Here’s a picture of my desk. It’s got ZERO papers on it. If I’m working on something I’ll put that ONE thing on the desk. Then put it away when I’m done, or when I’m interrupted. This concept is new to me (as anyone who’s seen my desk can attest). We’ll have to see how long it lasts, but I’m liking the way that it feels. I’m more focused and feel I have more choice in what I should be working on. And those nagging projects that I needed to do but didn’t want to get started on? It’s harder to ignore them.
Look below for a view of what it used to look like:
And that blank stare you see? The clutter made it hard to focus. But when there’s nothing on my desk I have to decide what’s the most important thing to work on now. I can’t fool myself into thinking I’m doing something important when I’m working on what’s merely urgent (or worse!). When there’s only one thing on my desk I know what I have to work on. When there’s two things on the desk (or more) I’m distracted.
You may also be able to see I’ve got ZERO emails in my inbox (the monitor on the left). I realized I was using it as a holding tank and doing so was cluttering up my mind. I’m using gmail so I just selected them all and archived them. That way I can find them with search if I need to, but if I don’t ever need them then I don’t need them. As mail comes in I’ll check periodically and empty the box every time. I’ve never been a huge fan of labels (folders) for email but I’m starting to find them useful. I now have one called “later” for stuff I want out of my inbox but don’t want to take the time for now.
A Mind is a Terrible Thing To Clutter
You do realize that multi-tasking is a myth don’t you? You can’t really do two things at once, you just flip from one to the other in very small bits. Like talking to someone on the phone while you’re having a different conversation with someone in the room. You don’t really hear them both at the same time. You just ignore parts of each conversation that (hopefully) you can infer when you switch back.
I’m trying to be more conscious about what I work on – meaning I’m deciding based on what’s important not what’s urgent (or distracting) unless I decide distraction is important for the time. It’s similar to the GTD process of emptying your inbox on a regular basis.
Applying this to a TODO list
I’ve started using Asana for my TODO / Project list. I like it because I can assign tasks to projects and see them that way. But in another view I can see all my tasks in a single list (called your inbox) This needs to be emptied regularly as well. The way Asana prioritizes tasks, you go to your inbox, and decide when you’re going to work on each task. You can assign it to TODAY, Upcoming or Later. I realized that the reason I kept so many things in my in box is I didn’t want to forget about them. The “Later” category is great for that. I can keep my Today list clean and not loose those wonderful ideas that I love (which often turn out to be not so great but that’s a post for another day).
It’s kind of like the concept of a WILL-DO list rather than a TODO list.
It’s devolved into a productivity discussion – which isn’t bad – but that’s not the bigger thought that inspired me to write. The bigger thought is
The difference between zero and one is huge!
Much bigger than the difference between one and two or even one and one hundred. You see this in lots of arenas. When a startup goes from zero sales to one – it becomes a company instead of just a prototype factory. That’s why so many small shops stick the first dollar on the wall. They don’t do that with the 2nd or the tenth or even the millionth dollar.
Zero mistakes is a great place to be. So is zero late shipments. Factories post how many days they’ve gone with zero injuries – not how many days since they’ve had one.
And the difference makes the one important as well. The only one is much more important than the best of two.
Takeaway:
I’m not sure what’s the best takeaway for this post. But it’s a new year. A year I hope will be marked by a one followed by lots of zeros in my bank account. Maybe starting with zero things on my desk and in my inbox will help.
Most sales people think they are in control and they move prospects through the various steps toward a sale. I’m suggesting that you think backwards – and look at the process from the buyer’s side. The buyer goes through 4 stages – sometimes with your help, sometimes without it, and sometimes in spite of what you do. These will make more sense if you consider a recent purchase you have made: something large-ish and non-routine like a new car or maybe a new cell phone or computer. Have you got that purchase in mind? Good. I believe all purchases are made by going through these same 4 stages, however in something small, like an impulse buy at the cash register they happen so quickly you don’t even realize it. So thinking about something bigger will be more helpful for this exercise.
I don’t mean stupid. Just that buyers at this stage don’t have your company or your product on their radar screen. If your purchase is a car, and like most people you go years between buying one, then you spend most of your life not thinking about new cars at all.
At some point it becomes time to consider a new car. You’re not ready to buy but you’re starting to pay attention. Maybe this stage was initiated by your car making some strange noise for the umpteenth time. Maybe you’ve had a couple kids since you bought your last vehicle and the car seats are starting to be annoying in your two-seater. Maybe some car company finally made something you’d like to buy and some ad really jumped out at you. But for some reason you’re now curious. Starting to look at models, features, prices etc.
Buyers at this stage have a budget and a time frame in mind. They’re in deal making mode, looking for the right place to purchase. Still doing some research but a different kind of research than those at stage 2. In the car scenario, you’ve narrowed down the type of car, the approximate price range, you know if you’re going for new or used and you’re starting to look for the place to buy it. Your research is helping you decide on what features, what make and model and maybe even what color. This stage carries on through the negotiation till you reach …
You’ve now plunked down your money and driven your vehicle off the lot. Congratulations. You’re now clueless about cars again, not to mention tires, service centers, and oil change locations. But you’ll go through the stages for those items soon enough.
