Last week we discussed getting your team aligned around a critical number, ours being Gross Profit Margin. This week I want to share one or two business practices that are counter intuitive, aka an “OOPS!” in the Aubrey Daniels book called OOPS! 13 Management Practices That Waste Time and Money. The book is about behavioral science, detailing the basis for how humans behave toward typical ways business is done. You might be just as surprised as I was to find that one of the most relevant, counter intuitive practices outlined here is Salary and Hourly Pay, otherwise known as Oops #6.

It’s funny how the behavior analysis types tend to look at salary jobs as the ticking of the clock rather than performance. Pay-for-performance is the right method behaviorally, as one study in the book exhibited when Safelite Glass Corp switched from salary to piece-rate. The saw a 44% increase in output after the change.

Daniels says that 3 things are necessary to obtain the best results:  

1 Pinpoint the behaviors and results that add value to the enterprise (this can take time, but it is the most important part of the process)

2 You must have an easy way to measure the results and behaviors

3 The measure should be one that can be easily tracked by the performer

We are considering using a scorecard that lists key activities, putting more weight on the ones that we value the most, to get more focus on performance for our development team. This will be a big leap toward everyone having their mindset on getting the right things done. I am excited to see how this will affect, and hopefully improve our performance.

In last week’s blog I discussed what it means to create value, and mentioned that simply asking your customers what they want is a viable way to determine value opportunities. When your customers don’t know what they want, an alternative is to use the Blue Ocean Strategy (BOS).

The cornerstone of the BOS is what they call Value Innovation. It stems from the idea that by combining value and innovation you can make the competition virtually irrelevant. This is done by simultaneously driving cost down and buyer value up. Take a look at the chart. The point where they meet in the middle is spot where value innovation is created.

It may not make much sense yet, but stay with me. Start with increasing buyer value by introducing offers not seen before in the industry. At the same time, identify factors that the industry currently competes on and see how you can either reduce or eliminate costs associated with those factors. To track this, use what BOS calls a Strategy Canvas. Along the X-axis­­­­­ you plot the factors that the industry competes on, and along the Y-axis you track the value received from those competing factors.  See Southwest’s Strategy Canvas below.

Once you know the factors that the industry “currently” competes on, you dive into what BOS calls the Four Actions Framework, which consists of these four questions:

1) Which of the factors that the industry takes for granted should be eliminated?

2) Which factors should be reduced well below the industry standard?

3) Which factors should be raised well above the industry’s standard?

4) Which factors should be created that the industry has never offered?

The first two questions assist in reducing cost, and the last two are meant to help generate value.

By doing this exercise and taking it seriously, you have the potential to break the mold and create something new and special. Think about historical breakaways, like Ford’s Model-T car for the masses back in 1908, CNN’s 24/7 news in 1980, Starbucks coffee – a higher price but higher quality or Cirques du Soleil’s Broadway performance/circus, using people instead of animals.

The book offers several examples and explanations, so if you’re serious about breaking the mold, it’s a great way to open your mind to the endless possibilities you can find in the vast blue ocean.

I have had my eyes on a blue ocean opportunity for a long time. As a software company, every new product we create that fills a void has BOS potential. Soon we’ll be launching a tool for requirements gathering called SluiceIt.com, as well as a company meeting software tool that helps to create an environment of execution around goals.

A few weeks ago I had the pleasure of hearing notable business coach Marshall Goldsmith speak at the Fortune Growth Summit.  Marshall’s work helps to make people better and is both educational and enlightening.  He has successfully coached several of the Fortune 500 leaders, and has done so by helping them in areas that required improvement.  As we’ve all heard time and time again, the first step to recovery is admitting you have a problem.

Marshall has written two bestselling books, What Got You Here Won’t Get You There and Mojo: How To Get It, How To Keep It, How to Get It Back if You Lose It.  What is interesting about this is that the key to success for people already in leadership roles is in their own, quirky personality flaws.  I find it comforting when reading his material and hearing him speak to learn that we all have those flaws.  The most successful people out there are filled with “issues” about how they are viewed by the people around them.  I know personally that I am dinged by both my partners and others around me for my own personality traits that they find annoying.  So what are we to do?

