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It's that time of year again when the Oracle of Omaha writes to his shareholders. As always, there's much wisdom in those pages.
Critics gotta criticize, and when you're as successful in your undertakings as Warren Buffett, they're going to look for anything they can find. This year, having combed through Buffett's annual letter to his Berkshire Hathaway shareholders, Fortune noted that S&P 500 returns beat Buffett's over the last five years--but not the past six.
Who gives a flying frijole? Buffett has proven himself one of the greatest investors of all time and someone who understands business like few people can. He gets the basics, the flourishes, and the twists. On an off year in 2013, Berkshire Hathaway pulled in 23 percent growth in pretax profits. It's even more remarkable because Buffett typically holds companies for extended periods of time and is the head of a conglomerate, which, given the history of disasters that have often plagued such entities, makes it additionally impressive.
So, forget about reading the Berkshire Hathaway results for gotchas. Let's take a look at some sound business advice that comes from watching what someone does, not just listening to what he says.1. Know your company's intrinsic value.
People focus far too often on the external measures of a company's value. They look at stock price or the valuation derived from looking at the prices venture capitalists pay for a given percentage of a company. Forget all that, because those are ephemeral measures. Here's how Buffett thinks of it:
Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.
The calculation can be complicated and can change with interest rates or cash-flow projections. But Buffett's definition offers reasonable guidance. Calculating the intrinsic value is an excellent exercise. When you have a sense of the company's real worth, you have a context in which to consider investments, deals, and strategic decisions. Just be careful of the inherent danger of believing your own hype: Look at all the tech companies that twist accounting metrics into pretzels to pretend that they're profitable when they aren't.2. Build business templates.
Ask most businesspeople about templates and they'll mention word-processing documents and spreadsheets. Buffett talks about a partnership template. He has built a new methodical approach to large acquisitions. The specific details are immaterial for an entrepreneur, who isn't buying a company like NV Energy or a big chunk of H.J. Heinz. What is important is the idea of developing repeatable processes. Major deals are always unique, and then they all have common characteristics. Know how to achieve what you need, and you have far more energy available to consider the quirks.3. Know the difference between types of growth.
Many companies are anxious to grow at a breakneck pace. Even large companies will buy other large companies for their revenue. But in a way that's just trading one block of money for another. It can be a wash. Buffett says he doesn't want Berkshire Hathaway to simply grow, but to grow per-share results. Even though your business is probably private, that's a good way to think about it. Are you just bulking up, or are you becoming proportionately more successful?4. Invest in management.
An important reason for Buffett's success is that Berkshire Hathaway only invests in companies if they have strong management. Otherwise, you only subsidize a badly working business. Get the best management you can in your company from people who really know how to run marketing, sales, supply chain, customer service, manufacturing, finance, and any other silos. While providing strategy, let the people who know how to do the work actually do it. Buffett admits that two people working for him handle $7 billion portfolios with returns far outperforming his. Better to have them work for you than compete with you.5. Use your money effectively.
Buffett wrote about the money that Berkshire Hathaway doesn't own but that it can use to its benefit. The idea of float is well known in certain types of businesses, particularly low-margin ones like groceries and distributors. There's the difference between when you get paid and when you pay. Some grocery chains make a significant percentage of their profit on the float made available by being a cash business that has terms from its vendors. Effective use of money can also mean passing on your bonuses or compensation and using the cash to strengthen the weaker parts of your operation. Invest in people and capital smartly. As Buffett wrote, "it's better to have a partial interest in the Hope diamond than to own all of a rhinestone."
That's five points in barely the first three pages of his letter. You can learn a lot from reading a little of the practices and thought processes of successful people.
Most companies don't have policies, and for good reason.
In the list of sure signs of spring, March Madness stands tall alongside fellow harbingers such as daylight-savings time and blooming flowers. And when employees harness that optimism by breaking out the brackets in a couple of weeks, it looks like they won't face a particularly tough defense from their employers.
According to the Society for Human Resources Management, 81 percent of employers say they do not have a policy regulating office pools like those that come with the NCAA tournament. That data was collected during last year's tournament and marks a big shift from 2010, when 67 percent of employers said they had an office policy. (Of the companies that do have policies, only 7 percent claim to have ever disciplined an employee.)
What's more, HR professionals are in agreement that office pools actually have a positive workplace effect. About 70 percent say they play a positive role in relationship building at their companies, 64 percent say they help with team building, and 54 percent said they even increase employee engagement.
Relationship building and teamwork, sure. Employees huddled around, keeping track of scores, talking about something other than work--it's not hard to see how March Madness could ultimately help build these connections.
Some companies even go out of their way to leverage the tournament for relationship building, such as by putting employees into teams that collectively fill out a bracket and compete against other teams' brackets across the company.
But engagement? Shouldn't the tournament serve to hurt engagement, with its potential for distraction and thus lost productivity? Well, maybe. Some studies have shown the tournament might come at the expense of U.S. employers. Another survey says that 62 percent of employers think March Madness has no effect on employee output, and 27 percent even think it boosts productivity.
Whatever the effect of office pools on employees, the focus on productivity belies the discussion at hand. Productivity is an end, not the means, by which we define engagement.
The actual recipe for engagement is a lot more muddled than that. But at some level, we know it comes down to how much employees like their jobs and their co-workers. And suffice it to say that employees tend to like the jobs that treat them like they're adults, and that facilitate those connections with colleagues.
So though you might notice a small downtick in productivity during the Madness, consider your laissez-faire approach to office pools an investment in creating the kind of longer-term engagement that will more than make up for it down the road.
The co-founder of Tesla Motors says money was never the motivating factor for his ambitious ventures.
Elon Musk says he didn't become an entrepreneur in order to be financially successful. He wanted to radically change the world for the better.
In a video recorded on October 2, 2013 at the 36th annual ENCORE Award reception at the Stanford Graduate School of Business, an event honoring Tesla Motors, Musk explains, "When I was in college, I was trying to think what would most affect the future in a positive way."
Musk, whom Inc. named Entrepreneur of the Year in 1997, realized early on that there were five areas he could focus on: sustainable energy, the Internet, "making life multi-planetary," and perhaps artificial intelligence (AI) and rewriting genetics. With the latter two though, he says, "I knew things could go wrong," so he decided not to pursue them.
