally builds a team instead of breaking it down. Shared challenge is the stuff of bonding. Use it!

A Great Business Leader Knows His Impact

Matsushita, one of history’s most successful businessmen, knew the impact he had on everyone around him. As this story shows1, he even appreciated the messages conveyed by what he didn’t do.

The father of $75 billion empire, Matsushita was revered in Japan with nearly as much respect and reverence as was the Emperor. And he was just as busy.

One day, Matsushita was to eat lunch with his executives at a local Osaka restaurant (Matsushita Leadership by John Kotter). Upon his entrance, people stopped to bow and acknowledge this great man. Matsushita honored the welcome and sat at a table selected by the manager.

Matsushita ate only half of his meal. He asked for the chef, who appeared in an instant, shaken and upset. The Great One nodded and spoke: “I felt that if you saw I had only eaten half of my meal, you would think I did not like the food or its preparation. Nothing could be less true. The food and your preparation of it were excellent. I am just old and can not eat as much as I used to. I wanted you to know that and to thank you personally.”

Concrete next steps

If you find yourself under the magnifying glass, here are ways of mastering the situation.

  1. Don’t get caught off guard. Schedule five minutes at the end of the day to review your day, note who you came in contact with, and simply ask yourself what messages you sent.

  2. Use the magnifying glass deliberately. At the start of the week, choose a message you want to communicate by example. Spend a moment or two identifying exactly where you can send the message, and how you have to behave to send it. Then do it.

  3. Check for messages of omission. During your daily review, ask yourself who you didn’t contact, but who might have expected it (you may not know who at first, but over time, you’ll learn). What message does the lack of contact send? What message will rumors of what you did do send to those who didn’t see/talk to you?

  4. Review company systems. To make sure you’re sending the same message as your company, review the systems once a year or so. Review your compensation plan: what does it communicate about company goals? What behavior does it encourage? Discourage? Review your decision making and feedback processes. Ask yourself if you’re omitting anyone or anything in those areas.

Communicate well!

  1. Matsushita story excerpted from Dr. Mark S. Albion’s Making-a-Life, Making-a-Living ML2 E-Newsletter #56. Free subscriptions and information on his New York Times Best Selling new book can be found at http://www.makingalife.com. ↩

More than one strategy is actually… no strategy at all.

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Creating a strategy

My friend Carey’s business had stalled. Since I’m one of those people who loves to offer unasked-for advice (knowing the recipient will be eternally grateful), I offered some. “You need an overarching strategy,” I intoned, sagely. The unfathomable response, “Thanks, but no thanks. I already have lots of strategies.” Lots of strategies? Hmm. You can’t have multiple overarching strategies at once. But Carey wouldn’t know that, because we’re never taught what a strategy is, or how to make sure you have a good one. Do you have a strategy? For business? For life? Do you even need one? What is one?

Strategies Aren’t Tactics

People use “strategy” to mean a to-do item, but that’s not a strategy. That’s a tactic. Carey has 16 different products under development at once. Those aren’t 16 strategies; they’re 16 tactics. A strategy is a directed plan you use to commit your time and action in a single direction. By aligning how you spend your time, your money, your resources, and your communication, you greatly increase your chances for success. If Carey’s projects include designing a high-fashion clothing line for the Milan runway and opening a Veterinary Pet Grooming franchise, those will compete for time, attention, and dollars. When the clothing line needs another 5-gallon tub of sequins (I never said Carey had taste), that’s money that could have been spent on tick sponge-on. Neither business gets the full resources needed to insure success.

Set a Vision that Drives Your Work

Before you can create your strategy, you need to know where you want to end up. What’s the result the strategy is designed to produce? That’s the vision that drives your work. Start your strategy by setting a compelling, substantive vision. A vision needs to be specific enough to use to make decisions. It needs to be general enough to allow flexibility in what you choose to do. My friend Rowan’s vision is “to build a business.” That’s so vague that it could cover everything from fashion design to tick removal… and so it does. But make it more specific, and it becomes a powerful guide. In an alternate universe where Rowan is capable of focus, the vision could become:

A business that helps pet owners keep their pets healthy 365 days a year1.

This vision can be used to decide which product lines to enter, and to allow a range of options: tick treatment and nutritional consultation both fit. It can also be used to decide which product lines not to enter: high fashion that features too many sequins2.

Create a Strategy Linking Your Goal to Your Reality

Now you have a vision. But while visions are great, they’re still too abstract for action. If a new Puppies R Us (We Sell ‘Em, You Care For ‘Em™) opened down the street from Rowan’s storefront, concentrating the business on dog care could be Rowan’s ticket to mansions and private planes. But if the new store is Spiders Galore: Unusual Pets for Unusual People, concentrating on the care and grooming of Brachypelma emilia might make the most sense. Begin crafting your strategy by linking the vision to your current reality. Assess your resources — what you have a lot of, and what you’re short on. Assess your situation — outside forces that might help or hinder different courses of action. Create a high-level plan that uses your resources to move towards some way to realize your vision, given your current environment. Rowan can take the pet health business vision, and link it to the things in real life that will make it happen.

Point tactics towards a vision to get the job done right. Then link it to reality.