A company needs sales to survive. If your company is alive, it has. Congratulations. But at some point as the company grows, you realize you need repeatable sales. An actual process. Something you can use to train and manage sales people and to increase sales. That’s where these 4 stages come in handy.
Realize that every prospect is at one and only one stage at a time. The stages are mutually exclusive but progress is not always linear – it can loop. So learn what people do differently at each stage. There will be things they say (or don’t say) things they do or don’t do at each stage that are different enough you can identify them. The details vary with each industry, product and even type of customer. So this exercise must be quite customized to be helpful. For example, if I’m at the clueless stage about cars, the only thing I’m doing is looking at some commercials on TV that I can’t get away from and maybe I’ll think about some environmental breakthrough I’ve read about if it applies to cars.
But when I’m curious, when a new purchase in 6 months or so away, I’m starting to be more active in my research. I’m talking to my wife about it. I’m looking up things on the web. I’m paying more attention to ads on TV and other places.
At stage three, serious, now I’ve narrowed down the price and if not the exact make/model. I know if I’m going for a compact SUV or a mini-van. I’m looking at what feature are just nice and which ones I really need. I’m searching for a dealer or looking on-line for a seller.
Whatever you sell there are things customers do that differ for each stage. This is complicated by the fact that there may be different types of customers for your product (who do different things at each stage) and if you have a complex B2B sale there are people in different positions who may act differently from each other at the same stage. This makes the process of identifying the stages more complicated but not impossible. In fact, the more complicated it is, the more important it might be so you don’t waste your time and money.
It may be that you can’t tell by strictly being passive, but a certain set of questions (what’s your budget, what’s your time frame, who else are you talking to) will let you know the prospect’s stage.
Once you know how to determine what stage the prospect is at, you need to determine the best thing for you to do at each stage. There are certain questions you ask at the beginning and others you only ask at stage 3. There may be informational or entertaining things you send my way if I’m just curious, but negotiations you do when I’m serious. You need to know what to do differently based on what stage I’m at.
If you do the wrong thing at the wrong stage, things will not go well. You may turn me off when I’m ready to buy. Or you may annoy me when I’m doing research and I’ll never come back. Or you may not close the deal when I’m ready to make a purchase. The point is that what you do at each stage is different. And my response to your actions will show you if I’ve moved to the next stage or not. If I haven’t then you can’t either.
In general, the things you do for a buyer at the start of the journey (Clueless and Curious) tend to be marketing activities and the things you do at the end (Curious, Serious, Sold) tend to be sales activities. Where the line is actually drawn differs by industry, product etc. But Marketing and Sales should work together as different parts of the same journey. This is why I like the position I’ve heard about recently: Chief Revenue Officer. Marketing AND Sales report to the CRO.
These are tools, but they don’t change the buyer’s journey. Just like a well-placed item at a supermarket checkout can make me go from clueless to sold in seconds, so can a website or even a tweet. Well maybe a tweet. But in any case only if it’s done for the right product, to the right customer, in the right context. In a more protracted sale, building a relationship with me when I’m clueless might be cost effective with a blog or facebook page in ways it never was in print. Then when I become curious or serious we already know each other. But just like any tool, it’s there to do a job. In this case it doesn’t change the nature of the buyer’s journey, but it may help you understand your prospects and react to them better.
I visited Zuccotti park on Sunday (Oct 16, 2011) and it brought back memories of marching against the Vietnam war in the 60’s – and yes, despite the fact that I remember the 60’s I really was there. In once sense the message was the same – Power to The People. A group feeling cheated and wronged were trying to change the course of those in power. But there were differences as well. Here are some random thoughts about those differences.
I hear a lot of complaints that OWS (Occupy Wall Street) is unfocused and needs a more succinct list of demands. I disagree. I think the lack of simple demands engenders a lot of conversation. And conversation was one thing that impressed me on at Zuccotti park. People were talking to each other. For the most part, the protesters were engaging others – media, tourists and just curious folks in conversations about what they believed. And the lack of a consistent message kept those conversations going because everyone I heard talk was there for a slightly different reason.
This contrasts sharply with my recollections of the “peace” marches in which I participated in the 1960’s. We were marching for peace against the war, but our rhetoric and behavior was anything but peaceful. We chanted slogans at people rather than talk with them.
The people in Zuccotti park showed a lot of concern for others. The place was cluttered but clean, their own sanitation department was organized to keep it that way. Even flower beds were fenced off and people were respectful of that. This contrasts markedly with my recollections of anti-war protestors looting stores and vandalizing property back in “the day”. I saw a man with tattoos all over his face reach down with a rag in his (bare) hand to wipe up dog urine while keeping others from stepping in it.
On what appears to be the “official” OWS site, they are talking about first aid just 1 minute into the 7 minute video.