In 1996, at the age of 24, Musk started his first Internet company with his brother and another partner, Greg Curry. The company, Zip2 Corporation, was an online city guide that provided content to online newspapers such as the The New York Times. Of those lean startup years, Musk recalls, "It wasn't about being wealthy, it was just from the standpoint of wanting to be part of the Internet. I figured if we could make enough just to get by, that'd be OK."
The trio rented a small office in Palo Alto, California--back when rent was affordable--for $450 a month and "we just slept in the office and showered at the YMCA," Musk says. "It was not from the standpoint of what's the best risk and rate of return. It was just, 'These things need to happen; I can try to make them happen.'"
Watch the videos below to learn what motivates Musk.
Creating a Positive Future For Humanity:
Under a new Obamacare extension, companies may be able to hold on to their old health insurance plans through 2017.
Here we go again. Adding to a succession of delays and extensions that has by now become almost comical, the Department of Health and Human Services announced on March 5 yet another significant reprieve for individuals and small businesses struggling to comply with the requirements of the Affordable Care Act.
If you have a group health plan that doesn't meet all the requirements of the Affordable Care Act--a "noncompliant" plan, in industry-speak--you can now keep it for an additional two years. This follows an announcement last November that allowed a one-year extension of such plans, which means that you can keep renewing your noncompliant group coverage up until October 1, 2016, with coverage effective through 2017. That is, if there are no additional delays--yesterday's announcement left the door open for an additional one-year extension.
Because of different coverage and underwriting requirements, older, noncompliant plans are often cheaper than the new Obamacare plans. They don't have to offer coverage in all 10 "essential" benefit categories, for one thing. And they don't have to comply with modified community rating rules. This is significant for small groups with young, healthy employees, who would probably see their premiums soar under community rating, which prohibits underwriting based on health status and limits adjustments for age. On the other hand, companies with less-healthy employees could see greater benefits from the new plans.
What this all means to individual businesses depends largely on location. Regardless of the federal ruling, it's still up to state insurance regulators to decide whether they will allow insurers to continue issuing noncompliant policies. About half of the states--including big ones like New York and California--have decided that they won't. However, the administration's latest notice allows those states to change their minds and reinstate canceled policies for anyone who held them in 2013.
Click here to read the full HHS bulletin, and call your insurance broker or benefits provider for clarification on how these changes might impact your company.
Take a note from this fast-growing startup and focus on the things that will make the biggest impact in your first few years of business.
If you want to change the world, your startup has to grow fast. So why not look into the growth strategy tips of a pair of Stanford MBAs whose startup has expanded its customer base nearly 200 percent a year in the last two-and-a-half years?
The startup is Austin-based Main Street Hub, or MSH--its social-, Web-, and email-marketing service claims to help “merchants get more customers and keep them coming back by spreading word of mouth, extending their customer service, managing their online reputation, and leveraging Main Street Hub’s merchant network.”
Co-CEOs Andrew Allison and Matt Stuart co-founded MSH in 2010. Allison, a Yale graduate with a Stanford JD/MBA, runs its product-development, content-operations, and customer-success functions. Stuart, who has a Stanford MBA and worked at Goldman Sachs, manages MSH’s sales, marketing, and business development.
Targeting the $133 billion local media ad spend market--20 percent of which is being spent on digital/online, MSH raised $14 million in January from investors led by Bessemer Venture Partners to tap that market’s expected 27 percent annual growth over the next four years.
Growing from scratch to 3,000 customers in 50 states with 175 employees across four offices, MSH has its hands full when it comes to managing its growth while sustaining a high level of employee and customer satisfaction.
In a recent interview, Allison and Stuart offered four things you should focus on that could help your startup grow.
1. The customer’s pain. It seems to go without saying that you can’t have much of a business if customers won’t pay you. As a leader, you must spend time meeting with those customers and find a need that competitors aren't meeting.
Then you must rally your troops to do a great job of satisfying that unmet need. MSH did just that--discovering that local restaurants and other small businesses didn't really want to become experts in Internet marketing and managing their social-media presence.
In response to that focus on its customer’s pain, MSH developed a "Do It for You," or DIFY, service using the so-called lean-startup approach. Specifically, MSH built a prototype of the DIFY service, put the prototype in front of the customer, then got feedback on what worked, what was missing, and what needed to be improved. Then the company repeated the process until it had developed a service that customers loved.
2. Your co-founder. Many entrepreneurs seek out co-founders. But picking the wrong one can be fatal for your startup. How do you find a partner with complementary skills who shares your vision and commitment to making it happen?
Allison and Stuart shared goals and values. As Allison explains, “We were both focused on building a company that was for-profit and that had a social purpose. We had strong alignment on values and we decided to work together. We built up trust by making commitments and acting on them.”
Interestingly, they reject the idea that co-founders should work together because they can split up the work. “We're skeptical that co-founders can find each other solely on the basis of complementary skills,” says Allison.
3. Your culture. As a startup grows, founders can’t do all the work themselves. Instead they hire people who they hope will be able to identify opportunities and capture them at least as well--if not better than--the founders would.
As Stuart explains, “A culture is essential to attract and retain talented people. When Andrew and I met at Stanford Business School in 2009, we talked about what the company would be like. We figured out its values and social purpose--to help create thriving local economics. We really wanted people who would care about strengthening local markets. We hire people who are passionate about this mission and share our values.”
4. Adapting. The biggest competitive advantage of a startup over a big company is its ability to attack profit pools faster. That means that if there's an opportunity to deliver value to customers in a new market, the big company will lumber while the startup sprints.
But such quick adaptation to new opportunities doesn't just magically happen. Leaders must have a clear vision for the market and deep insight into customers’ evolving needs. Thanks to these skills, MSH has developed popular additions to its service.
As Allison explains, “We developed our first product then we listened to our customer. We got feedback from every one of our customer touch points--engineers, sales, and customer service. Based on the feedback, we followed lean principles of product development--testing and rolling out prototypes constantly.”
