Josh Richards "jrichard"

What gives me the right to talk about these? Because I've made (and learned) from all of 'em. We're all works in progress. It's what we do next that counts.

1. You aren't really in "business". You're a freelancer/specialist who still operates with an employee mindset... Stuck between two worlds: lacking the benefits of employment as well as the benefits of being a self-employed business owner.
2. You think marketing and sales are "icky" and about advertising, being impersonal, and manipulation.
3. Your product/service isn't all that great
4. Your product/service isn't compelling or differentiated.
5. You are afraid of failing so you're just copying what others are doing.
6. You take advice without considering its origin carefully.
7. You built a product/service instead of finding an attractive market and figuring out what they want, need, despise, desire, and wish for.
   
8. Your product/service is wonderful but you're trying to sell it to the wrong folks, at the wrong price, in the wrong way, and at the wrong time.
9. You're stuck telling prospects why they should buy your product/services instead of finding out why they will (and do) buy your product/services... or haven't (and won't) buy similar, competing, or related products/services.
   
10. You don't actually like business (or don't think you do). You just like your product/service.
11. It's not your business... it's someone else's.
12. You don't desire success enough... including a willingness to fail often, incremental improve, learn every day, have an open mind, and the confidence and energy to put up with in-your-face uncertainty.
13. You work too hard on the wrong things and not had enough on the right things. Working hard on the wrong things is admirable but also stupid. If stuck or losing faith, stand back and make sure you're on a (likely) right path. Strategy before tactics. Insight before planning. Planning before implementation.
    
14. You talk about yourself and your product/service before you talk about your customer, prospect, and the outcome they desire, wish for, need, and will get.
15. You are selling before informing.
16. You are advertising your "name" and your "brand" (a focus on yourself that the prospect cannot even yet relate to or trust) before you've drawn the prospect in by focusing on their issues, problems, concerns, context, pains, needs, hopes, and wishes.
17. You more often than not go with the "safe" (failure avoiding) choices. You also give up too soon. Even though you learn from failures and getting outside your comfort zone. And, other than self-inflicted stress from worry, the majority of "failures" are non-fatal, temporary, and (ironically) incremental steps toward success.
18. You are unfocused, scattered, and have an endless "To Do" list. In part, that's okay. There are always opportunities to improve, get better, grow more, etc. That's the upside of having an endless "To Do" list (and idea lists, resources for outside advice, etc.). The downside is that we can let it keep us scattered constantly and never completing key initiatives supporting critical objectives. Accept the endless lists (they're a good thing - call them "opportunities" if it'll help your mindset). Narrow down your daily, weekly, quarterly, and yearly projects to the fewest necessary and practical that will move you closer towards your objectives. You can always update plans... but do so intentionally, carefully, and boldly.
19. You stopped pro-actively learning and improving your capabilities in business, marketing, sales, communication, listening, planning, and strategic thinking.
20. You don't write down and place in an obvious undeniable spot your top objectives and supporting initiatives (and only them).
21. You aren't clear and specific about why you do what you do, why achieving your objectives is important, and what doing so would truly mean to you.
    
22. You mistake learning from what others are doing, even successfully, with justification to mimic them, not be yourself, not put your own slant on it, lose your own voice in the shuffle, etc.
23. You seek perfection over success.
24. You want (and need) help but aren't certain it'll work out.
25. You jumped in too soon and now are afraid to admit it... so you can move on and get past it.
    
26. You think your line of business is unique, your customers are not open to doing things differently, and you're unwilling to adapt ideas from entirely different industries, businesses, and markets to your own.

Add your own below, or perhaps a story that matches up with one of the above, in the comments.

Last week I wrote about using Terrible Service as a Differentiator. Today I was reminded about another interesting example of counter-intuitive differentiation, a restaurant called the Heart Attack Grill (wikipedia).

Being an independent IT professional, at least if one wishes to be in it for the long-haul and happy with their level of achievement, is a complex undertaking. The level of success, gratification, and income can vary widely.

Many who undertake it fail to grow their level of business to the size they'd like. Still others find themselves unhappy with their lifestyle, even those who achieve attractive income levels.

It is quite common for many to fail to survive beyond a few months to a couple of years. Yes, some do hang on, but often are unhappy with themselves and their businesses.

Or, as some have found recently, they had viable but weak businesses. When low hanging fruit disappeared (clients that fell into their lap by chance rather than through a well developed system for attracting and cultivating new business), income dried up.

In my observation and study of independent IT professionals, non-IT professional services firms, and even other industries, as well as my own experiences, I've concluded that there are a number of common factors why IT professionals, and business owners in general, fail to achieve the level of success they hope for:

1. Lack of time
2. Lack of interest in "business issues"
3. Misconceptions about what marketing is/isn't
   
4. Lack of reliable systems (for attracting clients, cultivating relationships, growing income)
   
5. Lack of strategy
   
6. Lack of understanding what clients value and that not all prospects are the same
7. Underestimation of their self-worth
   
8. Lack of understanding how self-worth intersects with finding the right clients for them
9. Lack of awareness about distinctions among freelancers (hired help), service providers, advisors, consultants, coaches, implementers, etc. Each of these are very different businesses.
   
10. Assuming that conventional wisdom and popular strategies and tactics, which are easily discovered by watching others, are well known and practiced because they "work"
11. A failure to shift from employee-->business owner mentality
12. Assuming that outside experts in things like PR, marketing, and sales nearly always know what they're doing and have exactly the same concerns as they do. These specialists are no different than many of the IT consultants we all like to shake our heads at. They not only give untested and ineffective advice, but they sell (or earn commissions for) things that are overkill, unnecessary, or otherwise not entirely in the client's interest.
    

