UPDATE: Tom Cooper has pointed me to this TED TALK by Eric Dishman. One of the most innovative ideas in health care that I’ve heard about. Spend 17 minutes and watch it.

If you run an American business, check out this guide to the new Health Care Bill. Thanks to Andrew Tobias for pointing it out.

If you have fewer than 50 employees, you may be able to get a tax credit to help pay your health insurance.

Now that the bill has passed, the furor seems to have ended, but the problem is far from solved. I believe the new bill is a step in the right direction, but we must continue to think about this problem and work toward a better solution, so here are some thoughts.

The last though is one I’ve not seen anyone else talk about. Ever. But I hope you’ll really click through on #8.

1. Insurance is a way to spread the financial burden. Don’t be mislead by advertising hype that insurance “protects” you from anything other than financial consequences. Auto insurance does not protect your car or your safety. It just spreads the financial burden of a crash among those who pay for insurance and never have a claim. So the more who pay, the more fairly the burden is spread.
2. Insurance, like any free and fair economic transaction, requires that neither side be privy to what economists call “informational asymmetry.” That’s why, if you sell your house in most states, you’re required to disclose if there’s been mold, or the basement floods.
3. If either side is able to adjust the deal after the fact – like insurance companies reducing coverage after you get sick – then it’s not really spreading the financial burden, it’s taking unfair advantage of the other side.
4. From an economic point of view, one of the most ridiculous aspects of health care in the US is that it is tied to employment. I understand the history of why this happened, but that doesn’t make it good policy. It basically keeps people in jobs (or out of jobs) for reasons that have nothing to do with them or their job. And that makes it harder to run a business.
5. It also keeps people from leaving their job to start companies and that’s bad for the economy.
6. It puts small companies at a disadvantage to big ones because any administrative function or cost that must be amortized over 15 employees is more burdensome than one that can be amortized over 1,500 or 15,000.
7. It puts American companies at a disadvantage to firms in other countries where health care is not a line item on a company budget.
8. Americans are getting ripped off by the system. Check out this post. And click on the graphic. It blew my mind. This makes me believe that we could solve the problem entirely at an over all cost savings – system wide. Many others are doing it with better outcomes for cheaper. So it’s obviously possible. The problem is that the savings would not be universal. Some would pay more than they are now even though on average, all would pay less. Unfortunately, our legislative system is organized so that those that would pay more have much stronger clout than those that would pay less.
9. Sick people are bad for business. If your customers have to choose between paying for pills and paying for groceries, they won’t have a lot of money to spend with you. If your employees are in a similar situation, they won’t be their most productive. I know most people’s situations are not that extreme but I think the point still holds.

One of the biggest challenges I deal with in helping people improve their companies, is changing beliefs. All of my clients are successful and what they’ve done (based on their beliefs) has gotten them where they are. But many times what got us here, won’t get us there – wherever we want “there” to be. And facing up to that reality often requires real courage. I think health care is one of those situations.

Did You Win?

I don’t get the proliferation of Business Competitions I see lately.

Being in business means you are competing for the customer’s dollars. What other competition matters?

But consider that you’re not competing with “competitors” as much as you are competing FOR your customer’s trust and desire for the value you provide. I’ve said before that business is like sex not like war. It’s just that the result is profit not babies.

Photo credit http://www.flickr.com/photos/tedsblog/39671954/sizes/s/

This video of Dan Ariely from TED  has several enlightening and surprising ideas you can use. It’s 18 min long but the last 2 minutes are an ad.

Why people cheat and steal and how this can be encouraged or discouraged. The reasons are not at all what you’d expect.

How these conditions were exacerbated by the stock market and financial systems to cause the mess we’re in.

Why our intuitions can lead us wrong and what to do about it. This doesn’t come up till about the 14th minute but it’s the most important takeaway. It broadens the appeal beyond cheating and beyond the financial mess. How many of your intutions do you rely on to run your business and how many have you really tested?

Takeaways:

1. Buy Dan’s book here  http://www.predictablyirrational.com/
2. Test your intuitions. This is a hard and painful process for most people. Hard because our intuitions are often invisible – we just think of them as “how things work.” And painful because self inspection often is. Hire a coach to help if you want to break out of the limits your intuitions are imposing on your growth.