MSH exemplifies the concept of Boundaryless Company Development, which I developed in my book Hungry Start-up Strategy. “We make assumptions or hypotheses and run small tests before we build fully featured versions of a new service. We measure the impact of our prototypes to see whether they confirm or disconfirm our hypotheses. For example, we developed Hub Exchange, a service that lets local businesses that target the same customer--such as an ice cream stand and a toy store--cross-promote each other’s’ products."
PwC's recent 2014 CEO report revealed where business leaders' heads are at.
It's no surprise that technology is top of mind for CEOs as they think about the future of their businesses. Perhaps what comes next on their priority list is though. Nearly 70 percent of CEOs are concerned that demographic shifts will transform their area of business within the next five years, according to a report for PwC. As Americans age, minority populations grow and consumer preferences change, these business leaders will have to figure out a way to market to an ever-changing audience.
Here is a graphic from statistics company Statista, which shows how 162 American CEOs rank today's most influential trends.
How many times should you follow up after a pitch goes unanswered? Chances are, more than you do now. Here's how to redouble your efforts--tactfully.
I once sent a pitch to a former client. I hadn't worked for this client in several months, but she paid well and I was eager to get another piece of business. I was certain I had a proposal she would be interested in. But my contact didn't respond to my first email. Or my second one, a couple of weeks later, or my third, a couple of weeks after that.
We had a strong history together and I really wanted to work with her again. And so, instead of my usual practice of giving up after a couple of tries, I kept at it. After yet another email went unanswered, I called her office and left a message. A week later, I left a message again. (I was feeling more and more like a stalker, but I really wanted the job.) A week after that, I called one more time--and she happened to pick up the phone.
She hadn't read or didn't remember my emails or phone messages, so I explained once more what I had in mind.
"That's interesting to me," she said. And gave me the job.
As soon as I got off the phone and got done whooping for joy, I pulled out a little yellow sticky note. "Persistence pays!" I wrote with a red felt tip, and stuck it to the side of my computer. For years--until I changed computers a couple of times and the stickum wore off--that little note stayed in place as an important reminder that what can feel like obnoxious pushiness might actually be the appropriate behavior needed to get a customer's attention in this busy world. It's a lesson I've often forgotten, but when I've remembered and made the effort to follow up and then follow up again, I've rarely been sorry. More than once, it has led to an unexpected sale.
On the other hand, as someone who receives a lot of pitches, and more than my share of follow-up emails and phone calls, I know that there are effective ways of doing it and ways that will only annoy.
How do you do follow-up right? Here's what works for me:1. If you haven't followed up, you haven't really pitched.
This seems like it should go without saying. But too many people will send one email or leave one phone message and never get in touch again if they don't get an answer. If something's worth going after, it's worth trying more than once.2. Follow up at least two times more than you think you should.
In another case, I sent a pitch, then one follow-up, and then gave up. Four months later the customer got back to me--very apologetically--to ask if I was still interested. I was, and that company has since become one of my best clients. It was sheer dumb luck that this particular customer remembered my pitch or else found it again in her inbox. If she hadn't, I would have missed a really good thing by giving up too soon.3. Assume your customer has forgotten your pitch.
You'll have the best chance of success if you figure on starting over from scratch every time you get in touch. If your original proposal was an email, include that email in your follow-up. If you have a prospect on the phone, or are leaving a message, remind him or her in as few words as you can what you proposed.4. Don't act like you're owed anything.
It can be tempting to get peevish the third or fourth time you've followed up and gotten no response. Keep in mind that no matter how many times you've gotten in touch or how perfect your offer is for that client, no one there is obligated to respond to you in any way. Your fifth follow-up should be as polite in tone as your first one was.5. Try multiple channels.
Not getting a response to your emails or phone messages? Try an @ message on Twitter, or a message on LinkedIn or Facebook. If you have multiple contacts at a prospective client and one isn't answering you, try someone else. (Make sure to let each contact know who else you've contacted, though, or this can backfire.)6. Your objective is an answer.
If you've set yourself a "no" quota, you know that an answer, even a turn-down, is much better than getting a non-answer such as "I'll get back to you." (If you don't have a "no" quota, you should.)
But some people are uncomfortable saying no, so they'll try to put off the inevitable. Fight that tendency by giving the person a reason to give you an immediate answer, such as a limited-time discount. And if your contact says something like "I'll get back to you," set a time when you'll get back to him or her instead.7. Have a plan.
What happens if and when you get that "no"? Have an immediate plan. What other customer can you pitch to next? What other product can you pitch to this client? Getting turned down should just take you to the next step along your planned path. By the way, you should also know what your next step is if the answer turns out to be yes.8. Say thank you.
Whatever answer you get, someone took the time to read your proposal, or speak with you on the phone. They gave you some of their time and attention, which is a scarce commodity for every professional these days. They may have given you information that can help you make your product better, or some ideas about how to sell it elsewhere. And if you thank them, they're likely to remember how gracious you were--and want to do business with you in the future.
Like this post? Sign up here for Minda's weekly email, and you'll never miss her columns. Next time: 10 Things to Stop Doing if You Want to Be Happy
There are plenty of people willing to buy an expensive electric car. Too bad Cadillac has no idea why.
Cadillac is now selling a $75,000 electric car. To get you to buy it, it's created an ad celebrating the unending, joyless pursuit of stuff.
In one sense, the ad has done its job. It's got us talking about Cadillac. To get that conversation going, Cadillac glorifies unthinking adherence to materialism, and plays into stereotypes by casting that materialism as uniquely American. In the ad, actor Neal McDonough (Band of Brothers, Boomtown, Desperate Housewives) strides through a modernist mansion, barely acknowledging his wife and kid (or at least that's who we assume they are), extolling the virtues of nonstop work and mocking people in other countries who take vacation time and stop to sip the espresso. This is not supposed to be ironic. It's supposed to make you want to buy a car.
What Cadillac doesn't seem to understand is that if you really wanted to buy an electric car, it would be called a Tesla.
