Category Archives: Essay

Essay

A Rebuttal to Jake DeSantis

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Yesterday, I published a link to a resignation letter by Jake DeSantis, an executive vice president from AIG Financial Products that was sent to the New York Times as an Op-Ed piece.  After rereading the letter and thinking about it way too much, I believe that his letter deserves a rebuttal.

Dear Mr. DeSantis,

Thank you for writing your clear description of your feelings.  As an owner of AIG (now that the US government owns 80% of the firm), I wish to respond to you regarding the issues brought up in your letter.

As an executive vice president of the AIG Financial Products group, I fail to see how you can be totally without blame for the economic mess that your teammates left us with. As a senior manager with responsibility for business development for commodities, you had to be aware of the shenanigans that were taking place in your own groups.

I know a little about this.  In the late ’90s and 2000, I worked for Computer Associates.  There were times that many of us in management talked about deals that came in on March 34th.  We chuckled and thought that somehow the powers that be had figured out a way to get more sales revenue.  I guess it is not as funny today with 5 former executives (including the CEO and CFO) behind bars for fraud.  I left the company in 2000, in part because there were too many corners cut, too many ethical dilemmas.  I wish today that I had had the fortitude to confront those with ethical lapses directly.  It might have made a difference to the people that I worked with.  But enough about me.

You are a smart guy, MIT, years on the street. You had to be aware in years past — the good years — that some of the rewards that came to you, both financial and career-wise were due to corporate (and divisional) behaviors that were wrong and possibly even were company threatening. But you assuaged your conscience by the thought that “at least my hands aren’t dirty”.

Now, you worked hard for 11 months to close down AIG Financial Products.  During this time, you accepted a $1 salary.  But you were promised a bonus for staying on.  The problem is that AIG Financial Products is bankrupt in all but the court of law.  If the Federal Government had not stepped up and invested billions to prop AIG up, AIG would be under the leadership of a bankruptcy trustee and all contracts would be open to cancellation or renegotiation by a bankruptcy judge.  This would most likely include your contract for retention.

Clearly, for the past 11 months, you have been doing better than a majority of Americans.  You have had a job and benefits. Compare this to the many people who have lost their jobs because of the havoc wrought by AIGFP.  Think about the folks who have lost their homes because of your company and others on Wall Street that created magic to hide the financial risks that they were taking.  There are many people in America today, who like your parents are working multiple jobs, who have it tougher today and have a cloudy retirement future because of this magic that your group peddled.

Think for a moment about the auto workers.  I am not a big fan of either auto manufacturer management or unions, but there haven’t been retention bonuses like yours for people in Lansing or Flint.  There are a whole lot of people who have it much worse and are being asked to take it just a little longer.  If the auto examples don’t work, check out Circuit City, Linens ‘n Things or Lehman Brothers. Think about others who contracts have been changed on a one-sided basis — forced furloughs, auto worker’s contracts, pay cuts. It is bigger than an AIG thing.

It amazes me that the folks within AIG are so tone deaf with regard to the PR aspect of this.  They are surprised that there are a lot of people in this country (aka the owners of AIG) who have a problem with $165 M being paid to the people that had a hand in the crisis that they are living.  Even Mr. Liddy, who should know better, seemed caught off-guard by the vehemence of the public response.

I guess my main message to you, Mr. De Santis, is to Grow Up.  You have been richly rewarded by a company that failed on so many levels.  If the company had succumbed to bankruptcy, most likely you would not have received your bonus.  The message that the financial industry has always put out was that the pay was so high due to the risks involved. Now, Mr. DeSantis you get to see up close what risk reciprocity means in the bad times. So welcome to the growing team of folks that has been screwed by AIG.

I wish you luck in your upcoming job search and hope that you can put this episode behind you where it belongs.