[tags] CEO skills, entrepreneurs, intuition, small business, management [/tags]

Mark Cuban – owner of Dallas Mavericks – put an interesting perspective on the AIG bonus situation using an analogy to a free agent athelete. Did I say he owns the Dallas Mavericks?
Hint – to keep good employees, financial firms will have to offer not bonuses but options. IF they do well in a few years they will get filthy rich and it will look like they did it off taxpayers money. How will that play in the press?

Seth Godin writes about how company founders can split equity.
Key point: Don’t give out all the common stock. If you and I split a company 50/50 we each own half. If we you get 5% and I get 5% for all practical purposes we still each own half. But we have a lot more latitude about how things work in the future. Seth doesn’t say this, but as an angel investor I know, founders often have no idea of the most useful place of common stock in the pecking order of a growing company.

Most of us aren’t in a position to turn the entire economy around. But don’t think you are powerless. Some people look at this situation and see all the negatives. Some people see opportunity. It’s easier to feel the fear and do the cut back thing and blame the economy.

In fact, it’s both the worst of times and the best of times (haven’t I heard that before?) And you’ve got to deal with both. I’m launching a new program to help companies do this called “Tighten Up and Come out Swinging”

Tighten Up to deal with the problems. Come out Swinging to take advantage of the opportunities.

In fact I’ve re-done the opening page of my web site to explain the details. Check it out.

Takeaway:

• Call or email to see if I can help you

[tags]CEO Skill, economy, small business, entrepreneur, turn around [/tags]

My apologies to non-US readers. We sometimes do things a little strangely here.

Did you US readers know that in Australia there’s a fine for not voting? or that in Canada the government just sends you a voter registration card so there’s no opportunity for  one party or the other to purge the rolls? And how is it we’ve been doing electronic transfer of money from ATMS for decades – I can get cash from my bank in almost any country in the local currency without any significant error – yet we can’t figure out a way to vote where the disputed votes are smaller than the margin of victory? That’s what I mean by strange.

And is the bailout bill a boondoggle? Spend an hour with Warren Buffett.

Yes, he talks in a few cutsey sound bites, but he also talks so you can understand (at least I could) what really caused the problem and why the bailout bill is/was solution. It was broadcast on Oct 1, 2008

By the way, he’s supporting Obama.

[tags] economy, entrepreneur, warren buffett [/tags]

Thanks to an email from Will Hill and Paul Graham’s latest essay I’ve shortened my advice (so you get to do less reading)

1. Make something people want.
As obvious as it sounds this advice is often ignored. Well not exactly ignored, but confused. Inventors especially, are apt to confuse the word “people” with the word “me”. They think if they like something, they can make a business out of it. You need enough people to want it bad enough to pay enough for it. In this context enough means the following. A number of people that you can find, market and sell to so cheaply that they’ll pay more for what you make to cover the cost of making it and also finding them, marketing and selling to them. Start-ups particularly underestimate the cost of finding, marketing and selling to people who want to pay for what they make. If you’re making software or a web application you can tweak and change it cheaply to find out what people really want. Provided you do the next 3 things.

2. Keep your costs low.
I mean really low. Many companies get lazy when they have start-up cash and they end up making stuff that people don’t want, or spending marketing money in ways that don’t get them sales. That’s why so many good companies are started out of a garage or on the side. Sure it takes a bit longer but when your costs are low you have many more chances to learn what people want and how to sell to them. And remember, The goal is not to get investors. The goal is to get customers. Getting investors takes time away from building your business. And if you get the money it could give you confidence to keep charging off in the wrong direction (building something not enough people want badly enough) for a long time. Plus if you keep your costs low and do the next 2 tips, you’ll be more valuable if/when you do get investors.

3. Learn what works.
You can’t assume. Hence the number of tips in my long post about measuring stuff. It’s tedious to measure and you’re never sure if you’re measuring the right stuff. Do it anyway. Force yourself to listen to people who don’t agree with you and challenge your beliefs. Learn what customers (and employees and suppliers) really want and also how your marketing and sales efforts affect their behavior (if at all).

4. Be persistent.
It’s currently in vogue to say be passionate. I disagree. Passion can keep you going, and when it does it’s helpful. But it can also blind you so you don’t learn. But you will need something to keep you going through the emotional roller coaster that is a start-up. Find within your gut, whatever it is that keeps you going and keep on truckin.