In the Cadillac ad, the car is clearly intended as a status symbol, up there with the house, the pool, the attractive wife, and the unobtrusive kid. Unfortunately, this isn't what the cool kids are into right now. Sure, Marissa Mayer buys artwork and likes designer clothes, but Mark Zuckerberg is wearing hoodies and slaughtering his own pigs, for Pete's sake. Sheryl Sandberg was recently named to Forbes' billionaires list, but how do we know she's really successful? She could go public with the fact that she leaves work at 5 o'clock.
The one remaining status symbol among the Silicon Valley tech set--and with the exception of Wall Street, that's where the money is--is a Tesla, an electric luxury car from the startup founded by Elon Musk. You don't hear people brag about their vacation homes. No one calls attention to his or her complicated mechanical watch, which can easily cost as much as several cars, unless you bring it up first. Mention Screaming Eagle, and you're as likely to end up in a conversation about the vintner's small runs and marketing prowess as you are the quality of its five-figure Cabernet Sauvignon.
Owning a Tesla is different. It's the one thing left--the one thing--that it's somehow OK to brag about. People will find a way to drop the fact that they own a Tesla into the most unrelated conversations, a propos of absolutely nothing. Even entrepreneurs romanticizing their long hours, huge credit-card bills, and ramen dinners will drop in a reference to their Tesla. When I try to ask, politely, how one can afford a Tesla on a ramen budget, the entrepreneur will confess that actually, he shares a Tesla with someone else, making it no more expensive than say, an Audi. (Somehow, Audi ownership is compatible with ramen. Don't ask me.)
Tesla owners don't love their cars just because no one else can afford one, or at least they're not going to say that. Instead, they gloat over rising fuel prices and the long lines of the great unwashed waiting to fill their cars with--yuck!--gasoline. Tesla owners charge their cars while they sleep, thank you very much. Nothing makes a Tesla owner happier than to explain to an innocent bystander that the car is not only designed and sold by a U.S. company but also manufactured at a plant in Fremont, Calif. The fact that Tesla's founder, Elon Musk, was born in South Africa but became a U.S. citizen is just the icing on the sustainably-baked cake.
For these members of the 1 percent--who can always buy a Prius--success isn't about an expansive kitchen and jingoistic chest-beating. It's about having something fun and beautiful that still seems environmentally responsible. It's about energy independence. It's about embracing the best--not the worst--of this crazy country of ours. Those are the new status symbols.
Tesla gets that. Somehow, Cadillac gets that, or they wouldn’t have made an electric car in the first place. Yet somehow, they missed it entirely.
Managing expectations can help you more seamlessly navigate the choppy startup waters.
Managing expectations is a vastly underutilized skill, in my opinion. Not everyone does it, but maybe if more did, we could avoid a lot of the day-to-day drama that goes on in every office.
Folks who know how to manage expectations are able to more seamlessly navigate the choppy waters of their business. Why? Because they know how to communicate, organize, and direct conversations around things getting done.
Follow these three practical tips to improve your own ability to manage expectations.Make No Assumptions
People often get into hot water when they assume a co-worker, vendor, or supervisor knows what they expect or even what they're talking about. My first piece of advice is making sure you get context.
Don't fall into the trap of assuming someone has the same understanding of a situation, project, deadline, or task that you do. You can avoid this pitfall by having a conversation in which you openly discuss what's expected, how it might be accomplished, and how success will be measured. Remember to leave plenty of opportunities for questions. This is also the time to agree and commit to what will be delivered, when. When something is going to be completed is one of the most common points of miscommunication. Which leads me to my next tip...Communicate, Communicate, Communicate
One of the best ways to manage expectations is to make sure you communicate with everyone on a frequent basis. In the early stages of a new project or as a key milestone or deadline approaches, you may want to even over-communicate.
Sure, it might be more work on your part, but it's especially important if you have a new team that isn't used to working together, or new leadership that may not have developed a level of trust in the team's ability to deliver. Better safe than sorry.
By holding frequent check-ins throughout the course of a project, you also have the chance to provide real-time status updates and manage any delays, risks, or blockers. When you're proactively honest and transparent in your communication, you have room to put a Plan B in place, if needed, or the flexibility of making new decisions as you move toward the finish line. Being honest about a delay is a thousand times better than promising to deliver and then missing your deadline.Pushing Back is OK
A huge piece of managing expectations is the actual expectation, right?
You have to be comfortable that the expectations are realistic and achievable. If they're not, you can--and should--push back. The key here is pushing back in a way that balances the organization's needs and the team's abilities. Being open about what can be delivered and what the plan is to bring in the rest can go a long way in instilling confidence and getting the go-ahead. If you can nail the fine art of pushback, you've won half the battle of managing expectations successfully.
How do you manage expectations? I'd love to hear in the comments.
The results could be amazing--for the people you meet and for you.
One of my clients is famous. Big time famous. Famous in that weird way that even people who don't know exactly what he does or why he's famous still instantly recognize him as somebody. (Unfortunately, I can't tell you who he is since he's a client, and mum is always the word.)
The same thing happens every time people meet him:
- They take a step forward.
- They make eye contact.
- They reach to shake hands in an eager and excited way.
- As they do, they bow their heads slightly, as if to nonverbally say, "I am so glad to meet you."
- They hold the handshake for an extra beat, almost as if they're reluctant to let go.
- They actually say, "I am so glad to meet you."
- They smile. Hugely.
- And they keep smiling and making eye contact...because they clearly feel it's awesome to meet him.
It's pretty cool to watch. And it makes me think.
What if we did the same thing every time we meet someone new? What if we didn't worry about comparative levels of status or pecking order, didn't worry about wearing our emotions on our sleeves, didn't worry about making ourselves vulnerable by possibly coming across a little too sincere or a little too happy?
What if you treat every person you meet with the same enthusiasm you would show if you met one of your heroes?
Most importantly, how would the other person feel if you treated them that way?
That answer to the last question is simple. You would not only make a great first impression but also a lasting impression. After all:
- We tend to like people who like us, and
- We tend to think well of people who think well of us, and
- We tend to remember the people who think meeting us is something they will remember.
Of course I'm not saying it will be easy. I should know, because it definitely isn't easy for me. Unless I feel sure of myself in a particular situation I tend to be fairly insecure. So when I meet people after, say, a speaking engagement, I'm comfortable. In those situations, I'm pretty confident.