Amenities – a strange word to use in a situation like this, but I can think of none better – ranged from a food line where anyone who wanted to could get a meal to a people’s library. There were probably a dozen buckets holding over a hundred books and even chairs set nearby so folks could read. Someone was even handing out blank calendar booklets
There were cops. Lots of them. But mostly I saw them just standing around. The only people I heard them admonish were the tourists. They had put up barriers to distinguish the park from the sidewalk and if you were on the sidewalk side, you had to keep moving. If you wanted to stop, you had to move inside so as not to block the walk way.
I’ve seen the videos and read reports of beatings and arrests. So I know terrible things happened. But none of the occupiers (or cops for that matter) seemed to hold a grudge the day I was there.
I saw none. I know there had been some by authorities against the protesters. But there’s much less violence from either side than I remember from the 60′s. I’m aware of the front-page picture of the man tackling a cop. but I’m also aware that seems to be the exception rather than the rule. When I marched in Washington DC against the war, protestors openly looted from local stores and trashed the place, and it was almost expected we’d get tear gassed – and we did. The tone was far from peaceful when I marched but it was on Sunday.
I hope it’s a renaissance – a re-ignition of the idea that our society functions best for those at the top as well as the bottom when the top and bottom are not so far apart. Even the IMF seems to think so. Hell, Eric Cantor is even pandering up to the idea. I doubt he’s sincere but one of the things that happens when people stake out a claim like OWS is it moves the conversation in that direction.
Shadow CoachingSurgeon Atul Gawande has a great article in New Yorker about hiring a coach to help him become a better surgeon.
He doesn’t call it this, but what he’s describing is “Shadow Coaching”. A shadow coach watches you (or shadows you) as you perform some activity and later gives you pointers and tips to improve your technique. This is the kind of coaching sports coaches do; also acting coaches, singing coaches, etc. Almost any kind of coach that improves performance works this way.
It’s useful because a coach has a different vantage point than you do (physically as well as emotionally) and can see things you cannot. A shadow coach also needs an understanding of the topic and the ability to teach things you would not have known. In Gawande’s case his coach was also a surgeon, and able to perform in the operating room. But this is not required in a coach. I doubt that 200-some pound, 50 year old Bela Karolyi (pictured above) could do any of the things he coached his 80 pound teen age girls to do in gymnastics competition, yet they won Olympic gold.
They can improve your performance in the following areas
This is the term I use for a less specific, but often more powerful type of support. A strategic coach is your confidante, your sounding board, your cheer leader and the one to kick you in the butt when needed. A strategic coach helps you achieve success (as you define it) in a broader sense than a shadow coach will. In fact one of the first things a strategic coach should do is help you put specific descriptions to your definition of success.
Strategic coaching also works because the coach has a different vantage point than you do, but in this case the important distinction is more emotional and intentional than physical. In fact it’s common for strategic coaching to work by phone with no face to face interaction at all. A coach can keep the big picture in mind and not get as distracted as you are in the day to day emergencies. Probably the single most useful thing a strategic coach can do is keep you focused on the important things and not allow you to get consumed by the merely urgent.
In working with CEO’s there’s often a fine line between coaching and consulting so I thought it useful to give consulting a short mention here. My working distinction is this:
A consultant brings in expertise that you didn’t have. A coach helps you maximize the expertise you already have.
Another way to say it is a coach is more focused on asking the right questions while a consultant provides answers. In my experience, CEOs of small to medium size companies want both. They want a coach to help them become better at what they know how to do, and at times they want a consultant to bring in some expertise that they have not yet developed.
Imagine you’re climbing a mountain and the fog rolls in. You can’t see the trail as far as you’d like, but you know you’re trying to reach the top. So you figure as long as each step takes you higher than the one before, you’re headed in the right direction. So you slog on. Moving higher each time. Sooner or later you reach the top. You know this is the top because in each direction the next step takes you lower, ergo, it’s the top. So you make camp (hard to do in the fog) and settle in for the night.
The next morning, the fog is gone, the sun shines bright and you see where you really are. You are indeed on top of the mountain, just not the mountain you wanted to be on. Off to the north is a higher mountain – the one you really wanted to reach. But between here and there is a valley. You have to go down to reach the higher peak.
You focused on making every step count, but the fog kept you from seeing where you were truly headed. You never took a step down but ended up on the little peak.
This is called the “Local Maximization Trap” And entrepreneurs fall into it all the time without even knowing it. Why?
Entrepreneurs are smart, thrifty and opportunistic. That means we’re “scrappy.” We can make it where others can’t. And it leads us to take maximum advantage of our situation. That usually means making sure each step is a step up. We cut costs, work longer, drive harder, and surround ourselves with a team that does the same. We squeak out every bit of production from our equipment, our facilities, and our people. We have our eye on the bottom line and it works. Then one day, the fog lifts and we find we’ve reach a local maximum.
Let me give you an example of one of my clients. We’ll call him Rick. He runs a manufacturing operation, started by his Dad 50 years ago. He’s been at the helm for a number of years, but still calls on Dad for advice on a regular basis. They get along very well. The company actually grew in the past few years despite the recession. They did $5.8 million in business last year and are closing in on 6.5 million this year. 12% growth. Profit is climbing as well.