With persistence, but not simply that, these obstacles can be overcome. There are many paths so I'd be disingenuous if I suggested one solution here. I do believe it is fair to say, however, that the key is to be deliberate - in your strategy, goals, and positioning. Just watching others passively and copying them -- or worse, doing nothing -- is not going to get you there.

I will provide a few suggestions based on my own experiences and mistakes:

• Observe others... and, in time, learning who to pay attention to and who to ignore, is a good first step. It's not always who you may think...
  
• Look at already successful leaders who are NOT in the IT and consulting businesses. Their ideas are more valuable to you because they are more likely to be things that others (read: your competition) aren't doing.
  
• Develop a vision for where you want to be (even if you aren't sure how you'll get there). Re-visit and refine it regularly. It's okay to evolve this over time too. It's inevitable.
  
• Constant learn, by reading, attending seminars, talking to (more) successful peers, borrowing ideas from other industries/businesses, applying creativity, experimenting (failures are excellent learning opportunities, fail often)
• Stop reading and listening to others for periods of time -- in order to implement (take action) on what you've picked up thus far. If you don't do this, you will become more addicted to the learning than to the doing.
  

My own wrong turns are why I started www.ITConsultingLessons.com. It is a community where I share the best resources I come across, my experiments, current thinking, etc. If you're an independent IT professional, know one, or are an aspiring one, I suggest you take a look at the site and join me.

I was recently pondering how effective an attempt at differentiation like this would work:

"You should choose us because we aren't like everybody else: we have terrible customer service."

Hey, at least there's an attempt to create a compelling differentiation in that statement. It certainly has a greater impact on the prospect then: "We're different because we have excellent quality and superb customer service." Oh really?

This problem, an inability to have a compelling message for the prospect, is rampant throughout the business world.

Here's an example from Dan McNicholl, CIO of General Motors, referring to IT VARs:

Don't attempt to offer every kind of solution to his organization or sound like any other solution provider, McNicholl says. Like most other CIOs, McNicholl says he's heard the same lines time and again. "We have the most innovative people; we have the most dependable methodologies; we have the most competitive prices. It's like a record after a while," he says. "None of them have created a reason, other than price, for me to choose them. Pick a dimension you want to compete on, and build your brand and focus on it. Otherwise, I'm going to pick you on price."

P.S. While my opener was meant as tongue-in-cheek, there is a restaurant, which sadly I can't track down the name of at the moment (yes, even via Google), that I recall reading about a bit back and is known for good food and absolutely horrendous service. It has turned the latter into their badge of honor (and which inspires word-of-mouth I'm sure). They intentionally make the service as horrible as possible because customers actually come to see if the stories are true (to be treated poorly). Customers would actually be disappointed if they didn't leave with a waiter telling them to "piss off", etc.

The point: The important part is that, whatever your compelling differentiation is, it ought not be half-ass or you risk diluting (and maybe even destroying) its effectiveness. It also needs to be congruent with what you actually are (and are not). It matters less what it actually is and more that it is real, noticeable, and intriguing.

-jr

Ran across this quote from Mary Schmidt, a marketing consultant, today. I thought it was great:

"I already knew that."

I sometimes hear this when asked for free advice. I'm tempted to reply, "Well, great! Then why aren't you doing it?" A good consultant can help you test assumptions, focus on key activities and help get "it" done, whatever "it" is -- launching a new product, reorganizing HR, and so on.

Also reminds me of the theme of one of my current reads-in-progress: Strategy and the Fat Smoker: Doing What's Obvious But Not Easy by David Maister.

Sometimes we tell ourselves (or hear someone else say):

"I've tried everything. I just can't do it."

(With some variation of the second sentence.) The only problem is: it is hardly ever true.

It's important to recognize there is a difference between trying everything possible versus trying everything we can think of. This comes up daily, for all of us, while in the search for solutions to problems (ex: getting new business, finding a job, etc.) , tackling projects at work, and personal goals.

Sometimes we even convince ourselves we've been "working our ass off", where the real problem isn't that we're not motivated but that we've been floundering around doing seemingly useful "busy work" because we lack a clear idea what we should be doing next to move forward towards our goal. (An aside: Copying what others are doing, who may be not be all that better off, often isn't a good shortcut either).

I usually get into these ruts when I'm feeling one or more of:

• tired
• overworked
• too focused
• overwhelmed
• unfocused
  

The best cure for me is some combination of:

• taking a walk
• studying something unrelated
• reading a good, intellectual and perspective stimulating, newspaper (ex: NY Times, Washington Post, Wall Street Journal, etc.) in print (hard copy, old school, not on-line)
• grabbing a letter or legal pad and writing down all the to do, worrisome, and upcoming items, goals, ideas, etc. I have sloshing around in my head (and also in my sub-conscious as a result)
• watching a favorite or engaging fictional TV show
• breaking the priorities/goals/to do items down into smaller blocks, chunks, to do lists
  
• sleeping on it
• clearing my calendar of outside appointments
• taking a long drive (sometimes with the commitment to not come back until I've figured out a next step)
• kicking the idea around with my wife, a partner, or a close friend or colleague
• getting out, often to a coffeehouse to do some people watching
• re-prioritizing my top 5 items (and adding anything else that comes to mind to the "6+ item", not bothering to prioritize it specifically since there's little point in worrying about the specific order of anything other than the top 3 to 5 at any given point in time)
• cleaning my work area, home office, or the even some area of the house
  

You get the gist.

It's just too easy to get stuck. It is inevitable. There's no profit in worrying or trying to prevent it. The only two things worth spending some time coming up with solutions to are:

1. How to recognize when you are stuck, as early and often as possible
2. Things to do to cure it
   

We have to develop personalized ways to get unstuck. There's no point in fighting or trying to avoid these situations outright -- they are bound to occur despite our best intentions.

