Joel Spolsky has a lengthy post on what is required for a software business. He starts off with a parable about a programmer sitting along in his apartment crafting code and eventually wondering why he’s not a financial success.

Can you imagine a plumber wanting to go out on his own and starting by soldering pipes together in his garage? Or a lawyer opening a practice by writing briefs hoping a client will walk in and need one she’s written?

But I bet you can imagine a musician who wants to make the big time, yet spends all his time alone in a room playing guitar. Or an actress who thinks taking another acting class will be the key to fame.

Why is that? There are some things people do for love of the craft. Software is one, so is music and acting. So also is gardening – but you rarely see someone who believes they can make a fortune from their garden.

It’s also true that people pay for software, and music, and acting (though not so much for other people’s gardening). This makes it so easy to mistake the business for the craft. And all the more tempting to do so when books and articles loudly proclaim “Do what you love and the money will come.”

Unlike a craft, a business is fundamentally a relationship (or at least a transaction) between two people. If you’re the provider, then the other person has to be the customer. And like a conversation the content can be of varying quality on any subject and it will still be a conversation as long as there are two people. But when there is only one person, no matter how good the quality of the content, it is not a conversation.

As Peter Drucker said decades ago, the purpose of a business is to create a customer -  not a product. Joel’s essay serves as a reminder of what else is needed to build a business using software as a product.

Takeaways:

• Just because you love it and you’re good at it, it’s not a business.
• Conversely financial success is not just about how good you are at making your product.

I saw a commercial last night on TV. A guy was pasting up billboards of women dressed in swanky clothes. As he turned away to get the next poster, the women in the ones he’d already posted winked and waved and moved around. The posters had a single word across the top (I believe it said “Transform”). I was thinking: I know this is about women’s clothes, but who paid for it and what do they want me to buy? Neither the visuals nor the audio gave me a clue. Till the last few seconds when the word KOHLS came on the screen. [Raise your hand if you knew that Kohls is a department store with 749 stores in 43 states catering to suburban women]. I said to my wife that if you didn’t know what Kohls is, the commercial would be a waste of money. My wife replied with two words: “Women know.”

Far be it from me to doubt the veracity of that statement. The problem was I was thinking of the commercial as a way to get new customers when actually it was a way to communicate with their existing ones – Preaching to The Choir. It all came together this morning as I put on a tee shirt to run (OK walk) on the treadmill. The shirt said, in big letters “I LOVE YOU MAN” and had a Budweiser logo. Remember that ad campaign? I doubt that it, or the talking frogs (or was it lizards?) got anyone to order a Bud for the first time. But it probably gave those already in the Bud flock something to feel good about and a reason not to stray.

Leaving aside the question of why women feel good about clothes and men about grunting amphibians, let’s look at the concept of Preaching to The Choir. Seth Goodin would probably argue that if your product is so bland that you have to resort to an animated swamp to differentiate it then commercials are a horribly wasteful way to do this. I don’t disagree. However, the need remains to connect with your customers after the sale. Another way to say it is, give your customers some reason to have a relationship with you that goes beyond the product.

Relationship beyond the Sale
This is why companies give out hats with their logo on them, why companies invite their best customers to an annual golf outing or such. If you think the relationship ends with the sale, you’re being very short sighted. For two reasons. First, it’s usually cheaper and easier to make your next sale to an existing customer than to a new one. Second, some percentage of those customers will become promoters for you if you give them a reason to.

Harley’s got it’s HOGS – Apple computer has evangelists – Jimmy Buffet has his Parrot Heads. Who do you have? I know, you’re going to tell me that you make ball bearings, which don’t exactly lend themselves to a lifestyle choice; or that you install wood floors and your customers only buy from you once; or that all this hoopla is too expensive. Well OK if you say so – let your competition get all the goodwill and referral business.

Personalize it
With a little imagination, and personalization, preaching to the choir can reap huge rewards. None of these ideas will appeal to all your customers. You can’t do a mass media thing. But that’s the beauty of a small company – you can get to know your customers and develop ideas that may only apply to some of them.

• Some people do like hats – or golf for that matter, but a lot of people like to be asked their opinion.
• Can you invite some folks to a forum or a dinner where they help you design your next product, or improve your customer interaction?
• Can you host a blog where people write in with stories of how they’ve used your stuff?
• Stew Leonard’s grocery store has a bulletin board where they post pictures people send in holding up a Stew Leonard’s grocery bag in places that range from in front of their RV or campsite to in front of the Eiffel Tower or the Pyramids. I always wanted to send one of my holding their bag in front of Kroger’s or Stop & Shop, but I doubt they’d put it up.
• Lexus dealers in various cities have been known to chip in together and buy premium parking slots at local sports events. For free (or cheap) Lexus owners get to park there. It’s a visible advertising thing as well to others who walk by. They also have free barbecue and other giveaways.
• When I was in sixth grade, my friend Johnny Salkin was some kind of tester for the Life Saver Candy company. He got new experimental flavors to evaluate and tell them what he thought. Man, did I want to be on that mailing list. I still remember it when I buy their candy.