Rick wants to build his company to $10Million in sales and he thought he was on track. At 6.5 million he thought he was two thirds of the way up a $10 Million dollar mountain peak, with nothing but climbing ahead. That’s where the green star is in the picture. But he was wrong. He’s really on top of a localized peak – where the pink star is.
He’s actually such a good entrepreneur, that in fact he’s floating in the air above that peak. What I mean is he’s on top of a hill that’s maybe 6.3 million high and he’s milking almost 6.5 out of it. He’s that good. He can jump but he can’t fly. He’s going to have to go down to go up.
I recently did an Orchestra Analysis of Rick’s company. What’s an Orchestra Analysis? It’s where we consider the company as an orchestra, with the CEO as conductor. We look at all the “instruments” in the company and see what notes they’re playing. There are a set number of instruments every company needs. What’s surprising to many people is that every company no matter how big or small needs all the same instruments. They just play louder or softer, or faster or slower in some companies than others.
To do an Orchestra Analysis we plot what notes all the instruments are really playing against the notes they should be playing to make the music the conductor wants, and see where the differences lie. Here’s some of what we found in Rick’s company.
When we looked at his sales operation we found most of the instruments were sitting idle. Rick doesn’t have any outgoing sales operation. He’s doing some advertising and giving quotes as the RFP’s come in. That’s how he’s growing. This is one reason he’s optimized his profit – his local maximum – because his sales costs are very low. But that has two serious ramifications. One is he’ll need to spend money building a real sales organization, one that reaches out, if he wants to grow. It also explains why even though the past few years have been good, profit in years before that has been erratic. He’s been at the whim of the market and not able to see changes coming in time to adapt.
There were other indications of a local maximum as well. His manufacturing space is maxed out. This also increases profit but limits growth.
Most critically, there is no in-house training program to develop line employees or
managers. This lowers his costs in the short term, but it keeps Rick trapped on the shop floor and not able to get out and move the company to the next level. That’s probably the biggest thing keeping him from growing the company the way he wants.
And the final indicator of a local maximum? Rick is turning down business, because he can’t fit it into the production schedule. This is a direct result of lack of investment in floor space, and developing employees.
At first he was turning down business he didn’t really want – C and D level customers. Loosing C and D customers is always a good thing. But he’s turning away some A’s as well. He estimates he turned away $200,000 in sales and $50,000 in profit so far this year. That’s a local maximum.
They can be – if you’re maximizing the right things and that’s where you want to be. But you can reach a maximum that feels like a pit if you’re maximizing the wrong things. You can maximize profit, for example, at the expense of cash flow; or market share at the expense of profit. That’s why before you do an Orchestra Analysis, figure out what song you want the orchestra to play.
In Rick’s case, he’s been closing in on this maximum for a while. Right now he’s maximizing profit, but that hasn’t always been the case. His frustration is that he’s maximizing his short term situation but sacrificing the sense of accomplishment and the money he sees in having a $10Million dollar organization.
Local maximums happen when you’re good at what you do and you move ahead one step at a time, without a good map of the territory. It’s not necessarily a bad thing if that’s the peak you want to be on. But in Rick’s case it’s not high enough. Here’s what I recommend if you’re in a similar situation.
Instead of moving ahead one step at a time, develop a map of where you are and where you want to be. Figure out how deep the valley is between the two. In Rick’s case that means figure out what kind of sales force he needs and what it will cost to develop one. Define what his training program should look like for managers and line employees. Understand how long will it take before he sees results from this. And decide what he should do about the lack of space, machinery and room in the schedule.
These things will all take investment. That’s what I mean by going down before you go up. He needs to have the resources, and the will, to cross that entire valley. If you don’t know how big it is, you can’t be sure you’ll make it to the other side. That’s why a good map is so important.
Living in Connecticut with some big trees in the yard, we stocked up on water, food we could eat without cooking, propane and then slept in the finished basement. We spent the entire time with running water (hot AND cold). We had no flooding, and enjoyed uninterrupted power, cable, phone and internet service. No trees or limbs down, though a small branchlette did tear a window screen on its journey down to earth but left the glass unscratched. That’s the extent of it.
We were fortunate. Also grateful for the funding and diligence of pro-active tree trimming around power lines that has been going on for years in this area.
Because of these facts.
Side note about Montreal. My wife went to Montreal on Friday to bring our daughter home after her summer there. They had planned to make the trip back on Sunday but as that was when Irene scheduled her visit they had to choose whether to come home on Saturday or ride it out up north and come back on Monday. They chose to arrive Saturday before Irene did. The right choice as it turned out; because damage to high rises which had been a concern for NYC never panned out there. But several windows were blown out of a high rise in Montreal – a building my family drove right by on their way home.
The point is that large scale trends can be irrelevant to specifics on the ground without being wrong. If your house did fine in Gloria (a REAL hurricane) but got flooded by Irene (JUST a tropical storm) the fact that, by some numbers, Connecticut did better than predicted doesn’t really matter to you.
That means that national or global economic trends of recessions, tight lending by banks, layoffs etc. may not be applicable to your business. Things may be better for you or worse depending on the specifics of your situation.