Unfortunately confidence is conditional, and I can think of plenty of situations where I'm definitely not confident. Sure, I shake hands and make eye contact, but I know I don't come across as well as I could. Sadly my shyness can even make me seem aloof, remote, or detached.
That's not my intention--but it is what sometimes happens. And the effect on the people I meet can be, at best, underwhelming.
Then I think about the time I met Wolverine. I was thrilled. I forgot all about feeling shy or insecure. (After all: Wolverine!) I didn't worry about coming across as too excited or too, well, anything. Just like the people who meet my client, I was just glad to meet him--and I let it show.
Now whenever I meet someone new, I try to mentally flash back to that moment. I know I can turn loose my inhibitions and be engaging and sincere and genuinely interested. I've done it before. All I have to do is treat every person I meet as someone I'm genuinely delighted to meet, someone I'm genuinely honored to meet, because for that moment they should be.
Try it. Imagine that each person you meet could turn out to be your next customer, your next important connection, or your next great friend. Then treat each person that way.
When you do, the odds are much greater they will turn out to be exactly what you imagine they could be.
Even if they don't, you will still have made another person feel valued and special--and making people feel valued and special is reason enough.
Every entrepreneur has made a blunder or two while trying to win new customers. If you're lucky, you can use the lessons you pick up to succeed the next time around.
Napoleon had Waterloo. Lee had Gettysburg. Custer had the Little Bighorn.
After his blunder, Napoleon was sent into exile. After Gettysburg, Lee never again invaded the North. And after the Little Bighorn--well, there was no "after" for the reckless Custer.
Entrepreneurs are far luckier than generals. For one thing, we seldom put our lives on the line. For another, though most of us have failed miserably at one point or another in our careers, the best of us have learned valuable lessons and become better leaders as a result.
So here I recount the three biggest new-business blunders in my career--and impart the useful, if painful, knowledge I gained as a result.1. Underestimating a new business lead
We were once approached by a company that made specially equipped vans for handicapped people. When they asked if we would be interested in representing them, we said sure, but we treated the opportunity far too lightly. In fact, we didn't even rehearse until about an hour before the presentation was scheduled to begin.
Our team decided not to present in person. Needless to say, our competitors took the new business lead very seriously and sent their full team to meet the prospect.
It gets worse. I showed a photograph of a handicapped-accessible van parked outside a retirement village. I began my explanation, but the prospect interrupted me. "Steve," he asked, "you do know the slide you're showing contains a photograph of our No. 1 competitor's product, correct?"
When my heart began beating again, I opted for humor. "Of course," I chuckled. "We just wanted to make sure you were still paying attention to the presentation."
The prospect wasn't amused. Needless to say, we received a "Dear agency" letter the next day informing us the business went to our competitor.
Lessons learned: Never pitch a piece of business unless you're willing to invest the maximum time and resources necessary to win it. And never wait until the last minute to rehearse or review the contents. We now work backward from a presentation date and rehearse multiple times.2. Trusting a mole
I received a call once from a good friend who also happened to be the in-house general counsel of a global international consulting firm. "Steve," he said, "not only are we firing our PR firm, but I know exactly what they did wrong and I know exactly what the CEO and COO want from the new firm."
We were thrilled to compete and ended up sharing every strategy and tactic with my friend, who massaged them at every step. I don't think I'd ever felt more confident striding into a prospect's conference room than I did walking into the consulting firm's that day. When the presentation ended, the CEO was the first to speak:
"That had to rank as the most glib and superficial presentation I've ever heard," he said.
The COO applied the coup de grâce: "Steve, why did you just assume this is what we wanted?"
We did our best to regroup, but we were dead in the water. Steaming, I ran to the nearest phone and called my friend. When I reported the results, he replied, "Hmm. I guess things must have changed between then and now." That was it. My best guess is that he had overheard snippets of different conversations and leaped to the wrong conclusions, but I never got further explanation.
Lessons learned: Don't trust an inside source at a prospective client's organization. Always depend on what the lead decision maker tells you in her brief.3. Drinking your own Kool-Aid
Like many firms in my field, we've dramatically changed the range of services we provide. So though we began as a traditional public relations firm 19 years ago, we have subsequently morphed into a fully integrated strategic communications firm.
In our early, PR-only days, we had the good fortune to represent a top office-products manufacturer. But as is often the case, the old management team that had hired us was swept out and replaced with a new one. And when a new sheriff arrives in town, the first person he shoots is the existing PR firm.
Fast-forward five years. One of the original clients had returned to the office-products company, in a much more senior position. Now that he was the sheriff, he was anxious to shoot the existing firm and bring in his favorite (that would be us). And so he arranged a capabilities presentation to his fellow managers that we assumed would be little more than a rubber stamp for him to hire us.
But there was one slight twist. "Joe" asked that we update him on the "new" Peppercomm. Rather than review our still-considerable public relations capabilities, we instead launched into a 40-minute review of our amazing new array of sophisticated client service offerings. The managers didn't seem impressed in the least. At last, Joe stopped us and said, "Hey, Steve, we're looking for a PR firm. It seems to me that Peppercomm doesn't even do PR anymore. But thanks for the update. We'll be in touch."
We were dead. I tried my best improvisation routines to win them back, but we had blown a golden opportunity. The PR account went to another firm that, you guessed it, did nothing but PR.
Lessons learned: You don't want to begin a meeting by extolling your firm's virtues. Instead, ask the prospective client to restate the exact scope of the assignment for which it requires assistance. Had we only asked, we would now once again be working with Joe.
The great thing about business (as opposed to war) is that leaders can live to fight another day. And, trust me, I now go into battle a chastened, if better prepared, leader. I may have been humbled by three horrific blunders, but each has made me a better entrepreneur and my business a more formidable competitor.
You don't have to treat all your employees exactly the same. But it's not quite that easy.
It's easy to become enamored with the cachet of Silicon Valley companies and wonder if you can replicate their way of life and fun company cultures. But what if napping rooms and yoga coaches aren't a fit for your business?