The first thing you need to do is identify the issue.  Marshall does this with a 360 degree survey.  He doesn’t just focus on the subject with the issue, but interviews all the people around that person (and is paid big bucks to take the time to do so!)  There are a variety of testing tools out there that do very similar things (check out the multipliers blog).  The second step is having the desire to change.  If that’s not there, you might as well stop here.  Marshall says that coaching someone who does not want to change is a waste of time.  Most of us want to get better, but there are still those who believe “being this way is what got me where I am”.  For those, it will usually take losing a job, or missing out on a prime opportunity to make them look back and finally question what went wrong, and what they could have done differently.

Marshall lists 20 main areas of interpersonal behavior that are annoyances to those around us.  A few of them are: winning too much, passing judgment, starting with “no”, “but” or “however”, speaking with anger, negativity, making excuses, not listening (my issue), and clinging to the past.

After the interviews take place and you have feedback, Marshall explains the 4 ways to address your issues, which include: apologizing, telling the world (what you’re going to change), listening and thanking.  He takes an entire chapter for each of these topics to explain them in greater detail.

We could all use some coaching, even Marshall.  His coach calls him every single day, no matter where he is, to ask him a dozen questions, such as:  how many pushups did you do today, have you said anything nice to your wife, how much time have you spent writing, and how much time did you spend on things that didn’t matter?  He discusses this in his interview with Verne Harnish.

Who is helping to make you better?

Watching the news these days doesn’t leave one with much hope for the future, when all we’re hearing is about inflation, unemployment and national debt.  Reports are spreading of an ongoing recession and even a possible depression before things get better.  So what is an entrepreneur to do?  Constantly trying to keep your head above water can get discouraging when you have nothing solid to look towards.  As much as I’d like to bury my head in the sand sometimes, I know that’s not a viable option.  Instead, I practice the Stockdale Paradox, which is to retain faith, regardless of the difficulties, AND confront the brutal facts, whatever they may be.

The fact is, things are not good out there, but this does not mean that there is no money or opportunity.

Let’s first consider how we view the world around us.  The word recession is defined as two consecutive, negative quarters of economic activity.  Does that mean that everyone stops spending money and the economy comes to a complete halt?  Not at all!  Now consider this:  the Gross Domestic Product (GDP) of the US was at $14.54 trillion in the 3^rd quarter of 2008, on an annualized basis, just before the financial meltdown.  That number never fell below $14.24 trillion, even at its lowest point in the first quarter of 2009.  So what does this mean to you?  There was still over $14 trillion being spent in the economy every year; money that you could be hustling for a share of.

Even though the overall drop was not significant, some industry sectors took a tragic hit, as much as 50%, while others grew by 20% or 30%.  In times like this, the Clipper Ship Strategy can be useful by positioning yourself to where your money is being spent.  This isn’t necessarily an easy thing to do, especially with big industrial and manufacturing centers.  It’s a little more feasible to move towards the money if you’re in the service sector, and much easier for information based businesses.  The point here is just to keep moving.

Something else to try and practice, and not just when times aretough, but all the time, is to focus on what you do best and hire others to do what they do best.  The simplest way to put it is to play to your strengths.  For example, we have engaged Kopp Consulting to go out and do our cultivating of new business for us, since our strength lies in the relationships and solutions, not sales.  Obtaining new business is a venture that requires focus and attention.  In our experience, when the relationship team is trying to do the job of the cultivation team, we lose focus and don’t see optimal results.

Kopp learns about your business and has their own secret sauceto finding the right clientele and getting you in front of them.  In the months ahead I will share more of our experience with what Kopp is doing for us. 

My last thought on this topic is this question: how hard do we make it for our customers to find us?  Go ask everyone in your office if they have used the phone book in the last week, and then ask them the same question about Google.  I have seen it done and the difference is eye opening.    Content and key words are key to getting found in search engines.  Have you Googled yourself lately?

So with a recession in the air, are you keeping the faith, confronting the brutal facts, focusing on what you do best, and can your customers find you? 

As an entrepreneur, you are never very far from your business.  No matter where you are or what you’re doing, it’s always with you, slipping into your consciousness.  You might be in the shower, lounging on the deck, on an airplane with everyone around you snoozing or out on the lake….your mind will still be spinning on the latest issue or the next big opportunity.  When you’re passionate about what you do, you have an advantage because you’re energized and motivated to give it the extra thought that helps keep you ahead of the game.

