Dan Pink turned me on to this post by a guy named Jason and this one by Mark Cuban (at least I’ve heard of him) with tips for start-ups. I was mildly distressed by the focus on tech and software companies. What about an old school company that makes stuff out of atoms not bits? Not that some of their ideas don’t apply but here’s some that they missed.

1. Technology is a tool – a great one – but only a means to an end. If you don’t know what the end is you’ll waste a lot of time and money on useless technology.
2. Likewise computerizing a process only makes sense if the process is a good one. Otherwise you’ll just be more efficient at your ineffectiveness. Think about processes apart from technology and people. Then adapt them to the people you have and their special mix of strengths and weaknesses. Then adapt technology to fit your processes and your people. Sometimes the best technology is the lowest tech ones, but don’t use that as a cop-out to let technophopes avoid improvement. Sometimes the best technology is high tech.
3. Management’s job is to create an environment where people can do their best work. That means providing them with all the resources, instruction and time they require. It also means good processes. As Daniel T. Jones Chairman of The Lean Enterprise Academy said: “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.”
4. Your employees are not mind readers, nor do they think like entrepreneurs. If they did they wouldn’t be working for you. If they don’t do what you know should be obvious, it probably isn’t. Spell out your expectations in much greater detail than you think should be needed and repeat yourself much more often than you’re comfortable with.
5. Track the right data. If you have any kind of production facility you need to track error rates, productivity and the like. If you spend money you have to track costs. If you make decisions you have to track why you made them and how they turned out or you’ll never get better at making them. The saying is Practice Makes Perfect. not Doing Makes Perfect. The difference between practice and doing is evaluation against a standard. That means tracking data to evaluate so you can improve.
6. Use a sales funnel. This is a sub-set of what to track but sales data is so important I wanted to give it it’s own tip. You have to define your sales funnel – and keep refining it till you get it right. Then relentlessly track every sales activity to learn what works and what doesn’t. The biggest waste of money in most start ups is cost of sales. You’ll never get that under control if you don’t track your sales effort well. Not every sale is a good sale – often the margins are too low or the cost of selling too high. There are patterns you can learn but only if you track and evaluate. From the start. After a month of selling you’ll have enough data to gain some insights. After 6 months you’ll have a lot.
7. You can’t buy buzz. I agree with what Jason and Mark said about not buying swag or PR. Likewise with sponsorships at conferences and lunches at events. Nobody cares who pays for that. And getting your “name out there” is worthless. You want sales in the door, not your name out there. If you get buzz, great but lots of money has been made without buzz.
8. Cross train everyone. Every person should know how to do at least one job besides their own and every job needs to have at least one person trained who doesn’t normally work that job. Even you. In some cases there might not be one person who could do it all, but every aspect of every job needs a backup.
9. Your financials can tell you a lot – but not the way most people use them. You have to figure out what you want to know and have someone who speaks accounting as their first language set things up so transactions are booked properly and reports are relevant.
10. Have a dash board. You should have between 5 and 15 numbers you track in real time. Some on a daily basis, some weekly. But all in real time.
11. Be sure you don’t measure the wrong things and remember some important things are non-quantifiable. People tend to game whatever system you set up to measure so it helps to measure contradictory metrics. For example, if you just measure speed of output, quality can suffer. If you just measure quality, productivity can suffer. So measure both.
12. Learn how to have good meetings. Meetings get a bad rap because they’re done so poorly. Good meetings actually save time, and mistakes, and wasted effort.
13. Focus. That means learn to say no. To yourself and your wonderful ideas. Keep a list of someday projects and do them then. Someday is not on the calendar for a reason. It’s better to do 3 things a quarter and get them done (that’s 12 a year) than be working on 30 all the time and a year later be working on the same 30.
14. Celebrate failures and mistakes. But only the first time. If nobody makes mistakes, then you’re not taking risks or accomplishing much. Mistakes are great when you learn from them. Problems are great when you prevent them (not just solve them). You’ll know you’re doing this right if the company keeps making different mistakes and has different problems. If it’s SSDD (same shit different day) then you’re doing it wrong.
15. Capture everybody’s wisdom. Build a policy and procedure manual on the fly. Keep the master copy on a network where everyone can read it. When they have a question, don’t answer it – have them look it up in the manual. If the answer’s not there, put it there. It should always be a work in progress.
16. Don’t have rules or policies you don’t enforce. Which means don’t have stupid rules and don’t have too many to remember. The ones you have should be dictated by law or the customer’s needs. Nothing else.
17. Under Promise and Over deliver. To your customers (duh!) but also to your suppliers, your employees and your family.

This post is not about what you think. It really is about business. First a little background. I started a company in 1991 when I lived in Texas. Two years later I moved to Connecticut but the company stayed Texas. I’ve run it long-distance as a “remote control CEO”. I had to systemize the business to work like this and that’s what laid the ground work for my coaching other entrepreneurs to systemize their companies. About four years ago my wife took over and has done a wonderful job. She is much more of a people person than I. Here’s an illustration of that.