Sincerely,

Al Herbach

Essay

The Young Entrepreneur – Winning

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My friend, Jeff Leitner, is fond of asking the question “What does winning look like?”.  This simple question neatly frames the problem that many entrepreneurs struggle with. Sometimes it is a lack of focus.  Sometimes it is a plethora of options.  Sometimes it is just getting overwhelmed by the speed of business. In sports, it’s easy — more points.  In politics — it’s 50% + 1 of the cast votes. In business, not so easy.

In a posting last week, I talked about negotiation.  The key to a negotiation is to understand the very essence of what winning looks like. In order to get what you need out of a negotiation, you need to take a deep breath and invest the time to really understand what winning looks like, both for you and what you imagine it looks like for the other party.  If you can clearly lay out what winning looks like, the negotiation becomes much easier since you know the winning strategy for each side.

But you do not need to be in a formal negotiation to see the benefits of thinking seriously about winning.  Think about meeting a new sales prospect.  As much as possible, you need to control the agenda for a meeting.  The agenda should be built with winning in mind. If you control and publish an agenda, you have the ability to help ensure winning.

In contracting, if you are asked to write a first draft of a proposed agreement, jump at the chance.  Yes, it will be more work for you, but it will allow you to shape the document towards your vision for winning.  You can certainly take this too far and write the agreement one sided, but if you can use the opportunity to shade things toward your winning strategy, you have a more positive negotiating position and the likelihood of getting a favorable deal is increased.

So, how do you know what winning looks like for the other side?  Many times you can guess as to the components of a winning deal, but why guess?  I have disarmed many people by just asking simple questions: “How are you compensated?”  or “What is your incentive for making this deal happen?”.  I don’t want to know their W2 or base salary.  What I really want to understand are those things that could be beneficial to my negotiating partner that are not valuable to me.  These become good bargaining chips.  Winning to the other guy could be something as simple as booking this deal by the end of the month.  Perhaps I can trade booking the deal this month with longer payment terms.

Sure, understanding what winning looks like before each meeting, negotiation or sales presentation is more work.  Documenting these strategies will take a bit more time.  But in business, as in sports, winning usually means working harder than the other side.

Essay

Negotiation 101

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The process of achieving agreement through discussion (en.wiktionary.org/wiki/negotiation)

Negotiation is one of those things that scares people.  Our moms have taught us that we need to be polite, thankful and subservient to power.  While your mom may have been right in teaching you social skills, negotiation is a business process.You need to be strong, knowledgeable and flexible as you try to come to agreement, whether it is for a salary increase, buying a car or selling a company.

First off, you need to do your homework.  What is that car really worth?  What do people with my level of experience actually get paid?  You may be surprised at the results of your research.  Next, you need to think about what you offer to the deal.  Is it a trade in, is it more responsibility, is it a contact list and potential sales leads?  What is the total value of these to the deal?  Are there intangibles? List them.  Are you willing to give something else to get the deal?  What is your BATNA (Best Alternative To a Negotiated Agreement)? What could you throw into the deal that has little value to you, but higher value to the other party? What do you know about the company across the table?  Find out about budget, financial status, reputation of dealing with vendors, corporate news, where this project fits into corporate strategic planning etc. How does the other side’s negotiator personally win – is  it saving money, is it ensuring that the project gets done correctly, is it building a vendor network? The more you know about both sides, the better you will be able to develop a strategy. Plan out your negotiating strategy in writing, so you have a guide.

A common mistake is to make the deal personal.  You think “If I don’t get this deal, then how will I face my spouse?” or you think ” I will demand the best price and won’t back down”. Wrong move. Don’t get angry or throw out “Take it or leave it” offers.  Now is the time for some of mom’s social skills to come into play.  Be calm.  Be strong. Take a deep breath before replying. The voice of reason usually will prevail in a negotiation.

Ok, so now you are calm and reasonable.  The other party asks you to make an offer.  You never want to make the first offer.  Now I realize that someone needs to make the first offer, but look for a way where you come to the first offer in a cooperative way. For example, when negotiating a contract for consulting services, I might ask the company what is the budget for the project.  That might give me an opportunity to look at whether I want to do an hourly type of contract or provide a fixed bid, which gives the client some additional comfort from fear of going overbudget. If you knew the budget for the project and also asked questions about the company’s level of risk tolerance, you could provide a more compelling case for winning the project.