For example, most of my current clients are doing better than the national averages in recent months and are having trouble hiring. One whose business as always done better than his local competition is having hard times and seeing his numbers dwindle and is having to cut staff. We’re starting to track different data points to learn the causes of these things and how to exploit them.
And it isn’t about website design. It’s about how to incorporate story telling into your marketing.
If you have a website; if you write for websites; if you design websites, take an hour and watch this.
I know. It’s a whole hour. But it’s worth it.
http://www.marketingexperiments.com/images/multifiles/articulate/webclinic-07-20-11/player.html
By “most CEO’s” I don’t mean most of the people who have CEO on their business card; not those in charge of very large, public companies. Most of us run companies with less than 100 people. In fact, 50% of the American work force works for companies under 50 employees. That’s a lot of CEOs.
And by “Nothing All Day”, I don’t mean you’re lazy or hanging out at the beach playing angry birds. What I mean is that the stuff you do all day is not, for the most part “CEO work”. It’s usually what is done in a large company by sales people, or production folks or HR or accounting.
There are 2 reasons for this.
This is a trap. The more time you spend on important work, the less often emergencies pop up. If you don’t force yourself to block out time for the non-urgent then you’ll always be chasing your tail.
This is true for all but the very largest companies. Think of CEO as a function not a job. Like cleaning your house. It’s a function that needs to be done, but you don’t need a full time janitorial staff. So there’s nothing wrong with you doing sales, solving production problems, or any of that others stuff. In fact there’s a lot that’s right with it.
What you shouldn’t do is neglect the CEO functions your company needs because they are not urgent.
Think of that metaphor. The conductor makes none of the music. A small band (4 or 5 people) doesn’t need a conductor. Everyone plays an instrument – but someone chooses what song to do next, and when to schedule rehearsal. You’re probably mid-way between the two. You are the conductor but you also play an instrument (or several).
I posted four years ago that typical pro-business political positions are often actually bad for business because they are short sighted. In my experience working with business owners, lack of strategic planning is something they are almost always “too busy” to do, so it doesn’t surprise me that this problem expends to politics.
Seth Godin writes a post with a similar conclusion, though Seth adds some more profound insights – as he usually does.
One interesting line from Seth is “At some point, a healthy and fairly paid community is essential if you want to sell them something.”
Think about it. How well would your company survive without a market that had the money to buy your products, the time to shop for and enjoy them, and the leisure to pay attention?
What makes a SoloPreneur is not the lack of employees. Some companies without employees contract everything from sales, to production, to answering their phone. They are functionally equivalent to one of the other groups because the management frustrations you face are more like those with employees (even though legally and technically you don’t have employees).
Examples of true solopreneurs: Artists (graphic and fine), consultants, plumbers and other trades people, dog walkers, coaches, piano teachers, wedding planners.
The critical success factors of a solopreneur business model are these.
Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.
Let me know what questions you have and we’ll see if it makes sense for us to work together.
Companies at this stage have employees doing different jobs. But usually they lack formal departments or managers of those departments. Most employees wear several hats and do what’s needed at the moment. This is not always a bad thing.
In fact it’s useful for this reason: companies at any stage need all the functions performed by big companies. But they usually don’t need them full time. Nor can they afford a full time position for many functions. That’s why employees have to wear many hats.
One other characteristic of these companies is they are frugal.
What’s missing is they often don’t have time to plan for the future. They tend to management from crisis to crisis thinking they don’t have time to be strategic. And that often becomes a barrier that prevents growth. That is a bad thing.
The first place to start is The Company Blue Print. My program called 20 questions will help you specify what you want from your company at this time in your life and translate that into a blue print that will help develop your company so it can achieve your personal goals.
After that we usually work on better cash flow management. Why? Because taking time away from the day to day to focus on the future requires cash.
The next step is to document work flows and job expectations. Expectations (rather than descriptions) define what you expect a person to produce. This leads to better management, fewer crises and a more organized company.
Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.
Let me know what questions you have and we’ll see if it makes sense for us to work together.
This is a critical stage for a CEO. For the company to grow you need to stop acting like a one-man band, and more like a conductor. But with a difference. An orchestra conductor makes none of the sound him or herself, but is responsible for all of it. Companies of this size rarely need a full-time CEO. That means you’ll spend some time playing an instrument.
Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.
Let me know what questions you have and we’ll see if it makes sense for us to work together.
Can you go away for a week? A month? As your firm grows beyond 50 employees the CEO spends less time dealing with day to day situations and more time planning for the future.
That means you need systems and managers in place to deal with the ongoing operations and keep them up to the standards that have got your company where it is. In other words, the wisdom and experience that you’ve developed can’t just live in people’s heads. It has to be transferred throughout the company.
The way to do that is by having standardized processes for routine tasks. This must be done in a way that doesn’t burden people with needless bureaucracy. You should also allow for new ideas to arise and be incorporated into the systems quickly.
But what about your job? As CEO you’ll now have time to focus on the more strategic aspects of growing the company.