This post was (in part) inspired by this excerpt from an excellent book I'm reading by Jay Abraham called "The Sticking Point Solution: 9 Ways to Move Your Business from Stagnation to Stunning Growth in Touch Economic Times":

Usually when people claim to have "tried it all," they haven't. They're stuck thinking within the same old mindset. And I've seen this revealed--firsthand.

At a Tony Robbins seminar I ounce attended, a man came up on stage, in front of thousands of people, and asked for advice. "Tony I've tried everything to make more money. I can't do it."

Tony was skeptical. "Name the last twenty-five to thirty new tactics you've tried in the last six or seven months and describe how each performed."

The man was speechless. He couldn't name a single one. Tony didn't give up. "Okay, name just ten." The man could only mutter unintelligibly before Tony finally drove the point home: "Just what have you done?"

The man's response shocked me: "I've looked in the want ads, and I've gone to a few franchise shows." Those two attempts hardly amounted to the "everything" he claimed to have tried. With his creative process stuck, the man was simply unable to see beyond the traditional methods he knew.

Usually, when I'm working with clients or myself, and start to feel "stuck" it's not due to a lack of intelligence, capability, confidence, or ambition. It's just a loss of perspective. When these times hit, it may be good to remember this post. We could all use a little perspective every once in a while.

Sometimes I (we) get stuck and don't even realize it. That has me thinking that we should build some of the cures for being stuck into our routines, even when we think we're on top of things. Because, even under the best of circumstances and when we're making lots of progress towards our goals, there are always others ways to look at things.

So, in conclusion, I'm suggesting this philosophy (for myself and perhaps for you too): Don't lose sleep over it, just keep your eyes wide open and keep moving forward. Go out of your way every day, to use some of the cures that you know keep you from getting stuck, so that you can be confident you're keeping your eyes wide open.

When I started this post it was, initially, entitled my THREE biggest business mistakes. Then it got longer, more occurring to me as I typed. There are many more but I decided to limit it to the six that stayed top of mind, figuring they were probably the most important (thus far), and that I view as also being highly relevant to other folks.

So here they are:

1. Assuming that what others are doing, who are seemingly successful, is the best way. Studying the competition is one thing. But the best path to take is usually based on a mixture of creative ideas of your own and those stolen from other completely unrelated industries. Study the competition to be different from them and to spot the gaps.
2. Listening to and considering advice from folks who, while well meaning, have absolutely no idea, credentials, or background in where I was headed. Even those in the same business do not warrant serious consideration unless they are on the same plane that you aspire too. For example, if you desire to be wealthy don't take advice from those who are not wealthy, even if they have your best interests at heart and sound savvy. This also means most talking heads on the television and reporters in general are not the best sources of wisdom. (Though they, or rather those they report on, may be good leads as to who to actually to listen to, talk to, read about, etc. yourself). Ultimately you have to make your own judgments regarding sources of advice. I spend a lot of time figuring out how to discover who to listen to on particular topics so that I can spend less time listening to noise from others who aren't truly helpful or, worse, are spouting B.S.
   
3. Not focusing. Once I had narrowed down who I was going to draw inspiration from, there came a point where I should have stopped looking for external inspiration and started applying my new found capabilities and knowledge gleaned from all that studying of other successful folks. Yes, the additional study of systems that had worked for others was beneficial (and continues to be, as I keep up that studying every day). There is no clear "starting line" but at some point I realized that for all the good stuff I was learning for the future I was also to a point where I could do plenty with what I had if only I got to work applying it.
   
4. Thinking that marketing (mostly) meant advertising (and also, in part, being cynical about advertising and sales). Marketing IS the business. And I don't mean that statement in the way I might have interpreted it before I knew what I know now. Combined with cynicism I might have written that statement off. But marketing is about everything: the features, the products, the service, the positioning, pricing, every interaction, etc. In fact, there is not one thing that you could name in any organization that isn't about marketing. Nada.
   
5. Not studying direct response marketing earlier. Holy crap. If you think good marketing and advertising is about pleasing and artistic advertisements, headlines that are a "play on words" in an attempt to sound cute, and winning awards than you are, worst case, a sitting duck waiting for competition to stomp you. Best case: you are spending money on marketing without any idea what is working and what isn't... and thus no measurable ROI or means to improve it over time (which still means you're a sitting duck: for a savvy competitor who understands direct response to blow you out of the water even as you boost your marketing spending). Effective advertising and promotion does not flow from the hands of graphics designers anymore than a professional baseball player's home run is the result of the guy who mows the grass at the stadium. You may argue it plays a role, and that may technically be true, but there are far bigger factors at work that should be focused on first.
   
6. Under-appreciating the importance of mindset. I am not just talking about positive thinking here. I'm talking about feelings about money, success, being wealth, not following the herd, questioning the status-quo, etc. And things like who you hang around with, focusing on results/outcomes over tasks, etc.. A lot of this stuff is sub-conscious or invisible until you start really learning about it so you can recognize it. It's even more difficult to spot because the majority of folks are oblivious to it. You can be ambitious as hell and still fail to reach your goals if your mindset is off-base.
   

That's all for now. I'm sure there will be to discuss another day. Perhaps a few folks out there will find this post helpful.

-jr

The economy can only take so much blame for the woes of many of us before a bubble of a different sort bursts: our own. Especially for those of us who are business owners, we need to remember that we're in business for ourselves.

Business owners are rarely innocent victims of circumstances. Sure we can't anticipate every possible thing, but no one forced us down any particular path either. We business owners, especially those of us in the developed world, have far more opportunities, protections, and levers at our disposal.

We suffer from the same weaknesses as anyone else such as complacency, fear of uncertainty, and the need for positive cash flow. But we are not entitled to being handed solutions to these needs and problems. They are our own and and we must seek solutions that are empowering.