If Rowan has home office space, an email list of pet owners, and a vast network of veterinarians, Rowan’s strategy could be to form an online pet care referral network. There could be an app, and a website, and a huge campaign to sign up hundreds of veterinarians from around the world. If Rowan has a retail storefront near Puppies R Us, but no mailing list, the strategy could be to create in-person care for dogs and dog-related issues. Rowan could even propose a collaboration with Puppies R Us where Puppies promotes Rowan’s business and gets a referral fee. These are two different strategies. Both lead towards the vision of “a business that helps pet owners keep their pets healthy year-round.” Being in possession of the retail storefront, Rowan chooses the strategy of providing in-person dog-related care.

Keep Your Strategy Clear

Lastly, keep your chosen strategy clear and singular. You might have many tactics that comprise the strategy. Rowan can get the word out in many different ways: online banner ads, leaflets in the local community, and a Puppies R Us partnership. These are pretty different activities, but make no mistake: these aren’t strategies, they’re separate tactics supporting a single strategy. By having only this one strategy, Rowan can now concentrate all resources on the storefront. If the opportunity comes up to run a nationwide banner ad, the explicit strategy tells Rowan what to do: say “no” to the ad; advertising a Springfield puppy health service in Skokie makes no sense.

Think Strategically Throughout Your Life

A strategy helps you make decisions about where to put your time, money, and attention. We’ve been exploring strategy in business, but you can apply strategic thinking to other areas of your life. What is your vision for your life? For your family? Your Career? Spend some time forming your vision. Then look at today’s reality, and choose a strategy that will realize that vision as possible in your life today. You’ll get a lot more of what you want in life, and a lot less of whatever random the world throws at you. Then you can put your efforts into tactics that support your strategy. A scattershot approach to success is a recipe for staying stuck. Avoid this by organizing your tactics and resources using a well-chosen strategy. Align it all in pursuit of the vision that inspires and energizes you, and you’ll soon be enjoying plenty of success, while still having time to stop and pet the puppies.

  1. Closed on February 29th  ↩︎
  2. Lack of fit with the vision is only one reason not to enter that particular business.  ↩︎

The Internet will destroy commerce

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Last week I wanted to buy product X, locally. I couldn’t. Every search phrase I could come up with took me to a custom site from a big company. “Widget, Miami, FL” didn’t go me Miami Florida local businesses, it gave me specially crafted, search engine optimized pages from Walmart.com, saying “Miami Widgets” on a domain that redirected to Walmart.com.

I rarely issue proclamations about the future, because I’ve noticed that my ability to predict trends is reasonable, but my ability to pick the timing of those trends sucks eggs. But let’s give it a shot:

Advertising-Supported Business Models Will Decline

The more that media companies and software companies and game companies rely on advertising as their primary revenue base, the more the supply of advertising spots will increase. Eventually, the supply will exceed the demand and, except for a few extremely high-traffic sites, ad prices will be driven down … because ads will become much less effective unless the advertiser has the time, money, and skill to do the detailed analytics needed to find the few venues where they get a positive ROI on their money.

This will drive a lot of the ad-supported businesses out of business, because they just don’t have the reach to be able to be one of the high-value ad space suppliers.

As Will All Businesses That Rely on Ads or Search for Customers

This will drive a lot of smaller businesses out of business, because those smaller businesses don’t have the resources to spend on marketing analytics, which will become necessary for finding the few advertising outlets that actually work for those small businesses. The marketing analytics will become a cost of being in the game.

In other words, the internet will drive us toward a more anemic economy where there are a few big-company winners, and those without the resources will lose.

(Essentially, the internet raises the playing field for everyone to the point where only big companies can survive.)

There will always be exceptions for specialty niches, but not for general commerce.

I hope I’m wrong, but I from what I see on the ground, it looks like a plausible scenario.

The ongoing joke that is Silicon Valley Privacy

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SnapChat just revised their privacy policy. I decided to read it. It looked pretty good. Then I got to the section How We Use Your Information. How does SnapChat use the information? To provide services. To communicate with me. To monitor trends. And so on.

The final bullet point? Carry out any other purpose for which the information was collected.

In other words: SnapChat has no privacy policy, and places no limits on what they can (and presumably will) do with your information.

Google’s privacy policy is similar. It sounds really grand, but if you read it carefully, in critical areas it exempts Google from any actual restrain on behavior by including similar clauses to the SnapChat clause.

Please face it: Silicon Valley, that supposed bastion of libertarian respect for individual rights, is no such thing. It’s a collection of disingenuous, deceptive, liars who are happy to write multipage privacy policies for PR purposes, which have no teeth whatsoever.

Be very, very careful of anything you put on a computer you don’t own. And I’m sure that the license agreements we agree to when we buy our computers and install Windows or Mac OS X will contain similar escape clauses if they don’t already.

If a policy does not have genuine, real teeth (“Corporation agrees to pay $1,000 for every violation of our privacy policy”), then over time, all such policies that supposedly protect consumers will be eroded. It seems to be a natural law, and it makes me believe more and more in regulation. I would rather slow progress than have process come at the expense of the well-being of consumers. Business was invented to serve us, not the other way around.

Corporations seem to be nothing if not explicitly immoral. It is very sad to watch.