I received this email from a HR manager at a company facing just such a dilemma:
Currently there is a disconnect between all managers on how they manage their employees and apply benefits, handle performance evaluations, and bend the rules. Even though we do have a written handbook with outlined policies and procedures, these are regularly bent or broken. I'm concerned that we are not only creating animosity within our organization but also leaving ourselves open for potential legal liability. Our CEO has been awed and inspired by recent articles from some of the top creative companies that employ this type of work style successfully. However the reality of our situation is that over 50 percent of our work force is based in manufacturing. The freer model may work well for companies in Silicon Valley, but it doesn't seem to fit into our blue-collar midwestern culture. Everything I have learned in HR is centered around consistency and documentation. Can you please guide me as to whether or not this still holds true, and if so, why consistency is still important? Or is this train of thought rooted in the past and the movement forward is to a more relaxed view of consistently applying policies, procedures, and guidelines throughout our organization?
She has some really important concerns. In some things, it's absolutely and legally necessary to be 100 percent consistent. For instance, sexual harassment and illegal discrimination should never be tolerated. Pay must always be done correctly. You also need to be fair and treat like situations likewise. But you need to evaluate what "like" situations are.
For instance, the HR manager above is faced with a CEO who wants a cool startup culture, but 50 percent of the company's employees work in manufacturing. Often in this situation, a more structured environment--where people show up on schedule, do their work, and go home--is the norm.
When You Can Bend the Rules...
But what about the other 50 percent of employees? The ones who aren't manufacturing? The rules can be different for these people for a couple of reasons. It's probably going to be OK for your marketing director to work from home on Tuesdays, because she can do 99 percent of her job over the phone and with her computer. Additionally, it's OK for your exempt employees to cut out of work an hour early because they'll be following up after the kids go to bed anyway.
And should two exempt employees be treated identically? Not necessarily. What you need to be looking at is performance. If John is always on top of things, is highly productive, and is available whenever he's needed, you can allow him a lot of leeway. But if Jane is hard to find, doesn't return calls when she's out of the office, tends to fall behind on her projects, and is generally unproductive, you can rein her in. It's all about performance.
This means you do have to treat your employees as individuals. It also means you need to document performance--otherwise Jane might claim that she's not allowed to work from home but John is because he's male and you're a horrible sexist. You need to have it documented that she isn't easily accessible when she's working from home, while John is.
...And When You Can't
With your manufacturing employees, of course, cutting out an hour early means an hour's less pay for that person and--depending on the set up of your place--lowered productivity for the whole team. The point is, the consequences of the actions aren't the same, so they shouldn't be treated the same.
Managing this way is more difficult, no doubt. It's much easier to follow zero tolerance policies and not have to think through employee requests, but it limits your work force unnecessarily.
With a focus on women entrepreneurs, the World Bank's International Finance Corporation plans to open a financing venture for emerging markets.
On Thursday, the World Bank's International Finance Corporation announced plans to launch a $600 million financing program in order to support women entrepreneurs, reports The Wall Street Journal.
The hope is that by having the program tap emerging markets such as Southeast Asia, the Middle East, and North Africa, women will have a better shot at developing their own businesses.
“We cannot afford to exclude half of the world’s population from the rightful role in helping to change the face of the global economy,” World Bank president Jim Yong Kim told the Journal.
However, many women worldwide cannot access loans due to legal or social barriers that undermine their efforts. For example, many women are not allowed to own assets such as a home, which would provide collateral for a loan. According to the IFC, the disparity against women-owned businesses in emerging markets is so great that nearly $320 billion has been held back.
Another goal of the program is to put more women to work. As economists told the Journal, closing the gender gap in the Middle East and North Africa could lift those regions' per capita gross domestic product by 27 percent; in South Asia, by 23 percent.
The IFC has vowed to invest $100 million in the venture, called the Women Entrepreneurs Operating Facility. Goldman Sachs has pledged an additional $32 million. For Goldman, the program represents another facet of its 10,000 Women initiative, which has provided business training to female entrepreneurs since 2008.
Don't keep your employees in the dark when it comes to the company's finances. Educating them on the state of the business makes for a more engaged team.
How much should we tell our employees about the business's finances? For small and midsize business owners, there's often a lot of anxiety about sharing too much information. For employees, there's a strong desire to understand the business and its prospects for the future. If you run a privately held company, balancing this is tough. Here are some general guidelines:
- Don't give information without education. Any financial reports you decide to share, whether they're summaries or complete traditional reports, such as your balance sheet, P/L, and budget, should always be accompanied with a thorough education as to how the employee can read the data. It's possible that your employees don't have the background or training to fully understand these documents, so passing them on without education can be little more than distracting.
- What does it mean to them? When looking at the information that you provide, there needs to be a clear summary telling the employees what it means to them. They will likely have lots of relevant questions:
- Is our company getting better or worse? More stable or vulnerable?
- Is my job at risk?
- What are we investing in to make us more successful in the future?
Employees look for context and relevance to the numbers.
- What can I do? Along with providing context for the numbers themselves, it's also important to provide a road map for what you're doing as a company with the information and what you're asking of employees. The ask during positive periods is simple: Keep doing your great work! The ask during negative periods may be around cost cutting, trimming waste, or helping to sell more. Be specific. Employees who believe in your company and its leaders want to know how they can contribute to its growing success or help in overcoming its current rough moment.
What to tell them
Every owner has a right to his or her own level of comfort in your transparency. I will also tell you that the companies that are attracting the best talent are moving towards greater transparency because smart employees want to know what's going on in their businesses. Here are some items you should consider when presenting and discussing the company's finances with your employees:
The days when employees were willing to extend blind trust on financial matters to the owners of the business have passed. People are concerned about the viability of their company, their own jobs, and whether they've bet on the right horse. People will stick with you through rough times if they know what's going on and see a path to success. You do nobody a favor by holding onto the information, because the speculation will always be there, and without data, it will likely be negative.
Presentations are all about what we do with our bodies. The trick is to make yours have impact.
If I asked you to walk around a room as though you were the most confident person in the world--if I asked you to show me confidence, only with your body and without words--what would it look like? You might stand up straight and walk slowly with long strides and smooth arm gestures. You’d look people in the eye, smile, and hold up your chin. You would breathe deeply, and your shoulders would relax.