Takeaways:

• Make something people want
• Keep your costs low
• Learn what Works
• Keep on truckin’

[tags] start-up, entrepreneur, small business, ceo [/tags]

Image from http://www.flickr.com/photos/drb62/1189903030/sizes/m/#cc_license

What would you pay for a tool that could transmit the wisdom of your smartest people out to everyone in your whole organization? One that is able to reduce errors in the most complex activity and achieve consistent results time after time? I’m sure you’d pay a lot, but this tool costs very little and requires almost no training to use.

By now you’re beginning to suspect the tool does not exist or this is some kind of joke. But this tool has accomplished the following things:

In 1935, a new generation of long-range bomber was all but certain to be adopted by the US Army until, in it’s competition flight, the Army’s chief of flight testing crashed it killing himself and another of the five crew members. There was no mechanical failure – the problem was pilot error due to the complexity of the new machine.

The bomber was scrapped in favor of a simpler plane which had much less range and capacity. But a few of the more complex planes were purchased for testing and this tool was adopted. Using this tool, pilots went on to fly this plane a total of 1.8 million miles without a single accident. The Army eventually ordered close to thirteen thousand of these bombers and because of its increased capacity gained a serious air advantage in World War II. The planes were known as the B-17 and nick named The Flying Fortress.

In more recent times, the tool has been applied to the complexity of hospital intensive care units where over half the ICU’s in the country (USA) rely on a super-specialist to oversee the intricacies of care which involve on average 178 separate, individual actions for each patient every day. In Michigan, starting in 2004 this tool was used where many hospitals are short on staff and funds. It saved over 1,500 lives and an estimated 175 million dollars in a year and a half.

What is this tool? A check list. That’s right. A check list. A simple check list. In this great New Yorker article, Atul Gawande points out that check lists have two benefits. I’ll quote him here and provide my emphasis.

First, they helped with memory recall, especially with mundane matters that are easily overlooked in patients undergoing more drastic events. (When you’re worrying about what treatment to give a woman who won’t stop seizing, it’s hard to remember to make sure that the head of her bed is in the right position.) A second effect was to make explicit the minimum, expected steps in complex processes. Pronovost was surprised to discover how often even experienced personnel failed to grasp the importance of certain precautions. In a survey of I.C.U. staff taken before introducing the ventilator checklists, he found that half hadn’t realized that there was evidence strongly supporting giving ventilated patients antacid medication. Checklists established a higher standard of baseline performance.

If something so simple can achieve such fantastic results why are they not used more often?

I’ll bet the answer lies in your response when you read what the tool is. Didn’t you think “Well that can’t apply to my business. Most of what I do can’t be reduced to something as one-dimensional as a check list – it’s too complex/unique/has special circumstances?” Didn’t you think that?

So did doctors and test pilots. The truth is most company founders don’t go to work thinking their main job is to develop check lists. No. We think our job is to get real stuff done. Solve problems. Sell product. Collect money. We don’t have time to develop check lists.

But that’s only our job if we don’t want to build a very large company. If we want to scale what we do then we should spend half our time developing check lists, the other half making sure people follow them (read the article for some great insight on that) and the third half handling the stuff that truly is special. It’s my experience that the “third half” is actually less than 15% of what goes on. The rest can be documented and replicated with something as simple as a check list. Or, actually, many check lists.

The problem with this approach is that it doesn’t feel so good. We don’t feel like heroes walking around with a clipboard ticking off boxes. We feel much better thinking that what we do is special and unique. We like to be heroes.

But you know what? A friend of mine’s house burned down recently. The picture above is of their house. Here’s the video.

Luckily he was awake at 2AM getting ready for a trip so he heard the smoke alarm go off. He rushed upstairs and got his kids and wife out of the house. With literally seconds to spare. One of their three pets died, another escaped in good shape, and the third was resuscitated by the fire fighters with oxygen and is doing fine. The house was destroyed. All their possessions including video tapes of the kids and all his wife’s art work were ruined. The family was checked out at the hospital, but didn’t need to stay. He described it like being sunburned and having smoke in the lungs like a few cigars. Sunburned skin from being so close to a fire in your house! That’s how near they came to disaster. Instead they only lost all their possessions and a pet.

Somewhere between the smoke detector, him rushing upstairs through smoky rooms, and the fire fighters I’m sure there’s a hero or two or three. I’m just as sure they wish they never needed one.