This weekend I spent time out on the lake with a few fellow entrepreneurs and some young up and coming entrepreneurs.   It was only natural in this environment for conversations to take place around what drives a successful business and person.

We gathered on a long time friend and fellow entrepreneur’s boat, Scott Brown.  Scott is a very successful chiropractor, due primarily to the fact that he broke his back when he was young and was told by the doctors that he would never again be able to do all of the physical activities in life that he loves so much.  He went to see a chiropractor and it changed his life, so he decided to go to school and become one himself.  From there he started his own practice, and he did so with a passion.

My son Tony’s friend Steven was another entrepreneur that joined us.  He is in the business of putting breathalyzer devices in cars that are occasionally ordered by the courts.  He’s facing issues in some states due to laws that have yet to be passed, which led Scott and I to discussing with him how it takes passion to push a business through the tough times and excel to higher levels.  We asked Steven, “Are you passionate about your business?”

Steven said he was passionate about boats, and was thoroughly enjoying the 60 foot one he was on.   Steven might very well find success without finding passion in his business, but he’ll not likely reach the level that he could unless he can find a way to connect to it and build passion around it. 

Scott suggested finding something in his past or through a friend where an effect of drunk driving could invoke some emotion.  Another option could be to talk with members of MADD (mothers against drunk driving), and connect with moms who’ve lost kids to drunk driving.  Having options like these to dig in and pull out the things that can fire up a passion help people to develop a conviction that supersedes money alone.  If this doesn’t work, experience tells me to move to where the passion is.

I have met a lot of people who are in that position of having a job serves only the purpose of providing a paycheck.  You can see the lack of enthusiasm and dread in their time at work.  I went after what I loved, starting as a young boy, which was to have my own business and the freedom to create value for others, letting the money follow.

Are you passionate about what you do?  If you’re not, are you doing anything to get there?  We deserve to be happy, and we are when we live our passion.

I have recently been contemplating how different peoples’ models are of how the world works.  I hear how some feel that capitalism neither works nor benefits the world, and I hear how others worry about technology taking away jobs.  Lately I keep hearing stories about how “business is bad” and people doing business are just out to get you.  Is that really the case?

In a recent blog I talked about value creation, and explained that  in order for people to give you money, you must offer them something of value that makes them want to pull out the green.  When was the last time you went into a Starbucks to get a “Fourbucks” coffee, then yelled at them for being evil and taking your money?  The more likely scenario was that you willingly walked in and handed them your four bucks, then enjoyed every sip of your “Fourbucks” while you took a moment to get away from the hustle and bustle of the world.  It was worth it to you…right?

When businesses provide something we want¸ why do we consider them the bad guys?  Do you feel like service people that keep operations going, just to make a few bucks and pay their bills, think the business should be squashed?  If that were to happen, then the service they provide would dissipate and we wouldn’t benefit from it anymore.

If you’ve read any of my blogs, you know that I’m a huge advocate of freedom and the opportunities it provides.  But do we really value our freedom, or do we take it for granted?  Let’s say those “evil” oil companies disappeared.  How would you get to work, school, the hospital, the grocery store…anywhere for that matter?  How drastically would your life change?  What if your job was one that required people to come to you and they couldn’t anymore?  What would happen to your job?  I know that, personally, this loss of freedom would have a huge impact on my life.

I value the goods and services that entrepreneurs have gone out and risked their time, energy, debt and savings to bring to the market.  Their businesses benefit me and help me to increase my standard of living.  When they are successful at giving me something I want, they benefit, and when they don’t, they lose.  So why do we make them the enemy?  If I benefit from what they do, why should they not be able to enjoy their success and be rewarded by earning a profit?

The daily interactions that take place in our lives are a large part of what makes the world go ‘round.   By living and contributing to our lives, we are contributing to others’ lives.  By exchanging with their company, we are helping others earn a paycheck.

It is on this 4^th of July weekend that I want to not only thank our four fathers and the creators of the Declaration of Independence, but also thank all of the entrepreneurs out there for the freedom they create in our lives every day!

HAPPY 4^th of JULY ALL and a shout out to all those protecting our Freedom around the world!

Over the years, I’ve experienced a variety of work environments.  I have to say that, no matter the environment, if I didn’t put myself in a position where I could focus, I paid the price.  By paying the price, I mean that I didn’t reach my best productivity level in whatever I was doing and wasted lots of time that could have been better spent.