Takeaways:

• Do something extra for your customers.
• A gift is nice, but better is to set up something they can contribute to or be a part of.
• The key word is not preaching or choir – it’s relationship.

You’ve heard that before right? Well, it’s not always so easy.

I think one thing that sets big companies apart from small companies are how they use measurement in their decisions. Big companies get it wrong because:

• A) they measure the wrong things – we’ve all heard stories of call centers giving bonuses based on shorter call times which result in operators ending calls quickly, but not necessarily successfully.
• or B) they measure things that are easy to measure and assume that makes them true. How often have you had to fill out a survey where you rate things from stongly disagree to strongly agree. You know that even if you’re diligent and honest the very nature of the questions give a skewed impression of what you really think and how many are honest and diligent when they fill these out?. Multiply that by the hundreds or thousands that get averaged into a report, and it’s no wonder executives make decisions that don’t fit the market.

Small companies get it wrong because measuring things is expensive and time consuming so they just don’t. I think this is one of the leading causes of small company failure.

Seth Godin had a couple of posts on the subject: Measure that  and don’t measure this.

To which I respond: Effort (and results) skew toward what you measure and often they skew away from something else.

If you measure widgets per hour you’ll likely get more efficient – more widgets per hour. But perhaps you’ll be sacrificing quality. If you measure quality (say defects per batch) you’ll get better quality but perhaps you’ll be sacrificing efficiency.

The trick is to put in place the right set of complimentary measurements. Measure both efficiency and quality understanding that they are both important but may tend to be mutually exclusive. So you want to hit that sweet spot in the middle.

I learned this from Andy Grove’s book “High Output Management.” It may be a partial solution to the dilema shown by Robert Austin in his book “Measuring and Managing Performance in Organizations” His point (I’m paraphrasing here) is that it’s impossible to actually define, let alone measure, all the important things in an organization. Hence whatever measurements you make will be an imperfect representation of what you want (like a blue print is a representation of a house, but you can’t live in the blue print.) And  whenever you measure performance, people learn to game the system and do more of what’s measured at the expense of something that may not be measureable but is important.

All this shows (to me anyway) how important is the job of management – not just leadership - in an organization. It’s the job of management to develop systems whereby people are encouraged and supported to do their best in the direction of the organization doing more as a unit than people can do independently. What to measure and what to do with those measurements is a big part of this.

Takeaways:

• Figure out the few things that are important to measure in your company right now.
• Put in the effort to measure them properly. Then use those measurements.
• Realize that what you measure doesn’t tell the whole story.

Many moons ago a buddy and I got a sub-contracting gig putting roofing shingles on a building. It was our first and last roofing job – we were terrible. And not because we only had old fashioned hammers instead of the (then) new-fangled air guns. No, it was because we didn’t know what we were doing - didn’t line things up right, didn’t use the right kind of nails etc. An air gun would have only helped us makes mistakes quicker.

Technology is like that. Besides knowing how to use it, you have to know what to use it for. For most businesses that means you’re going to have to change the way you work in order to get the benefit of new technology. And you’re going to have to change your mind set. Buying the newest technology won’t do that for you. Ten years ago, many small companies didn’t adopt new technology for that reason. Today that would be a death sentence.

Put Data in Only Once -Use it Often
Here’s a small example in the field of IT – information technology. One of the principles of ideal IT design is that you only have to capture data one time in one place, then you can use it everywhere. This means its much cheaper and easier to use the information you have than it would be if it were only captured on paper.

For example, I know a guy who owns several title companies that do real estate closings. Each time they get a new file, they capture a lot of info including the name of the person who sent the file. In the real olden days, those files were paper. so even though each file had a source, there was no easy way to aggregate that information and learn who had been sending over the most files every month. Or who was sending over the most profitable files, or if there was a pattern of whose files tended to have more problems.

That was the olden days. Putting that information on a computer helped a bit. But unless you changed how people put that information in, you still couldn’t get it out right. Some would put it in a spreadsheet, some in a word processing document. different people might get business from the same source but spell the name differently or one would use a first name and last name and one would use the last name and the company name.

But when the operating procedures (ie the ways people work) are adapted to use the tools, then data goes in the system correctly. Once that data is in the system it’s relatively easy to get it out for all kinds of new uses. This makes it cheap and easy to do things like:

• Reward people who send the most business
• Reward people who send the best business
• Educate people who send problem business
• Search out and build a better relationships with people who don’t send very much business

However, the owner of the companies that I was telling you about is from the old school. He wasn’t raised on technology, and while he does use it, he’s never been shown how to get the best use out of it. So he didn’t think of all the things he should be able to do with it.