If I then asked you to walk around showing me the physical manifestation of fear and nervousness, you would probably close in on yourself. You might hold your arms tightly to your body, duck your head, and move erratically and quickly, as though fearing danger at any moment. Your eyes would dart around, and your breathing would be fast and shallow.
Try it out now: Get up from your seat and walk around the room, first in confidence and then in fear. Note how different you feel and how your body tries to show those emotions.
This nonverbal exercise has an important purpose. We have a misconception that presentations are about the words we say and the slides we show.
Presentations are actually all about what we do with our bodies. People focus on your body, usually without even realizing it. Much more impact comes from your body than from your words. As a matter of fact, putting your body into expansive, powerful poses can actually create confidence.Your Body, Your Mood
Confidence is a doozy of a concern for a huge percentage of people--whether they present formally to crowds or just to small groups at weekly meetings. People often say gaining confidence is their biggest goal.
Get ready. You have the instant ability to do just that. All you have to do is make your body look confident. When William James said, “Act as if you are beautiful, confident, and poised, and you will be," he was more right than he might have realized. The way you hold your body can actually change the level of power and confidence you feel.
We all have attitudes and perspectives within us that come alive from body cues, not from mindsets. In fact, those who study the psychology of self-efficacy (your belief in your ability to perform a certain task or skill) have found that one key to unlocking confidence is to talk your body into it, even before your mind.
For example, if you show the physical signs of happiness (smiling), you will feel happier. Your face, body, and voice send signals to your brain, informing it that you are experiencing a particular emotion because you are engaging in behaviors that signal happiness. You then feel that emotion.
One study even showed that forcing the body to change can affect mood and attitude. In 2006, 10 clinically depressed patients, who had been depressed for two to 10 years and who had not responded to drug therapy, were administered a drug that reduced their frown lines.
In other words, researchers used Botox to force the patients’ faces to assume a happier aspect--free of frown lines and down expressions. Two months later, without additional drugs, nine of the 10 were no longer depressed. And no, silly, I’m not telling you to go get Botox. The point is that by forcing the patients’ bodies to send new signals to their brains, their chemical depression began to improve. This astonishing finding is only the beginning.Strike a Pose
Some of the most fascinating research in this arena comes from Amy J.C. Cuddy, as reported by the Harvard Business School. In her work “Power Posing: Brief Nonverbal Displays Affect Neuroendocrine Levels and Risk Tolerance,” she illuminates the fact that we have much more ability to manipulate our confidence than we realize.
Cuddy and her co-authors conducted experiments to measure several important hormones. The first was testosterone, which is present in both the human and animal worlds and correlates with greater confidence, risk tolerance, power, and dominance when it is present in the body at higher levels. The second was cortisol, a hormone that’s present in the brain and body during times of stress, fear, and lack of confidence and which can also over time create hypertension and memory loss.
In her experiments, Cuddy’s subjects were asked to hold high-power, expansive poses--such as putting their feet on a desk with their hands behind their head--for one to two minutes. Members of another control group were directed to sit with their legs crossed and their arms protecting their bodies, often with their heads down. Saliva samples from before and after the experiment showed astonishing changes.
Controlling for the subjects’ baseline levels of both hormones, Cuddy and her co-authors found that high-power poses decreased cortisol by about 25 percent and increased testosterone by about 19 percent in both men and women. By contrast, the low-power poses increased cortisol about 17 percent and decreased testosterone about 10 percent.
In addition, the people who had taken on the high-power poses said they felt very “in charge” and “powerful.” They felt confident. This research has ramifications not only for presentations but for anyone who might feel powerless or have low self-esteem. By manipulating the way you hold your body, you can affect your level of confidence and sense of control. And by managing your internal confidence, by building yourself up and giving yourself more power, you in turn affect how your audience feels about you.Make a Connection
My geek core gets so worked up about this stuff! By changing our bodies, we control chemicals that can affect our confidence. When we are positive, confident, and willing to make a warm connection with our audience, they will respond. As Cuddy elaborates:
We are influenced, and influence others, through very unconscious and implicit processes. People tend to spend too much energy focusing on the words they’re saying--perfectly crafting the content of the message--when in many cases that matters much less than how it’s being communicated. People often are more influenced by how they feel about you than by what you’re saying. It’s not about the content of the message, but how you’re communicating it.
Excerpted with permission from Be the Best Bad Presenter Ever: Break the Rules, Make Mistakes, and Win Them Over © 2014 Berrett-Koehler Publishers
Two years after legalizing pot for recreational use, the state issued the first license to a grower.
Washington State issued its first legal-marijuana business license on Wednesday, the Associated Press reported, making Kouchlock Productions of Spokane the first licensed and certified grower there.
Issuing a producer/processor license to Sean Green, CEO of Kouchlock--a name that refers to being so high that a person is unable to leave the couch--marks a new phase for the Pacific Coast state. Business owners are lining up to obtain such licenses in hopes of cashing in on the potentially lucrative marijuana business.
"Cannabis prohibition is over," Green said, according to the AP. "I'm coming home with jobs, Spokane."
Under the law passed by Washington voters in the fall of 2012, Green will be allowed to grow 21,000 square feet of marijuana plants. Kouchlock Productions, however, will not be able to sell cannabis for recreational use unless it receives a retail license. The entrepreneur plans to start by growing plants to sell to other growers.
The Washington Liquor Control Board says it has received more than 2,800 applications for producer/processor licenses. The state has yet to begin issuing retail licenses, for which it will hold a lottery later this year.
The first marijuana retail stores are expected to open in June or July; the board plans to allow 334 pot shops statewide.
The sale of marijuana for recreational use also became legal in Colorado this year. Under federal law, however, it remains illegal.
Gadget love is an infidelity you have to learn to live with.
One of the first columns I ever wrote for Inc. was about the intrusion of technology into entrepreneurial marriages. It's still among the complaints I encounter most often when I talk to founders and their spouses. Mostly spouses. Entrepreneurs argue that smartphones and tablets free them up from the office. Spouses counter that the entrepreneurs carry their offices with them, like Bluetooth-enabled hermit crabs.