First though we need to be honest with ourselves:

• How much credit do we really deserve for our growth during boom times? Was it strategic or more the result of the pie growing around us? (i.e. did business fall into our lap... as well as our competitors... or did we attract it systematically and through compelling positioning?)
• How much is our blame on the nebulous "economy" our way of deflecting from our own weaknesses, mistakes, and oversights while putting off the nitty gritty work of tackling them?
  
• What's the profit in continuing to blame things that are outside our control while ignoring the things that are?
  

As a blogger Brandon Boyd recently said:

This economy is 'thinning the herd' of weak business practices. Its affect will be a benefit to the customer in the long run - as businesses that truly 'deliver' will remain.

I'd add that it'll benefit business owners in the long run too. Those that manage to do more than simply coast through economic downturns will build stronger businesses. They will be the leaders, regardless of economic cycles. Those that go away, well, they were lucky to begin with.

The truth may hurt but that doesn't mean it can't be helpful. The first step is admitting it, right?

-jr

Too much marketing is impersonal and "me too".

Make your marketing personal, emotional, and human.

Start saying "I" a lot more. Talk to your prospect directly by saying "You" a lot more too.

It's harder to copy your personality than a slogan. It's easier to connect with a human than generic language.

And while you're at it, stop saying "we're the best". Show them, paint a picture, and lead them to realizing it on their own. Make it obvious but discoverable.

The secret to good marketing isn't fancy slogans or perfect copy. It's about connecting and relating. It's much harder to do that while being inhuman and generic even if it makes for excellent academic prose.

-jr

I have mixed feelings about Kiva's recent experiments with lending to U.S. based entrepreneurs. I'm going to let that concept roll around in my head and read more about Kiva's own reasoning for the foray before making up my own mind (Prosper.com, Lending Club, Pertuity Direct, and others already seemed to cover that space... and do so as commercial businesses).

However, something else immediately intrigues me: Of the $34,576,235 of loans with completed loan terms to folks in third-world countries, the default rate is 1.6%. Pretty good. While it's not apples to apples (for one, Kiva individuals don't have credit score categories to map into for comparison; secondly, Prosper and Lending Club lend don't loan solely to entrepreneurs), that's actually better than the across-the-board peer-to-peer lending statistics at both Prosper.com (stats) and Lending Club (stats).

What interests me most is how the statistics will look several years: will the U.S. based borrowers have as good a record as the ones from impoverished third world countries?

Another interesting tidbit, which I realize can be partially explained by cost-of-living differences, is that the U.S. based borrowers have far larger loan requests in nearly all cases. Usually $5,000 to $10,000 (though there are some outliers that are $1,000-ish).

The only loans this large from non-U.S. borrowers (which are most of the sample base so this is a pretty accurate set of statistics) are actually from large groups of entrepreneurs who are only borrowing $200-$300 individually in most cases (this group lending is common practice in micro-lending in these types of communities -- it reduces lending risk since peer pressure combined with the other members covering when someone comes up short ensures repayment).

It may be an unpopular, uncomfortable viewpoint, or simply cynical but my gut tells me that a higher percentage of the U.S. based loans will default over several years. Not because they don't mean well but because even the poor in the U.S. take a lot of things for granted. Lots of low-income folks pay for cable television, overpriced hyped cell phones like the iPhone, manage to go to Starbucks everyday, etc.

Don't get me wrong -- I support micro-lending, even domestically. I'll be curious to see the data though. While third-world countries may suffer from the risk of political instability and lack of resource availability, developed nations suffer from taking things for granted and curious personal money management practices. Even our worst off citizens have it better than much of the world's population. That doesn't make either okay but it does provide some context and, I believe, a catalyst for different mindsets when it comes to money management, suffering, and learning from our mistakes.

Micro-lending continues to fascinate me in any case. Especially when it can be done with less overhead using smart software and the Internet. Too much overhead (background checks, interviewing borrowers, checking in regularly to encourage prompt repayment, following up on late payments, etc) relative to the loan amounts has traditionally been one of its main hurdles. One which Kiva.org has tried to break through and commercial peer-to-peer lenders have tried to make viable on-line.

-jr

1. Those that give up. There's nothing dishonorable about this. Owning a business isn't for everyone at all times. Perhaps these folks will try again later. Perhaps they won't ever come back but they'll feel better that they gave it a shot.
2. Those that survive. They hunker down and manage to get by. They don't thrive but they survive. When rosy prevailing economic conditions come back they are not much worse of then they were before.
3. Those that thrive. They use the downturn as a motivator to tackle the elements they knew (or at least sensed) were missing previously. When business was just falling into their lap it was easier to put off things like establishing predictable and systematic business attraction mechanisms. While putting in the extra work now they will also be building a much stronger foundation for all economic climates. Their businesses will thrive and be far more durable. They will enjoy greater long-term profits, less frustration and uncertainty, and probably greater fulfillment as business owners.

Those businesses that focus on thriving and not just surviving are the counter-intuitive twist to all economic downturns: the output of the downward cycle consists of stronger, better and more focused and profitable businesses... and business owners.

Which camp do you intend to be in?
What small step can you take today to get moving in that direction?

-jr

The single greatest opportunity for your business to prosper (yes, even now) awaits... are you blowing it?

Dramatic changes in economic sentiment and wholesale rewrites of entire industry structures leave a lot of chaos in their wake. That chaos is, for most of us, uncomfortable. For some it is very negative, dramatically changing the course of their lives, while for others it only leaves them confused and uncertain but otherwise relatively unscathed (when viewed objectively).

The gravest mistake I see, in businesses which are otherwise perfectly reasonable ones to be in still, is too much of an inward focus. Businesses do not exist to and will never prosper when they focus on themselves. Your business exists to create value for your customers. In both good times and bad there are customers for all manner of products and services.

You may need to tweak your present offerings. Or reach out to your customers in ways that you have not had to in the past. You may need to connect with them in ways that are relevant to the conversations they are already having in their minds.