Programs I have that help with this include:
Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.
Let me know what questions you have and we’ll see if it makes sense for us to work together.
Every start-up by definition is a small company and they all have the same problem: They don’t have enough revenue to pay for ongoing operations. However there are different ways to solve this problem and choosing the right one depends on knowing which kind of company the start-up is likely to become when it grows up. Choosing the wrong one can be fatal.
There are 4 kinds of small companies. What makes them different is the potential scope of the business and this is defined by business model and the owner’s goals.
To get over the hump of being a start-up it’s critical to know which kind of company yours is. Then develop a plan to raise money and scale in the most appropriate way.
Call me. 203-775-6676. I’m on eastern time. Or shoot me an email: john@betterceo.com.
Let me know what questions you have and we’ll see if it makes sense for us to work together.
My wife broke her leg recently so I’ve been doing all the driving and grocery shopping. She is able to use a wheeled stool to get around the kitchen and cook again which she is very grateful for – as am I – so her menus inform what I’m to get at the store.
One night at dinner she said to me, “The chicken stock makes the rice too salty”. I’ve been married long enough to know there was more to that statement than met the ears.
“Oh,” I said, “Did I buy the wrong kind of stock?” She nodded. “Should I have bought the low-sodium kind?” She nodded again. “But it didn’t say that on the list.” I said, more by way of explanation than self-defense.
Her response to me is the reason you should be interested in this post. She said “It never occurred to me that there was any other kind.” Never occurred to her. Never?
Of course she KNOWS there are other kinds of chicken stock. It’s just that this is the kind she’s used for so long that the others are not part of her conscious thinking anymore.
To be an effective shopping manager, she needs to think differently than she does as an effective shopper.
It’s the same reason we’re eating lots of mushrooms this week. She prints a list from the grocery chain website. The list said “ Mushrooms are on sale – 3 boxes for $5” and it didn’t say “We only need one box.” But I digress.
This is actually a pain in the ass for her. And I sympathize. She’s frustrated with having to spell all that stuff out. And frustrated when I call from the store asking about what I’m sure she considers stupid details. And she’s more frustrated because when she shops, she does make a list but also makes a lot of decisions and changes on the fly. These are triggered by what she sees on the shelf. And it ties into what she’s got coupons for and even changes her plans of what to cook. This is all very hard to translate into instructions for someone else to follow. Even someone as smart and motivated (did I say rich and good looking?) as I am.
The truth is, in our case it’s just not worth it for her to become a better shopping manager. We’ll muddle through and she should be driving again in a month or so. But in your case, if you want to free yourself from performing a function AND you want someone to do it as well (or better) than you, you have to become a better manager. Here are some tips:
1. Use details. Lots of details. A manager (or delegator) has to think differently than a doer. List the specifics of the outcome you really want – even the minutia that should be obvious. And consider the context of the decisions you’d make if you were doing the job. Then make those explicit. This is one reason it helps to write things down. It’s harder to be vague on paper.
2. Allow more time than you think it should take. You won’t be good at explaining everything right away and the other person will need some time to learn how you think. The more nuanced the job is, and the more experienced you are the more time it will take. Schedule some time for review and ongoing training. Schedule it before the deadlines are due so you have time to correct mistakes and omissions.
3. Use Verbs. Too often we give someone a list of To Do items that includes only nouns. When your list says “Conference Topics” it may not be obvious what you want them to do about Conference Topics. Do you want that person to suggest topics for the upcoming conference? Do you want them to interview others about what topic they’d like to see? Are you giving this person the authority to decide on the topics or just to recommend? The answer lies in verbs.
In any new company, there are 4 distinct types of risk to a successful business outcome. It’s my experience that seeing these risks in different ways is often at the root of problems between investors and entrepreneurs.
This is the risk that your product won’t work. This is why drug companies say they need such high prices: because it costs to much to find a new drug that works. This is also why some things can only be accomplished by non-commercial organizations. No sane board of directors in the 1960′s would have let their CEO bet company money on sending a man to the moon. But it was a great thing for government to invest in. For economic as well as other reasons.
This is the risk that enough people won’t want to buy it at the right price. MySpace is currently experiencing this problem right now. The price is FREE and yet they just announced a lay-off of half their employees. Why? Even at FREE not enough people want to buy it. They prefer Facebook.
In some ways these two risks are opposite ends of the same line. The cure for cancer is entirely technology risk with zero market risk. If you can make it work, people will buy it. Making a video game, however is the opposite. There’s no doubt you can get the technology to work. The entire risk is in the market.
The web has reduced technology risk for a lot of new ideas. It’s now cheaper and easier to build things that people could barely conceive of a few years ago. FourSquare anyone? But that has not eliminated market risk. This is what makes the Customer Development Methodology so powerful. You start early in the process to connect with customers so you don’t waste time building something people don’t want to buy. And you learn quickly how to sell to them.
This is the risk that even with a technology that works and people who will buy it, management won’t find a business model that makes a profit or won’t be able to execute on that model, or scale the company properly. It’s common that inventors often don’t make good CEOs (and vice versa). One is all about technology and one need to focus on running the company.