But if you want to survive you’d better get with the program – your competition is, and your customers demand it. Back when I did my one and only roofing job, many knowledgeable roofers still used a hammer, not an air gun. None do today.

Takeaways:

• If a salesperson tries to sell you solutions – RUN AWAY! They are selling tools.
• Learn how to use the tools – and that means changing the way you work and the way you think.
• Have a technology audit – get someone to come in and look at the way you and your people use technology. The result should be changes to the way you work – not just sales of more stuff.

Would your life be improved if you could influence others better?

Check out this interview posted by Guy Kawasaki. And be sure to take the test

When work is physical you need time & motion studies. Frederick Taylor pioneered this around 1900. He found out, for example, that a guy (it was always a guy then) could shovel more stuff in a day if he didn’t overload the shovel.

When work is a process you need process design and proper automated tools. Check out The Goal by Eliyahu Goldratt and Lean Thinking by Womack and Jones.

Your work is probably neither. It’s probably knowledge work and often interrupted. That needs a time management system. Not every system works for every person. Some people need piles and have to see all their stuff or they loose track. Some need a clean desk and properly labled files. Some use cards or paper, some electronics, and some all of the above. I can’t even recommend one system from experience because I work best after I’ve just started a new one. A few months later it all goes to hell and I wait a while – then find another and restart the cycle. At my age (or actually once you’re past 30) it’s time to stop trying to improve your weaknesses and learn how to prevent them from causing catastrophies. Then play to your strengths. That saves a lot of time.

I can tell you that time management is a misnomer. You can’t manage time – you can’t save it or allocate it or spend it the way you can with anything else we “manage”. You can only manage yourself within the time we all have. But it has a nice ring to it so we’ll keep using that term.

I can also tell you the single best read on the subject is Getting Things Done by David Allen. His system, called GTD for short, has inspired countless web sites. Google it when you have some time.

But here’s what all the systems I’ve looked at have in common:

• Review – They all require a periodic review of EVERYTHING, Daily, hourly, whatever works for you but no less than weekly.
• Transitions – No one really multi-tasks. We just switch back and forth between many things so quickly that we don’t loose our grip. The best systems force you to slow down this process and deal with your transitions in a way that makes it easy and quick to pick up where you left off. I’m using clear plastic folders now – a new one for every task. All the papers have to be in that folder expect for the one (only one) thing I’m working on now.
• Priority – With a good system in place you’ll actually do less. You’ll know what has to be done now, what can be put off and what can be eliminated. You’ll have better ways of delegating and following up. You’ll get the distinction between urgent and important.

Some things I’ve not seen any system recommend:

Empower your employees to manage your time. Regular meetings on certain subjects are one way to do this. It clumps all the work on that topic to just before and during the meeting. Another is to empower an assistant to demand certain things of you at certain times. One client, an attorney, stopped working with me after a couple sessions. I told him to have his secretary come in at the end of the day and insist on getting his time sheets, before she went home. She then gave them to the person who did the invoices and he started getting paid a lot quicker, and a lot more. (It’s hard to bill someone for all the work you’ve really done after weeks have gone by). It made such a difference in his life that he didn’t need me anymore.

Stop managing your employee’s time. That means when you give them more stuff to do, they can not assume you know what’s on their plate and that you know if they have the time to do it all. Instead they are required to assess if they can fit it in by the deadline you give them (you do give deadlines don’t you?) and if not, they are to immediately tell you this and discuss your priorities for what they should postpone.

Takeaways:

• Stay on top of transitions and you’ve got half the battle won.
• Review more often than you think you need to. The reason you feel so good before you go on vacation is you’ve reviewed everything and know there’s nothing lurking that you’ve let slip.
• Google David Allen’s GTD. I learned that bit about vacations from him.

Owning your own business is one of the most amazing ways to get what you want. As long as you understand how the game is played, you get to choose things like where you live and work, what kind of work you do, who you work with, when you work. And oh yes, you get paid for it if you do it well.

Over the years I’ve cataloged 22 different kinds of things things people want from running their companies. Only four are primarily focused on money. Seven focus on emotions or values, five on lifestye, three on community or people, and two are mostly related to the future.

Have you ever described in detail what you want from your company? If you do there’s a better chance you’ll build your company in a way that helps you get it. Yes, there are times when the choices are mutually exclusive. But knowing what you want makes it easier to choose.

Sharp readers will notice one the numbers don’t add up to 22. The missing one is “company growth” and it’s really a stand-in for all the other things you want.

Takeaways:

• Knowing what you want makes it easier to get it.
• Partnerships can get into trouble when what each partner wants requires them to grow the company in incompatible ways.