We have a system for tracking our sales efforts (number of calls, follow ups, contracts sent out etc) and our results. One of the guys in our fulfillment department quit and they decided not to replace him, figuring the people in the front office could fill in. This month, sales are down 33% from last month. That sounds worse than it is: we keep client for years and only get about 10 new ones a month (and we generally loose about 10 as well) so sales went from 9 to 6 and it so happens we only lost 6 so we’re even. But still 33% down is not the way you want to go.

My wife could tell from the sales tracking system that the number of contracts sent out was about the same as last month but the number of follow up calls was way down. And she could tell from the timing of when the calls were made (or not) that it’s because the people in the front who are now filling in in the back are letting the follow up calls fall through the cracks.

So what does she do? She goes over these numbers with our general manager and says basically “You see the problem? I’ll give you the month of April to fix it and if sales don’t come up we’ll have to do something different”

What would I have done? As a typical entrepreneur, I would have said that it’s OBVIOUS that the guy who left needs to be replaced and I would have been frustrated as hell that somebody didn’t see this coming half way through the month and waited till I saw it at the end of the month and I would have wanted changes made right now.

Which way is right?
What? You think I’m going to say my wife is wrong – all over the internet? I may be dumb but I’m not crazy. And I like to think that I’m not a typical entrepreneur anymore. There are three things to think about.

1. A typical entrepreneur’s approach only works if you’ve instructed people how to analyze the numbers and told them that it’s their job to do so and how frequently you want them to do this and how to come up with solutions to the problems they uncover when they analyze the numbers. If you’ve done that and put people who have that skill in the right positions then you have the “right” to be frustrated when they don’t do their job. In my experience most entrepreneurs don’t do any of this, but they still want the results of having done it.

2. My wife has never done this, and given the way responsibility is assigned in our company she has no intention of doing it. She’s keeping the job of analysis and problem solving on her desk. So her way is perfectly suited for our company – even though it’s slower than what a more typical entrepreneur might want.

3. I’ve given you a bit of a red herring by talking about the typical entrepreneur the way I have. If my experience of coaching entrepreneurs since 1994 has given me insight to what’s typical, the typical ones don’t even start to measure things to the degree that we do. So they would have no idea why sales were down. They’d just be upset when they saw the decline. So what appears to be slow as I tell this story (taking a month to see the problem and another month to fix it) is actually fast compared to what usually happens. (A month to see the problem and several months fuming about it while casting about for a fix – and maybe never uncovering the real cause). Because we’ve always measured a lot of stuff in our company, and always looked to find the root cause of any problems, not just the immediate solution, I don’t think I’m the typical entrepreneur.

Takeaways:

• You need to measure the right stuff. At first you don’t know what’s the right stuff so measure more than you think you need.
• Make sure your expectations for people are in line with their skill set, and what you’ve trained them to do. They can’t read minds.

[tags] management, entrepreneur, small business [/tags]

I mentioned this before but I don’t think I gave it the focus it deserves. The focus it deserves is actually in this New Yorker article and a shorter one in Fast Company.

But consider this key quote

If someone found a new drug that could wipe out infections with anything remotely like the effectiveness of Pronovost’s [check lists], there would be television ads with Robert Jarvik extolling its virtues, detail men offering free lunches to get doctors to make it part of their practice, government programs to research it, and competitors jumping in to make a newer, better version.

The article focuses on checklists to improve outcomes in hospital intensive care units. But has examples of their use in other fields, with results just as impressive.

Why They are Unappealing

But just like the timer, a checklist is so mundane we feel funny using it. We think it will dehumanize our workers or our work. In my opinion it does the opposite. For two reasons.

1. When the checklist is created (and improved) it encapsulates the best of our creativity and judgement to determine how to best perform a job. In other words it takes the best practices out of the heads of a few individuals and spreads them around the entire organization.
2. When the checklist is used, it provides consistentcy and recall of best practices. Consistency and recall are two things people are not terribly good at. By relying on the checklist for those parts of their job, they can free their brains for other aspects that people are good at. Courage, wits, and improvisation are three of these that are mentioned in the New Yorker article.

Would your business benefit from consistency? Best Practices? Courage? Wits? Improvisation – what I’ll call creativity? If so then I’d propose that management’s primary job is to create check lists and make sure they are used properly.

Takeaways:

• Checklists encapsulate the best thinking in your organization and make it available to everyone
• Checklists replace the parts of our brain we aren’t good at, and free us up to use the parts we are.
• The primary job of Management is to come up with the right checklists and make sure they are used properly.

[tags] best practices, entreprneur, check list, productivity, small business, management. CEO [/tags]