In some cases, depending on what your value add to the world is, that may mean reminding them about what's going on while giving them a different perspective on the situation. In other cases your job may actually be to save them from all the doom and gloom.... by helping them escape from it even if it is just for a brief bit of time. Only your own capabilities intersecting with your chosen customers can determine where on the spectrum your positioning should fall.

The single greatest corollary of the above also presents business owners with a tremendous opportunity. It is one of the most ubiquitous yet largely untapped opportunities to be seen in a long time. It spans across industries, has nothing to do with technology, and hits at the core of what successful businesses should already - and always - be doing anyhow: connecting with and adding value to their customers lives.

This is always a goal, of any business. Yet, especially in so-called "good times", it is easy to get complacent and simply focus on what is in front of you, what is handed to you -- on the customers that just seem to fall into your lap.

But there are always more customers out there. In good times you are leaving a lot on the table but just don't realize it. And in bad times you want a larger share of what is normally left behind.

The key is to get your marketing, relationship building, product, service, and offer development efforts, and other keys to value adding aligned. By doing this in good times as well as bad times, natural business cycles flatten out more and even under very poor economic conditions things are bearable.

The point being that those who are able to not be paralyzed by recent economic turmoil and use it as an opportunity to build a stronger foundation for their businesses will also be more profitable in good times. Survival is important and prospering remains possible with the right foundation.

The world has not ended. It has simply changed albeit dramatically (at least on the short time spans most of us view things under).

Get moving. But hurry... you're running out of time to capitalize on this opportunity!

-jr

The Pacific Crossing trans-Pacific undersea fiber network (PC-1) connects Asia and the U.S. It lands here (where I'm based) in Grover Beach, California. It was originally part of the Global Crossing network but was sold off during GBLX's restructuring several years back.

Today NTT (Japan's largest telco & a major international carrier in its own right) acquired it:

Official Press Release
Official NTT News Release
PC-1 web site

-jr

A great example of just how different efficiency and effectiveness really are. In business (and in life in general) it's very easy to fall into the efficiency trap while missing the bigger picture. If you're looking for a bump in effectiveness, look here.

This is also a rare example of an insurance company finding a way to align itself with its customers in a win-win all around.

(this particular situation also happens to be a good example of the nuances that can be picked up in one-on-one conversation that cannot be picked up in a form or even, at times, a a letter or an e-mail. Good food for thought when you're looking to overcome a disagreement, build trust, or tackle a perplexing situation).

When Leslie McMillan was hired as a director at Quebec-based Industrial Alliance in January 2004, the company processed disability claims rationally and efficiently. People seeking disability pay would submit their claims to the company, analysts would read them to make sure they were properly filed and then pass them along to independent medical experts to determine if the requests were valid. With the medical analysis complete, the company would then approve or deny the claim. It was a process designed to avoid errors and maximize efficiency. It took about eight weeks from start to finish. And it worked.

In spite of the success of the existing system, McMillan decided to change things. Based on her experience at another firm, she believed that Industrial Alliance could become better by inserting a little empathy into the system. She instructed the ten claims analysts in her division to call the people seeking disability benefits and interview them for a half-hour to learn more about them.

Within a year, the results were astounding. Across the disability division, the institution of policies that put people, not paper, at the center of claims analysis transformed the division. McMillan reports that spending on independent medical evaluations dropped by 80%. The typical time required to settle a claim fell from eight weeks to four. As analysts developed better interviewing and decision-making skills, the company was able to boost revenue by marketing higher-value disability management products instead of just offering claims evaluations. Employee satisfaction shot up as their powers increased. And lawsuits, a major expense for any insurer, dropped off precipitously as well. She estimated that whereas 12% of all claims had previously ended up in litigation, that figure had dropped to just 7%.

These are major improvements. How did this happen?

Read the rest of the story here:

http://www.businessweek.com/innovate/content/apr2009/id20090427_553433.htm

Alan Weiss, a very successful consultant, has said this many times:

"If you improve by 1% a day, in 70 days you’re twice as good."

Today I ran across a follow-on insight he had late last year that he appended to the end of the prior statement:

"But if you don’t learn carefully and instead become confused, the opposite can actually occur. People can get dumber."

I gotta say, that I know that to be true because I experience it again & again... with myself. I am so addicted to acquiring new knowledge that I constantly read books, newsletters, web sites, blogs, etc. When I'm doing it connected to a particular topic or concern (as opposed to more serendipitous research) I often find myself learning WITHOUT doing. Eventually I have to convince myself to bite the bullet, take what I've acquired thus far, and take action on it.

It's tough deciding, especially when you don't have a concrete deadline, to stop researching and pondering... and to simply take action. But, until you do, it's all theory and, well, generally not very useful.

-jr

Brian Cuban, who happens to be the brother of Mark Cuban (the owner of the Dallas Mavericks but which is irrelevant to the topic...mostly), has a good thought piece in Worth magazine entitled Celebrity Cash Crunch - We may secretly enjoy it when celebrities go belly-up—but would we do any different in their shoes?

Indeed... Heck -- with far less money to throw away -- most folks make the exact same financial mistakes. I suggest you read it here.

-jr

1. Getting their marketing systems in order. When the economy is rocking often business owners get lazy about marketing systems used to bring in new clients, boost business from existing clients, and build strong moats around their businesses.
2. If they have employees, identifying the top talent out there and re-approaching them. They are more likely to be available and amiable between restructurings, underwater stock options, and employer uncertainty, etc.
3. With competitors and complimentary businesses hurting and credit markets tightened up, both public and private business valuations are low. Acquisitions made now will be far cheaper and, if astutely approached, achieve greater returns over the long run. In some cases, significant returns can be achieved even in the near-term simply by bringing the clarity of more mature marketing systems to a target that did well when the economy was gangbusters but lacked systems useful when things got tougher.
4. Re-evaluating their unique selling proposition, value proposition, and positioning. Going back to basics and reconsidering what sets them apart and how they communicate this (both in words and in actions).
5. Taking market share from weaker, distracted, and confused competitors
6. Boosting direct marketing activities with provable ROIs and cutting vague "branding" activities with less provable ROI (branding can still be a part of the direct marketing activities but it should be a secondary goal).
   