This isn’t limited to time and energy, but extends to reaching goals and running a business.  How many goals can you have and still make sure you can reach them all?  We try to limit our company quarterly goals to just 3 if they are somewhat large so that we retain enough time and energy to achieve them.  I have run multiple businesses at once, only to find that the time and thought required to run them just distracted me and I lost focus.

The lack of focus takes away from the power that can be created when you aggregate all of your energy to a central point.  Most people know that when light is focused with a magnifying glass onto a surface, it creates a laser so hot it can cut through almost anything, and the same with water.  These are perfect examples of pushing on the great big flywheel that Jim Collins discusses in his book Good to Great.

The flywheel, if you’re not familiar, is synonymous with your business.  When you and your team are concentrating your efforts all in the same spot on the flywheel, you can push it forward.  With the combined effort, the big heavy flywheel starts to move, then spin with ongoing effort and focus.  Once its spinning, it gets easier and requires less effort and focus.  This, in my opinion, is where businesses start to fall behind.  When it gets easier, we get distracted, which brings about less focus on the business, and then a competitor comes up behind you with more focus pushing on their own flywheel.

When I sit down to write my blog, and end up multitasking by taking phone calls and reading emails, I lose the streaming thoughts I had when I sat down to write.  So how do I focus and steer clear of getting sucked into things like the black hole of email?

What I do now is close my email, turn my phone on airplane mode and shut the door to my office when it’s time to focus and write my blog.  Most of us entrepreneurs have some form of ADD, Dyslexia (this one is me) or both.  We also tend to be easily distracted by motion, or things as simple as a messy desk.  I recently read an article called “The Single Best Time Management Tip Ever” by Dave Logan.  He discovered, after working with a Dyslexic student and seeking some advice, that the key was to devote short 20 minute bursts of pure focus to whatever you’re doing, and then putting it down.  By doing this over and over, major work was accomplished.

Thomas Edison was nearly deaf, and his theory was that his lack of hearing was what allowed him to focus so well, which led to so many successful inventions.  I am working hard to be FOCUSED because I know that it leads to great business success and great results!  How focused are you?

Business is a constant battle against competitors, trying to keep customers happy and on your side…or so it seems.  For most of us, in whatever space we’re trying to fill, we continuously add to our offer, making the deal sweeter and sweeter.  We do this in an effort to stay ahead of the competition so the customers don’t run off to the next guy.  BUT…should that always be the case?  What if we were to take something away that they expect?  Would they still come running, or possibly even more than they did before?

You’ve seen this happen, but probably didn’t notice it or recognize it as a business/marketing strategy.  One of the speakers at Verne Harnish’s Fortune Growth Summit coming up in October is going to be Youngme Moon.  I decided to read her book Different after Verne gave her such high praise at the last summit.  The book really puts this marketing strategy in perspective.

To set the stage, think about the early days of the internet when search engines like Yahoo!, AltaVista and AOL came about.  The search pages were covered with more options, more content…just busy all around.  Then a new search engine came along, and all you saw when you went to the homepage was their name and a search bar.  I remember my old investment firm business partner Robert yelling down the hall “Hey everyone! Check out this really cool Google page!”  My response…”What the heck is a google?!?”    These days, who doesn’t know what Google is?

Moon’s book also talks about IKEA, which was one of her most popular case studies on how companies normally wrap things in a positive.  IKEA, on the other hand, uses a set of negatives such as having to drive to the warehouse, having to walk around and locate what you want, which are limited in choice, long checkout lines, and then assembling it yourself.  How could they possibly be so successful?

Moon calls them a reverse brand, and say that “This is what reverse brands do:  they eliminate, but they also elevate.  They strip things down even as they sweeten things up.  The result is a fusion of the basic with the sublime, a fusion that may seem strange, unfamiliar or even disconcerting at first encounrter – but is nothing if not distinctive.”

When she brought up the topic of our country going through a period when big “phat” buffet’s were popping up one after another, each restaurant trying to outdo the next with their massive offering of tasty food, it gave me an idea.  What if someone opened a restaurant around the concept of not overeating?!  Don’t you hate the overstuffed feeling when you leave the restaurant that resulted from your eyes being bigger than your stomach?  The brand promise could be something like “Guaranteed to walk away without that overstuffed feeling!”  Talk about a reverse brand!  If you like the idea, please feel free to use it.  I would certainly eat there!