A key to minimizing this risk is first to understand that being a CEO is a definable skill. And that being a CEO of a start-up is a different skill than being CEO of a growing company. Experience helps here as well. Experience on the team, experience in your board and experienced advisors. Don’t shy away from asking for support.
Even large established companies are not immune to this risk. It’s what led to the need for General Motors to need a bailout to survive. They had a sizeable market, wonderful technology, ample capacity but for decades management just couldn’t put the pieces together properly.
This risk is to the investors. The risk is that the technology will work, people will buy the product, management will run a profitable company, and you still won’t make a good return on your investment. Maybe there won’t be an exit. Maybe the deal will be structured so that only some of the investors make money.
There are different types of investors and investment vehicles. Be sure to pick the right ones so everyone’s goals are aligned as much as possible. Of course bootstrapping is one way to go – without investors you don’t need to make deals with them. I’m a big fan of bootstrapping. But there are occasions when not taking on investors slows your growth and that can open up the risk that a competitor will get exploit the market before you do.
Jason Fried says that the office is a lousy place to get work done because of 2 things: Managers & Meetings.
If that’s true, then you’re not doing it right. And, of course a lot of people aren’t doing it right – that’s what keeps my blog in business. I’ll tackle the meetings bit here and leave the manager problem for another post.
Most people don’t do their work in a vacuum. They need collaboration and communication (C&C) with others. Let’s say you have 5 people on a team who need to organize their work together. Let’s add a sixth person – the manager – who needs to know how the team is doing, if there’s anything she can do to help any of them (that’s her job after all) AND she needs to provide direction and connection with other teams in the organization.
That’s a lot of C&C. If all those people reach out to one another willy-nilly whenever the impulse strikes that’s a lot of interruptions. No wonder Jason wants to get away from the office.
But there is another solution. Figure out which parts of all that C&C can be scheduled and organized. It won’t make the problem go away, but it will diminish it. Hopefully to the point where the down side of the interruption is out weighed by the benefits of C&C. So if you’ve got a scheduled and organized way to collaborate and communicate, what do you have but a meeting?!?!?
I agree that most meetings are a waste of time. But that’s because they aren’t done right. Appropriate meetings not only save time, but encourage all kinds of good things like synergy, morale, camaraderie, sharing of ideas – in short, team work. But the idea of abolishing meetings because of this problem is like abolishing food because people are obese. You just have to do it right.
[Ricardo Semler goes so far as to make all meetings optional. His point is if you're planning the meeting it's your job to make it enticing enough that people want to come (and want to pay attention instead of playing with their iphones). This is pretty extreme and only works when all other aspects of the company culture are aligned with it. But it's an interesting approach. ]
If doing meetings this way sounds like a lot of work – well yeah. That’s why no bumper sticker says “I’d rather be running a meeting.” But (as Jason points out in the video) meetings are expensive. A one hour meeting with 10 people is really a ten hour meeting. And if you add up the salaries of all those people and account for the interruptions the meeting causes before they get back into the flow of their work – you’ll jump out of your skin. If you’re going to spend that much money / time / etc isn’t it worth it to do it right? That’s why you get paid the big bucks.
UPDATE: Seth Godin and I are aligned in starting the new year with better meetings.
We must respect the other fellow’s religion, but only in the sense and to the extent that we respect his theory that his wife is beautiful and his children smart.
– H. L. Mencken
We all love our own ideas. But they are not as valuable as we think. If you try to raise money from investors based on the strength of an idea, you’ll quickly see how little the market values ideas.
Business idea from xkcd.com
Many of us have had the experience depicted in the cartoon. If you read about the history of almost any technology, you’ll find that many breakthrough ideas occurred to several people independently around the same time. I think 5 people lined up behind Alexander Graham Bell to patent the telephone. Leivnz and Newton are usually both credited with the invention of calculus. Charles Darwin had delayed publishing his “Origin of the Species” because he feared the repercussions, but changed his mind when it looked like someone else had come to the same conclusion and would publish first.
The market values the action, products, sales etc that comes from ideas – but not the ideas themselves. And usually when ideas get loose in the real world, they don’t survive unless they change, adapt, morph, evolve etc. It’s the result of the changed idea that produces value.
Takeaways:
flickr.com/photos/ramdac/ Jason Gulledge
I almost called this post the ideal team for RUNNING your company. But that would be wrong. You can run it however you want. Some people want to be in charge of everything. Fine. Some want to just do stuff and not think about process or monitor any results except the bottom line. Fine. Some want to operate on a whim and change direction on impulse. Fine too. You can run a company any of those ways. Just don’t expect it to grow very large or very fast.
If you want a company to grow, you have to have a team that executes. Hence the term “executive.” By executive, I mean someone who can take an idea and run with it: make it happen. I don’t mean they run away with it. Executives need to be monitored and accountable but they don’t need hand holding. They take responsibility and initiative.
There are two reasons you need a team and they both relate to the fact that a growing company is constantly changing. There are new activities and new challenges all the time. (This same is true of a turn around situation so the team concept is applicable there as well even though the company may actually be shrinking not growing).