7. Reaching out to clients, experimenting with new offers, packaging, and positioning. Also talking to clients, prospects, and others about their concerns, wants, and desires. Even in downturns we all still have needs and wants that we'll pay to get addressed.
   
8. Cutting unprofitable relationships (clients, vendors, partners). Good times make us fat, stupid, and lazy. Nothing like necessity to force us to get back into shape.
9. Stay focused. On what? That's for each one of us to decide. But it's important it be done deliberately or it won't be done at all. There are always distractions but when combined with strong emotions and widespread uncertainty it's even more difficult to decide where we want to go and then keep our eye on it.

Are you doing some of these things? Can you think of others? Drop me a line josh.t.richards@gmail.com.

http://blogs.harvardbusiness.org/baldoni/2009/03/how_aigs_edward_liddy_lived_to_figh.html

(I suggest reading his actual opening remarks linked to in the article; they aren't as long as they appear at first - only ~7 pages).

-jr

"Downturn my ass; they had no strategy to begin with."

Lots of businesses are suffering these days. I feel for 'em, I really do.

What frustrates me though is that many have tremendous opportunities ahead... if only their owners would stop using the economy as a convenient way to avoid the truth (I'm sure you can come up with your own appropriate metaphor for this behavior). Downturns offer great opportunities for those businesses which are willing to face the truth and ask the tough questions that propel them forward.

A very agreeable phrase that I ran across awhile back[1] goes something like this:

"Luck is when opportunity crosses paths with preparation."

It's relevant to present circumstances, even if many would consider these unlucky times...

Let's take almost every local retail type business which I encounter. Based on observation, as a customer of many of them no less, the root cause is that they never had a plan for success to begin with. Their existence rested far too much on the opportunity portion and not enough on the preparation aspect.... of luck.

In short: their business models, being entirely reactive and not proactive, leave them (seemingly) powerless when(ever) the tide turns against them.

Recent economy woes are really just the final straws.

I can prove it.

To have sustainability the business owner must take deliberate action. And opening up the doors and putting up a sign... even having a good product or service... is not what I mean by deliberate. Nor is dropping yet another "me too" advertisement in the local paper or Yellow Pages.

(And if the only solution they can come up with is dropping prices, it just proves the point that our relationship could use some upkeep... on their part not mine; I'm the customer after all).

Maybe they intended to do more but found they didn't have to so they got complacent. Or maybe they've only existed in "good times" and never even realized they were missing something. Maybe they just barely skated by before and recent times has just proven how thin the ice was underneath them.

Whatever. The reason is irrelevant. What's important is that they get moving. (After all, with fewer customers, they ought to have more time on their hands). Some may also have to put their fragile egos aside... (a small price to pay for long-term success).

It's been said that great friends are ones that will empathize with you while also kicking you in the ass with the cold hard truth when you need to hear it.

So I have some questions for you...

• Why aren't you collecting my name, e-mail addy, phone number, snail-mail address?
• Why aren't you doing something compelling and useful with those "frequent customer" cards my wallet is bulging with?
• When was the last time you went out of your way to communicate with me outside of your store?
• Why aren't you trying to up-sell/cross-promote me something else that I might also find of interest?
  
• Translate "why you went into business" into something along the lines of "what's in it for me" and tell me all about it
  
• Why haven't you come up with a way to encourage me to bring in my friends to your establishment?
• Ask me what I like about you establishment. Ask me what I don't like about your establishment. (Make me feel like you actually want me to be honest and not just "nice").
• If I start coming in less often, reach out to me, so that I perceive that you actually noticed...
• Why aren't you trying to sell me your products and services in different ways that may be more conducive to my current concerns, pains, and desires? (a hint: it's not as simple as just lowering prices... in fact if you play your cards right you can keep your margins... maybe even boost 'em)
  

I'm already your customer for crying out loud! Make me buy more, come in more often, and drag in my friends. Make me compelling offers...some of which I won't be able to refuse. Reach out to me in interesting ways... that show me you care about me more than wallowing in your "woe is me" attitude.

Yes, it seems that many places are suffering. It's too bad that economic woes are just a cover for the real cause of weakness in many businesses today: a lack of preparation.

Sure, sometimes one can scoot by but look where it gets you?

Whenever I have a client who seems to be treating symptoms and not the underlying problem I try my best to guide them back to reality. So, if you (or someone you know) falls into the aforementioned camp I leave you with this...

It's not (just) the economy, stupid. Get off your butt, stop lying to yourself and your friends to avoid a bruised ago, and do something about it. (Then, if it'll make you feel more motivated, consider how you'll be able to brag about how you kicked ass through the latest business cycle).

To change things you first must face the truth...

-jr

Footnotes:

[1] Another one, this one coined by Warren Buffett is: "After all, you only find out who is swimming naked when the tide goes out". Stated shortly after September 11, 2001, he was referring to insurers who had failed to price policies properly (too low), certainly weren't prepared for the worst and thus were suffering mightily - some fatally. It's an appropriate metaphor for many recurring situations in history - and thus in business and in life.

Reading through HBR today I came across a discussion entitled "Big Company Lessons for Small Businesses". This quote is from Dick Harrington, former CEO of Thomson Reuters and who now works with early stage and small businesses through his investment firm Cue Ball. I thought it was particularly dead on:

"Most small businesses think that big companies have limitless resources and tons of money, and accordingly can do whatever they want. At the same time, most large companies think that all small ones are entrepreneurial, acting quickly, and bursting with creativity. Neither of these common beliefs is true."