Is there anything that you could eliminate or strip down that would brighten up your offering?

Check out this video on Moon’s book Different:

Why is it so difficult for us to be productive? Why do we continue to get distracted from doing the work that matters? What is it about our human nature that draws us into the drama and unproductive activity that surrounds us?

The information and knowledge work of today is much different than what those in generations before us experienced. It used to be that the masses were on assembly lines, working day in and day out in the same routine.  It didn’t matter if they didn’t feel like being productive…they didn’t have a choice.  Be productive or lose your job.  If leaders wanted to increase productivity, they found ways to make the line go faster.  It was up to the workers to figure out how to keep up.

Today the masses work on moving information rather than moving assembly lines. We are not governed by that assembly line that can be made to go faster, but by the speed at which we can generate and share knowledge in combination with the service we provide to others, making up a good portion of today’s economy.  

What we face now is finding a way to increase the speed of our mind, our intelligence…how do we find a faster way to creating new knowledge, the knowledge that invents new technologies or new cures?  How do we stay engaged in the task at hand so that we can be the most productive, whether that is writing an article, helping a patient, serving a meal, or fixing a computer?

Many of us are in roles that require us to motivate and direct ourselves to work.  That is reason enough to be engaged in something that you’re passionate about, as I’ve stated so many times before.  How can you stay fully engaged and excel at something if you have to drag yourself screaming and kicking to do it?

This environment doesn’t cater to the manager or the employee.  Motivating people is not an easy task ( I discussed this in a previous blog on Drive), but motivating oneself can be just as daunting.

What is a person to do to be more productive?  Personally, I like to define my top 3 things that I am going to get done each day, and come hell or high water, get them done.  In our office we have a daily 10 minute huddle, and at this huddle, each person shares their 3 things with the rest of the team.  This provides accountability outside of just ourselves, which can be invaluable to motivation.  It’s easy to justify to ourselves that we can’t do what we planned to do, but trying to explain that to your team of coworkers just makes you look like a slacker.

I came across an interesting one page productivity planner that falls in line with what I just discussed.  It adds projects and people to the list of the top things that should be made a priority  Maybe this can help you or someone you know.  Check it out here.

As a follow up to last week’s blog on disruptive technology, I wanted to talk about ways of getting around the mentality that causes successful firms to be blindsided.  (On a side note, I just watched the movie The Blind Side again and it’s a great analogy to what can happen in business).  Blockbuster’s blind side tackle was being a step off and letting Netflix sack them.

So what is it we need to be looking out for so this doesn’t happen to us?  There are companies going under every day who appear to have done all the right things.

To begin with, you need to understand that there is a difference between sustaining technological change and disruptive change.  In sustaining change, the existing companies continue to invest and improve their products and it’s hard for new companies to break through to these leaders. Disruptive changes come from new entrants that use disruptive technology to find new markets that can sustain growth.  The existing companies may have thought this disruptive technology was “cool” but their customers didn’t want it at that moment, so someone else came along and ran with it.

This is the type of technological change you want to protect your blindside againt: the “cool” stuff that you can see being viable, but disregarding for the time being because the bulk of your clientele isn’t interested.

According to Clayton Christensen, author of The Innovator’s Dilemma, there are 4 things managers can do to deal with disruptive technology:

First, proper resource allocation is essential.  Determining which projects get money and which don’t can be grueling.  The projects that do receive resources have a solid chance of succeeding, while the ones that don’t will likely fail, and this is where disruptive technology sneaks in.  If you don’t allocate resources to some kind of R&D, the cool stuff might come back to bite you.

Second, it is best to have organizations prepared to handle disruptive technology.  You can set them up on a smaller scale and match them up to the markets and customers that need them.  By keeping it small, flexible and exploratory, they can appreciate the small wins and not get hung up on huge profits right away.

Third, failures are a given in new markets since they lack any significant history to research, so be prepared.  Seasoned managers will generally avoid this scenario, so seek out the entrepreneurial types to lead these organizations.  They will have the drive to explore and fail, just be sure to give them the freedom to do so.

Fourth, and last…locate new markets that will appreciate the disruptive technology that your primary customer base doesn’t welcome.  Start out small, then grow those markets and see where they take you. Over time they could mature to a point that your primary customer base might begin to find them useful.

Are you prepared to protect your blind side so you don’t get sacked?