Reason # One is there are too many moving parts for a single person to do them all. If the same stuff is happening over and over again, maybe one executive can deal with it. But by definition, this won’t be true if you’re growing.
Reason # Two is because of the shower syndrome. You know those ideas you get in the shower? Or maybe as you’re falling asleep, or out walking the dog? I often get them when I’m in the car by myself – another reason not to text and drive.
Those are the result of your non-conscious mind working on a problem after your conscious mind has let it go. They aren’t always right but they can be very very powerful. The reason for a team is you only get these ideas about one thing at a time. If you’re focused on raising a new round of investment, you won’t be focused on opening a new market.
flickr.com/photos/rocketjim54/
You need a team so more people can get these kind of ideas in the shower. Not that I recommend group showers or anything.
So without further ado here’s your team:
NOTE: The ideal team size is not 7 even though I’ve listed 7 categories below. The best team size is either 3, 4, or 5. It makes sense to combine responsibilities based on your industry, company size and individual’s skill sets. But you do need a “buck stops here” person at the top of each of these categories.
Sales & Marketing. I know these are separate skill sets, but they both serve parts of the same process (turning a person into a lead, then a prospect then a customer). So you need a person at the top who can make this happen and do it in a way that supports the strategic goals of the company. At different times that means opening up new markets, shifting the sales mix toward, or away from certain product lines, more profitable sales at the expense of market share – or vice versa.
Operations. This person is charged with developing an organization to deliver what the sales people sell. They must focus on effectiveness, not just efficiency. They should be able to accurately project lead times, quality assessments and costs.
CFO Everything the company does affects cash. Someone needs to be focused on the cash aspects of every decision the company makes. Someone need the time and bandwidth to routinely hit up vendors for better prices, make sure sales are collected early and bills are paid at the optimal time.
This person need not be an accountant. But they need to understand accounting well enough to “speak the language” and relate accounting to management decisions. And she (or he) must understand the differences between short term spending and long term investment.
Legal Almost everything the company does has legal implications. This person should not be in-house council. They should probably not even be a lawyer (like the CFO need not be an accountant). But they have to “speak the language.” This person should know when something needs to be sent to the company’s counsel and when it doesn’t. They should be able to mark up legal documents and negotiate contracts to a point where you’re not paying lawyers to do things that a mere mortal can accomplish. This way the firm can get the most benefit from what it does spend on legal fees.
IT Here I’m talking of IT as a strategic function – not a support function. Increasingly, every company has some informational or knowledge component to what they sell or how they make and sell it. Someone needs to know how to tap into the latest technology to provide a competitive advantage in that aspect of the product or process. This is the person I’m talking about.
For some historical perspective, consider this. Before factories were run by electricity, they were powered by an external source – often water. No matter what they produced, they needed an intricate arrangements of wheels, belts, pulleys etc to get the power from the river or waterfall outside the building to the machines and devices inside. The ability to design and implement the power transmission often became a strategic advantage to the firm – despite that fact that what they sold did not contain water, belts, or pulleys. That is the aspect of IT that I’m referring to here. It is of course, more critical in some companies than in others, but worth considering in all companies.
New Products Every market is moving faster and faster. Just selling the same stuff year after year is a way to consign your company to the commodity market (at best and the graveyard at worst). Someone should be thinking 1,2 or 5 years out about and developing new products for existing customers as well as new markets. This job is very much in the Important but not Urgent category.
CEO The CEO is the keeper of the business model. It’s up to her (or him) to understand how the trends and cultural changes outside the company affect and are exploited by the systems and organizational structure on the inside.
This person is the captain of the ship, or more aptly, the conductor of the orchestra. Did you ever stop to think that the conductor makes none of the sound the audience hears? Their job is in two parts. One faces outside the company where they need to make key relationships and notice trends. One faces inside the company, where they develop the size and scope of the organization to profit from those trends and relationships.
It takes a big cultural shift for many companies – especially ones that were founded by a single individual.
I’m a big fan of the bootstrap – that phase when you do it or make it rather then buy it, when you spend time rather than money, and pay in stock options rather than cash. But a company can only bootstrap so far. If you’re going to build a top notch team, you have to hire the best and pay them market rates. But just as importantly, you have to structure the organization so those expenditures are investments rather than costs.
Another big attitude shift is that of control. When one person’s at the top they are expected to know everything and all the decisions rest on their shoulders. A company like that can’t scale past a certain point. To grow you must be thrilled to give up control, and be happy to find people who are much better than you at certain tasks.
Another cultural shift is that as a company grows it becomes more dependent on process and less on just getting the job done. Not to say that process should be allowed to impede the results – that’s bureaucracy. But the wisdom and experience that people develop can’t be allowed to live in a few people’s heads. It has to spread throughout the organization so that best practices abound. That takes process.
Many of the ideas here were inspired by a discussion I had with Mark Volchek about this topic. Mark is a co-founder and the CFO of Higher One. The company was founded in 2000 by students right out of college, was on the INC 500 in 2009 and went public in 2010.
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