The full article is on-line here.

This is a real ad albeit from the 50s.

-jr

A lot of IT folks consider themselves to be a far cry from the marketing and sales departments. I have news for them: Get over it.

Within the IT department the toughest problems, the ones that can really have an impact on the organization, are not about technology. Successful IT leader's recognize this and figure out how to connect the IT group with real business needs of the organization. I hit on this a little over a year ago in "Can Technology Geeks Be (Good) Managers?".

But it's not as simple as it may sound.

This is about marketing and sales, even if the IT group's customers are in-house end-users. The essence of marketing, which includes finding out what is really needed/desired by a constituency and then figuring how to give it to 'em, is the essence of the IT department's mission too.

But a lot of marketers fail. And even enlightened IT groups fail... and it's for much the same reason. Why? Because they forget about the "What's in it for me?" principle. Where "me" is your customer/end-user not you... if you're the marketer...or the IT group.

Jay Rollins, recently writing at TechRepublic.com, hit at this from a different angle that deserves to be pondered (below replace 'customers' with 'in-house end-users'):

The technology was the easy part. Pulling together a solution that the customers actually wanted was the tough part.

As with all technology implementations, the tough part is not necessarily the initial technology. The services and business processes that are typically not part of IT’s purview or area of expertise are usually what makes or breaks a successful technology implementation. Challenging long-held assumptions and having the intestinal fortitude to carry the ball across the goal line regardless of how tough it actually is separates the outstanding IT leader from the rest.

How are you making sure too much emphasis isn't being placed on the technology and the IT department itself?

A quick and dirty test:

• How often do you question _IT_ best practices? (many don't make sense in a particular organization or at a particular time; similarly many so-called best practices are really conventional wisdom... and questionable tidbits at that)
• How much do you argue over technical elegance versus pragmatic business aligned solutions?
• How much do other groups grumble behind the IT groups back?
• How cynical is the IT group about other groups?
• Has the IT group done anything other than ask to be included in early strategic and tactical planning that has a technology component?
• Have you explained your position not from the perspective of the burden it places on IT but from the perspective of the burden it places on the business? In marketing, those marketers who talk about themselves don't do as well. Those who talk about things from the perspective of the prospect, enjoy far more success. What is in it for your "customers" (end-users) not just you?

Each organization is different and IT can't work in a silo... nor can IT blame everyone else for its problems unless its willing to view the world with eyes wide open.

-jr

I just finished buying our tickets (for both games)... go get yours here. We went last year and it was lots of fun! It, ultimately, motivated us to go to a regular season San Jose Earthquakes games. But seeing them play in a much smaller - more intimate - stadium, locally to boot, beat that because you are so much closer to the action.

During the opening, they have a couple lucky local youth soccer teams walk the pro guys out (one kid per player), while they announce the starters. Last year one of the kids turned out to be one of my old client's offspring.

Cal Poly Athletics will host a pair of Major League Soccer exhibitions in the 2009 MLS Central Coast Showcase on February 13 and 15 at Alex G. Spanos Stadium in San Luis Obispo, Calif. The San Jose Earthquakes will play exhibitions against expansion franchise Seattle Sounders FC on Friday, Feb. 13 at 7 p.m. and two-time MLS Cup champion Houston Dynamo on Sunday, Feb. 15 at 1 p.m.

“Cal Poly Athletics is incredibly excited to host the 2009 MLS Central Coast Showcase,” Cal Poly men’s soccer head coach Paul Holocher said. “To see world-class talent in your own backyard is just a fantastic opportunity. Whether you’re a soccer fan or not, this is an event to see.”

Last year, Cal Poly Athletics hosted San Jose as the Earthquakes played matches against the Columbus Crew and D.C. United. The Crew, 2-1 losers to the Earthquakes in San Luis Obispo, went on to win the 2008 MLS Cup.

Article continued here. Sitting chart for the stadium is here.

-jr

Simplification and perspective.

The lack of, that is.

I know how it is. We all get caught up in the day-to-day fire fighting. Business requirements change. Timeline warp. Scope creep.

The result is...

The endless, painful cycle of the treatment of symptoms. Not problems. Not root causes.

Ad hoc changes. Lots of 'em. Without any pro-active design. No big picture. High level thinking? Ha!

There's no time for any of that.

Then we either throw up our hands in frustration and run far far away. Or we hire an outside consultant that (we hope) will provide us with some much needed perspective (we know we need it we just don't know how else to get it). Consultants sell, when it comes down to it, hope and perspective -- and they are generally called in when we're fresh out of it.

Or we throw more bodies at the situation. But we're not used to letting people sit and "think" without any activity - we have fires to fight after all... we can't afford that luxury!

Or maybe we'll buy new gadgets to help us out. But they add more complexity, unknowns, and risks. Oh, and stuff for somebody to learn to apply appropriately. (Not to mention that we should have probably taken the time to make sure we understood what we were buying beforehand...)

Hmm.

I'm pretty lazy. That is, I don't like to do work I can avoid if at all possible. This includes having to tax my brain to work through complex problems.

It isn't that I'm not good at it. It's that I'd much rather apply my brain to other things... or at least make sure it's available for the next problem to come along...

For the longest time, this worried me. Until I realized an interesting habit it had ingrained in me as a result.... When I'm faced with a problem to solve, a new situation, or something else that smells of brain work -- I, without hesitating, click into "How can I make this situation as simple as possible because I sure as hell don't want keep thinking so hard about it if I can avoid it?". It's sort of like the situation where you know somebody who is known to "always be searching for the angle".

My angle is: "How in the heck can I simplify whatever the heck it is that I'm trying to do because I'm sure as well not interested in working that hard on it day after day?"