Sometimes our desire to feel like the hero gets in the way of building a company. Because the majority of what we need to accomplish is not heroic. But making sure the right things happen day after day every time anyone in your company does their job or helps a customer; to do that consistently with great results we need a cheap little tool, not a hero.

Takeaways:

Change the batteries in your smoke detectors.

Don’t be a hero

Build some checklists

[tags]Checklist, CEO Skills, Entrepreneur, Build a company, small business [/tags]

The key to growing your company is to prevent problems rather than solve them. There are two parts to this: Attitude and Skill.

Attitude – you must not like being the hero
Heroes solve problems. Usually at the last moment in dramatic fashion with a fanfare and a flourish of cape – just before they dash off to a secret place where they can transform into their secret identity. If this turns you on, it will be hard to stop solving problems. You won’t get the same kind of attention or validation. Because when problems are prevented, nobody knows. How many colds didn’t you get last year? How many times did your roof not leak, or the bridge you were driving on not collapse? But all of these things took some not inconsequential degree of effort – the first by your immune system, the second by your builder and the third by a whole slew of people: some who paid taxes, others who allocated them to public works instead of flashier projects, and still others who built and maintained the bridge.

If, in your heart of hearts, a smooth running transportation system is not more satisfying than charging on the scene in a cruiser with lights flashing to set up a detour and save folks from driving over a rotted out bridge, then the best you can hope for is a company that stays small enough that the problems don’t kill it, and you can still be the hero.

Skill – root cause analysis
The skill in problem prevention is to find and cure the root cause of the problem, not the most obvious symptom. Cash flow is a prime example. It’s common wisdom that the reason most companies die because they run out of cash. Well that’s like saying in the 1700′s the two main causes of death were consumption and heart failure. They figured if you didn’t die of consumption, then it’s a sure bet that your heart had stopped. Obviously medical science was in its infancy.

The knee-jerk reaction to cash flow problems (in start-ups anyway) is to raise more cash. This almost always prolongs the agony rather than cures it. If cash is tight because sales are too low the solutions are a whole lot different than if cash is tight because costs are too high, or collections are not efficient. More cash is rarely the ultimate solution to any of these.

Common Sense & Quick Fixes don’t usually work
Two quotes from http://www.isixsigma.com/library/content/c050516a.asp are enlightening. The emphasis is mine.

“Research has repeatedly proven that unwanted situations within organizations are about 95 percent related to process problems and only 5 percent related to personnel problems. Yet, most organizations spend far more time looking for culprits than causes and because of this misdirected effort, seldom really gain the benefit they could gain from understanding the foundation of the unwanted situation,” according to Gene Bellinger, who writes on the web site Systems-Thinking.org

Alexander Dunn, director of Assetivity Properties Ltd., in a paper posted on the Maintenance World web site, quotes a study which showed, “…that, when trying to prevent unacceptable events from happening again, 10 percent of participants immediately sought to place blame, 26 percent immediately expressed an opinion of the causes and offered an opinion without investigating the problem, and only 20 percent of participants examined the problem in sufficient detail to be able to identify an effective solution.” From these statistics, its clear that effective problem-solving is far from common sense.

The 5 Why’s
One technique used to find the root cause is to ask why five times. Suppose your car won’t start because the battery is dead. Calling a tow truck to provide a jump start is solving the problem. But asking why five times might result in prevention.

1. Why won’t my car start? – the battery is dead. [SOLUTION: Jump Start]
2. Why is the battery dead? – the alternator is not charging.
3. Why is the alternator not charging? – the belt is worn out.
4. Why is the belt worn out? – they don’t last forever and this one has not been changed in a while.
5. Why did I not know about this until my car wouldn’t start just on the morning I had to get to a meeting with an important client? – because I’m too cheap (oops I mean too busy) to spend money (oops I mean take time out of my important schedule) to get my car inspected and serviced when it has no symptoms. [PREVENTION - Regular, proactive maintenance program]

You can see from the example that the key is asking the right questions. You might also note that five is not a magic number – the point is to keep asking why till you find a root cause and five is often enough for that. According to wikipedia, this technique was developed by Sakichi Toyoda.

Takeaways:

• Are you more prone to problem solving or prevention?
• Do you prefer to be a hero?
• Are you willing to allocate time to find and fix the root causes?

[tags] CEO Skills, Problem solving, Small business, entrepreneur [/tags]