Rethinking Business

Impress, delight, over deliver. Give your clients something to rave about. The alternative is to squeeze every penny out of the interaction, maximize your bottom line instead of giving a gift, beef up the small print instead building trust.

Sure, reduce barriers, make it easy to refer you, give gifts, but don’t mistake of thinking these will drive referrals. Gimmicks are rarely sustainable, only the hard work of delivering more than what is expected, building great products, developing honest relationships and aiming for the long run will deliver more referrals. (Side note: notice how delighting does not mean giving in to every customer whim and demand.)

Referrals are a matter of trust. Quick fixed will never change that.

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It’s tempting to beat them loud and strong. To stand behind them and beat our chests. The heart pounding and blood flowing.

A state of emergency is just what we need to get out of this rut. Call a company wide meeting, declare this the point of no return, throw out the book, the plans, the advantages and the scope. There might not be a tomorrow.

When the long haul seems too long, when the dip to far, when the plateau without end, it is easy to throw it all away self-trigger out fight or flight response and declare a sense of emergency. It’s much more difficult to keep going, through the unclear waters and the endless plains.

But before the drum beats let’s ask, where will this lead us, what are we sacrificing.

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One thing is clear, the middle, average mass is disappearing. Both average products and services as well as the middle class. There simply isn’t any more room for average. It’s not a new concept of course, Seth Godin has been talking about this for years. And of course, the middle is a relatively new concept as well. There are some big differences between then and now:

1. Networks are fueling the deterioration of the middle. They allow for cheap and efficient delivery of products and services. They favor skill over anything else.
2. There’s more opportunity for those who realize that skill trumps all. Its cheaper than ever to start, ship and start over. More opportunity means more choice for anyone who accepts this.
3. If there’s a dwindling middle, does that mean there are more extremes? The thing is there’s a redefinition of what success means. In fact, there’s a complete redefinition of what professional and personal lives should look like. I think saying the 1% vs. the rest is an old way to look at things.

Digital networks, along with automation, outsourcing and robotization is allowing us to optimize for skill whether that means empowering the network to create value (i.e.: Facebook, LinkedIn, etc.) or using the network to emphasize skill (i.e.: Uber, Etsy).

What this means is that optimizing for average is clearly unsustainable in the long run. If you’re running a business it means you need to aim for the extremes: automation and network fueled value or skill supported by networks.

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All too often, we as leaders and managers are quick to pass the buck to another team or down the line. As far down as it needs to go to lose relevance and meaning. That means postponing decisions and refusing to claim responsibility for actions.

It’s too easy to point to another group or department, to blame someone so far down the ladder they have no say.

No, the buck needs to stop here. No excuses, no justifications and finger pointing, no scapegoats – just honest responsibility. The only way to move forward is to make the call and assume responsibility for the outcome.

If that level of vulnerability is uncomfortable to you, then the top is not where you need to be.

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What’s the fuel that keeps a young organization going? What keeps it on the road when all it faces is obstacles? What is it that make employees scale and tear down walls?

Vision.

Not the nice words written on a plaque at the entrance or on the website, but the relentless, uncompromising dedication of the leader to what the company stands for and where it needs to go.

It might not lead to the next multi-billion dollar company. It might sound fluffy and silly. After all, there are lines of code to write, PNLs to review, productions to oversee. In fact, the vision can be flawed or erroneous, it doesn’t matter. If you want a fighting chance, you need vision.

(Hat tip to Fred Wilson – well worth the quick read).

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When it comes to companies you have three types of worldviews – forward-looking, presentists and rearviewers. I think you can find examples of each type that work and that don’t work.

Knowing a company’s worldview matters if you’re an investor. It matters if you’re looking to sell a product or service and it matters if you’re thinking of working there.

Forward-looking companies look to what’s next, how can the disrupt, reinvent and create. That innovation can be incremental like it can be revolutionary. These companies don’t hesitate to charge a premium for what they create. These companies often place a large value on R&D, marketing, design and development. That’s not to say other fields don’t matter, it’s that they play more of a supporting role.

Presentists are companies that look at today. What’s working now and look to maximize that. The aim is less to reinvent and more to increase efficiency. They won’t hesitate to discount pricing if necessary. The important roles here are sales, product management, analysts, legal. Again, it’s not that other roles aren’t needed, its that they aren’t key.