The most recent version of this lament comes from Kathy Korman Frey whose husband, Josh Frey, is CEO of OnSalePromos.com, a Washington, D.C.-based promotional-products company. Kathy is a self-described "business junkie" with an MBA and her own small business. Nonetheless, she finds it easier than her husband does to put limits on work hours. Her biggest gripe is the omnipresence of Josh's laptop. It's everywhere--at the breakfast bar with the kids, on the couch, in bed. "It's like he's having an affair with the computer," Kathy says. "It has the siren's call.
"When I noticed that Josh's office space had bled into the entire house, I tried to set some rules," Kathy told me. "For example, 'No laptop in the main living areas of the house.' When I'm around someone who's furiously typing away, the mojo of the home is gone. It's very un-Zen."
If there were a 12-step program for relatives of tech addicts, setting rules would probably be step four (after getting the spouse to admit he has a problem, hiding all the chargers at the bottom of the box of holiday decorations in the basement, and threatening to buy a signal jammer). Josh understood why Kathy wanted to establish limits, but he wasn't crazy about it. And Kathy admits she was a half-hearted enforcer. (I did mention that she's also an entrepreneur.) Not surprisingly, over time many of the rules have quietly vanished.
A few have stuck around, though. The couple has successfully prohibited gadgets at the dinner table--both for themselves and their two kids. If a smartphone peeks its head out during date night, they consider it "bad form."
Kathy said the best vacation the couple ever took was at a place in the Virgin Islands with no Internet access. "You have to remove the option," says Kathy. "Otherwise the computer is like Josh's little buddy. He carries it around like it's a Mini-Me."
Kathy has read the studies that explain how the blinking light or ding that accompanies a new email creates a small adrenaline rush. But she thinks the real reason Josh--and, yes, she--have so much trouble disconnecting is fear of missing out on that one crucial communication or piece of information that could mean the difference between success or failure for their businesses. "You don't want to be the bottleneck to your own future," she says.
The point of limiting technology at home is to spend more quality time with your family. If you're freaking out that business-moving events are taking place without your knowledge, that time won't be quality. I like that Kathy and Josh have drawn a few clear lines but are otherwise realistic about how far they can banish technology. The best strategy is to convene a conversation with the entire family about what's desirable versus what's realistic. Try to imagine yourself going smartphone-less for an entire Saturday. Do your palms sweat just thinking about it? If so, don't commit.
Whatever the rules, everyone must be a party to enforcing them; otherwise the arrangement will quickly fall apart. Tough as it is to set limits, the rewards are great in terms of enabling the connectivity that's truly important: the kind you enjoy with loved ones.
Marketers often lose track of what marketing is all about. These phrases signal that they need to get back on track.
Over the years, I've listened to hundreds of marketing pitches and participated in thousands of conversations among marketers. I've then watched how well the subsequent marketing campaigns actually performed.
Based on that experience, I've identified eight phrases that almost always mean that a marketing group is on the wrong track and will probably fail. Here they are, along with comparable phrases that reflect a more likely-to-succeed approach:1. "Marketing drives sales."
Marketers use this phrase to communicate their belief that sales is just the tail end of the marketing effort. They have it backwards. Selling is the entire reason any company exists.
Say instead: "Marketing is trying to help make sales happen."2. "We've been talking to our customers."
Marketers have a tendency to think about marketing as a process of pushing information out, hence talking to customers is a good thing. In fact, effective marketing is the other way around; it draws customers in.
Say instead: "We've been listening to our customers."3. "We have a worldwide focus."
This phrase is just the worst example of the misuse of the word focus. Because it's impossible to focus on more than one thing at the same time, any marketing effort that has too wide a focus will inevitably fall flat.
Say instead: "Today we are focusing on the following specific objective..."4. "Shock and awe"
Any marketing metaphor that uses military imagery is inherently absurd and awkward. Warfare is all about killing the enemy; marketing is all about persuading customers to buy. There's really no common ground.
Say instead: Nothing.5. "Sales doesn't follow up on our hot leads."
Many is the time I've heard marketers complain that they find hot leads that the sales team is incapable of closing. But a hot sales lead is, by definition, one that the current sales team can easily close. If it can't, it's not a hot lead.
Say instead: "Sales team: Please tell us what kinds of leads you can easily close."6. "Everyone must use this standard presentation."
This ominous phrase comes out when marketing groups want to present a consistent brand image to the world. Only one problem: Every customer is different, which is why salespeople (the good ones anyway) always customize their presentations.
Say instead: "Here are some slides that might be useful."7. "We are rebranding."
The concept of rebranding assumes that the brand consists of the exterior elements that express the brand, like the logo, font, tag line, and so forth. Brand actually reflects the customer's experience, so the only way to rebrand is to change that experience.
Say instead: "Let's improve our products and services while making them easier to buy."8. "I am a market strategist."
Strategy, by definition, is long term. Employing somebody specifically to strategize virtually guarantees that your strategy will change frequently, making it impossible to execute tactically.
Say instead: "We've got a strategy; now, let's make it happen."
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In order for acqui-hiring to work well, there must be philosophical and cultural alignment.
A new promotion for Oscar Mayer promises to help you reboot your morning with a phone app that triggers the scent of bacon when your alarm goes off.
You already know morning people rule the world. But did you know that what you smell in the morning can impact your day?
It's true. The smell of coffee or frying bacon can stimulate your appetite and raise arousal levels when you wake up, according to Focus. Which is perhaps part of the reason why Oscar Mayer released an iPhone attachment and accompanying alarm clock app this week that tantalize the senses with the smell of frying bacon. When it's time to get up, the phone dongle unleashes the scent, and the alarm goes off with a sizzle. On the phone's screen, a frying pan appears.
“With nearly two million mentions of #bacon on Instagram, it seems people never get tired of bacon," Tom Bick, senior director of integrated marketing and advertising at Oscar Mayer, said in a statement. "That’s why our team decided to develop a device to give folks what they long for most."
Of course, there are a host of other ways to get charged up in the morning. If bacon isn't your thing, supercold water with lemon might do the trick--either by drinking it or splashing it on your face. Aromatic protein and fruit are also helpful. For an extra kick, try some spicy beef jerky and cucumbers with chili powder, or go tropical and reach for some watermelon with cayenne pepper.