These days, with many of my consulting engagements, I'm called in to eliminate a specific problem... or make something possible. In the former, probably 9 times out of 10, there is a high probability that the "specific problem" is likely to be best solved by ignoring the known problem and tackling the underlying situation that resulted in it...

Which is usually where simplification comes in. And a healthy application of perspective - a clean approach - which is easier for me to apply than the prior folks since I have the benefit of hindsight -- but no less valuable to the client.

Simplify. MAKE the time. Make your IT infrastructure as simple as it can be. You do NOT really need an outsider to do this -- hopefully (but sometimes you do, and that's okay too).

Best of luck in your endeavors,

-jr

We used to have this sort of thing come up at my last company so often that we turned it into a sales approach (that is, we'd help the prospect, usually gently, gain some perspective). That is why this quote hit home with me. Jeff Biggs, CIO of Peak 10 Data Solutions, has established a rule of thumb over the years:

“Whenever I see the Four Horsemen of the Apocalypse, I run for cover,” says Biggs. “The four horsemen are ‘We’re going to have big Sun servers, Oracle databases, tons of bandwidth and a bunch of consultants.’ You need to start small and see if you can make it work. That way, you’re a customer for 10 years and not six months.”

It's just so dead one.

When we came across this, we admired the ambition and vision, but we tried to re-focus the clients energies back into their business in other ways. An incremental approach makes far more sense. Things can always be ramped up for the right reasons when the time comes but it's tough to get back money already spent when things don't ramp up quite at the rate expected.

I'm not saying you should be a pessimist versus an optimist. More like a pragmatist. Toss a bit (not all) of the cash saved towards beefing up your "Slashdot effect" plans (as in, how you're going to get that level of success and what you'll do when it happens not what you've already done) and you'll be better prepared in any case. Besides are you sure you'd know what to do if you outgrew even the big stuff?

When we weren't able to make a convincing case for pragmatism, it wasn't unusual to see them last a year or two as customers... than pretty much disappear. Now even some of the pragmatic ones disappeared too but at least it wasn't because they spent all their cash before they'd even had a chance to become a success in the marketplace.

Most of the time, capital is better spent making the product/service more inspiring and actually getting real paying customers for the new product/service, and whatnot. Don't buy the big infrastructure stuff just because your IT advisor wants to prove his worth or even because you want to prove your own level of seriousness about the venture (there are far better way to do that...like by getting sufficient customers and cost structures in place to be a sustainable profitable enterprise that can afford to invest further in its infrastructure).

Commit your resources to the right things and the rest will come together as needed. Of course, I realize that is easier said than done but it's an important concept to strive for and keep in the back of your mind always nonetheless.

Are you involved in an IT (ad)venture like this? If so, I suggest refocusing the ambition to other aspects of the venture that could benefit from it, and talking the infrastructure over with an objective outsider before taking the leap. And, no, I didn't set out to make this post into a self-serving pitch... it just sort of worked out that way. :)

Best of luck in your (ad)ventures however big or small they may be or seem,

-jr

Perhaps I'm unusual but I tend not to donate to non-profits that don't use Paypal or Google Checkout (or another large well known front-end processor) to accept payments. The reason is because non-profits are rarely large trusted brands, are usually underfunded and thus security isn't a high priority, and their web sites are often a hodgepodge of thrown together stuff hosted who-knows-where.

(It's not just non-profits I take this position with. I often click away from small no-name merchants if I can't be confident I'm bypassing their who-the-heck-knows-who-where-and-how web site to make the actual payment transaction).

I don't see justification for exposing my credit card so easily. With Paypal or Google Checkout, the credit card information is never exposed to the non-profits hosting provider. Plus, at least with Paypal, the person paying doesn't even have to have a Paypal account - any major CC with still do.

If you're a non-profit, give some consideration to how you might improve the trust level of your web site. Come at it with the mindset of a business doing e-commerce... someone may want to buy what you're selling but they also may click away because they are uncomfortable.

This is about more than having just an SSL certificate. Using https:// is meaningless if the server(s) behind it can't be trusted.

How can you give your customers (potential donors) the warm and fuzzy feeling when they hit your web site?

-jr

There's a lot of good stuff in this wonderful post. If you have any interest at all in investing in publicly traded securities I suggest a read:

How can the mindset of chief capital allocator help you distinguish between value and price? If you were in charge of allocating capital around the world, you wouldn’t be able to rely on the market to bail you out of bad investments. The greater fool theory of someone buying your shares at a higher price breaks down if the buck stops with you. Successful investors believe their return will come from the investee company’s return on equity rather than from sales of stock. This mindset produces a very different process of estimating value than if you rely on the market to establish value and then try to gauge whether a company was likely to beat or miss consensus earnings estimates.

[...]

Investment professionalization has had unintended consequences, as the ultimate owners of capital (households and endowments) have become increasingly detached from security selection. Short term-oriented “security holders,” such as mutual funds and hedge funds, have displaced long-term “owners.” The results have been a greater tendency to choose portfolios that reduce occupational risk rather than investment risk, increased trading mentality, and less participation in company affairs. As Vanguard founder John Bogle points out, “The old own-a-stock industry could hardly afford to take for granted effective corporate governance in the interest of shareholders; the new rent-a-stock industry has little reason to care.”

On Buffett:

[...] Buying businesses cheaply has not generated his long-term returns -- it has merely accentuated them.

Buffett raised eyebrows in the investment community many years ago when he bought Coca-Cola at a mid teens multiple of earnings. Most value investors couldn't understand why Buffett considered it a bargain purchase. Of course, Buffett was allocating capital to a superior business at a fair price. He knew that Coca-Cola would compound the capital employed in the business at a high rate for a long time to come. Buffett did not need P/E multiple expansion to make the investment in Coca-Cola pay off.

It's not all theory... it pulls together a lot of practical stuff.

-jr