Finally, the rearviewers drive looking in the rearview mirror. They build on what has always worked and find ways to keep making it work. They tend to be price-sensitive, trying to preserve historical margins. Key roles there are accounting, account management, support, infrastructure and top management.

One last point, most organizations stay within one framework. It’s tempting to think they move along a spectrum, but unless there’s a dramatic change in culture, the worldview tends to stay the same.

Your goal then if you’re looking to work somewhere is to 1, find a company that matches your worldview and 2, accept that your role will have more or less importance.

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Yesterday, Seth Godin talked about 4 steps to organizational growth, dominance or irrelevance. Those steps are Struggle, Servant, Bully and Utility. Each step I think creates it’s own set of challenges for employers and leaders as they navigate from one to the next.

The first stage, the Struggle stage, is arguably the hardest – trying to figure out what you offer and its value. We are hard wired for routine and stability and this stage flies in the face of that. Yet some strive here and I think the key is strong leadership with a relentless dedication to corporate values. That leadership provides the stability to try, test, fail and get back up again.

The second stage – Servant – is when you move to build on initial success and delight the customer. The challenge as Seth points out is the temptation to optimize for profits at this early stage thereby ignoring your first true fans. The key here is a shared sense of what the company stands for coupled with rewards that favor service.

The Bully stage: where the organization has achieved dominance and is under pressure to write the rules. The challenge here, which probably first appeared during the last stage is your team. The team that has helped you when you were scrappy is probably not the best suited to write the rules – their strength is to strive where there are no rules. A strong team with diverging ideas of what the industry should look like is needed.

During the last stage – the Utility stage – you’re simply creating utility for customers. The challenge here is more complex. On the one hand you need an organization to implement and make the rules of stage three stick and be more efficient. On the other you need the courage to look, at least in small part, at being scrappy and struggle again – not to review the whole business but some of its fringe functions.

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There are two ways to look at the reward, whatever that reward is – revenue, commissions, trophies, a piece of candy. The reward can be the goal or it can be the consequence.

When it’s the goal, everything becomes about the reward. Everything we do is geared towards the desired revenue or commission. Every action we take is about getting to what was promised. Nothing is forbidden as long as the goal is reached.

On the other hand, when the reward is a consequence what takes precedence is the the actions, the work, the craft. The reward is an afterthought because there’s no way of knowing it will actually happen and so the process of doing, creating and transforming is what matters. If the reward comes, it only comes as a way to move a little further.

There isn’t a right way or a wrong way, just two ways to look at rewards. I would argue looking at the work is much harder than looking at the reward. And, it does seem though that those who have achieved great things value the craft above all. But I can’t say for sure.

I guess what matters is joining others who see them the same way you do so I’ll leave you with one question: Do you value the work or the reward?

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There’s a common misperception in corporations that once in a while you need to put your job on the line. It’s all or nothing, do or die, winner takes all.

I’m not sure where it stems from. Maybe it’s all the sports analogies: the bottom of the ninth, game seven, a few seconds left in the fourth quarter. Or maybe it stems from something else. Maybe it’s a way to remove responsibility from every other day of the year.

Truth is, everyday you step in the office, every time you answer a client’s call or develop a strategy and objectives you’re putting your job on the line. Each day you have a responsibility to move the organization forward and each day you are up against forces that could lead to the company closing or contracting.

Some choose to be passive, to wait for the boss to decide, to hide behind what’s been done, to rehash old ideas. Others step up and take charge, choose themselves and push forward.

Regardless, they’re both putting their job on the line. Let’s not kid ourselves: there is no Stanley Cup, World Series or Super Bowl in business. It’s about relentless dedication, small steps, being generous and taking bold stands.

Each day we put our job on the line because there is no big prize, just the opportunity to see another day.

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An industrialist is someone who looks for stability. At the opposite end of the spectrum, the capitalist seeks opportunity and unmet needs. That means the capitalist takes risks, trying to serve a bigger purpose while the industrialist avoids risk, supports the status quo and looks inward.

Almost by definition then the industrialist misses opportunities and misreads new technologies. For example, where the capitalist sees new technologies and automation as a way to serve people and bring back the human touch by reducing inefficiencies, the industrialist sees automation as a way to improve the process and remove uniqueness.

I think only an industrialist could have looked at robot scheduling and found it great – a more efficient way to reward predictability, yield and return at the detriment of art and uniqueness. Finally a better way to be average and unremarkable!

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