Understanding that this is a negotiation, you need to ask for more than you reasonably expect to receive.  While I don’t like the term compromise because it makes it seem like you are already giving up something, your offer will most likely be reduced (in value to you) throughout the negotiation process.  Be prepared for this by understanding your limits and thinking creatively about what other items can be included in an agreement.

In a negotiation, you need to understand that you own your position.  You can make this deal happen or you can walk away.  The other party owns his position.  He also holds the right to walk.  If he walks, your deal is dead.  The goal is to find the place where both parties are a little uncomfortable, but both get rewarded in some way.

Having said that you own your position, my next statement is a bit incongruous. The final decision should never rest with you.  This is the reason that the CEO or chairman of companies do not normally negotiate deals.  You always want to have an out to say that your partners need to review the deal or the chairman has the ability to approve any deal that you come up with.  This will allow you to take a deal home and think through the options without being pressed for an answer in front of the other party. While you don’t want to make minor changes at this stage, you do want to reserve the ability to pull out completely if with a clear mind, you find a deal unacceptable.

Now, both parties have agreed to the deal.  The negotiation is still not done.  There is the writing of a contract to codify the terms and conditions of the deal.  In most cases, there will be a standard document that will be presented to be signed by both parties.  If you have not done this before, please, please get a lawyer to review any legal documents.  Make sure that you understand that you can make changes to any document and if the other party agrees, you have a valid contract.  Even if you are signing a pre-printed contract (like, say for a new car), if you don’t like a term, you can cross it out or make changes.  If the other party wants to complete the deal, they can choose to accept your change.  Otherwise, you may need to negotiate terms and conditions.

The final point is that a successful negotiation will leave both parties feeling better off than if the deal had not been done.  People like doing business with people that they like.  If you have squeezed every drop of blood out of the deal and “won”, you may have created a monster.  Be prepared for the client from hell.

Essay

The Keiretsu Experiment

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Yesterday, I invited 15 entrepreneurs to dinner.  The purpose was to explore an experiment in community based around the idea of the keiretsu, the Japanese concept of building an interlocking groups of companies that can become stronger through the connections. Below, I will talk about my rationale for starting this and what I hope we will be able to accomplish.  I plan to report back to you, my blog readers, about the progress of this experiment over time.

One of the things that interests me is the growth and development of entrepreneurial ventures. I have been involved in entrepreneurial activities for over 25 years now. For the past several years, I have been involved in mentoring entrepreneurs who are getting started. In some cases, I have invested time, others, contacts, in still others, money. In all, I hope that I have been useful to these individual business owners.

As I expand my thinking about my role in the entrepreneurial community, I have also started to expand my footprint. First it was just through DePaul, next it was outside companies, then teaching and this blog. I have come to appreciate the value of communities and wanted to try an experiment with a group of entrepreneurs that I feel comfortable with. Each of the entrepreneurs has specific strengths, weaknesses, contacts, products, services and issues. Some of them have not been in business before, others are pros. Some of them have a revenue generating product or service, others, not yet.

I believe that in this group, collectively there are a lot of assets. If we were to be able to utilize the group’s assets, it is my contention that all of the companies represented will have a better outcome than by going it alone.

What I am not proposing is another networking group. All of the entrepreneurs are or should be networking. But, if you ask me, networking will not really get you to where you want to be. You need to really understand and trust the companies that you deal with. In our current thinking, networking is more like speed dating. Get your business cards out and recite your elevator speech. 2 minutes and then find the next target. You are always looking for the next contact to give you what you need, whatever that is.

I am looking to turn networking on its head. In this group, I would like to see if we can bring to the table assets that we are good at or that we own or have access to. It could be anything — talents, relationships, resources. If anyone in the group can utilize the asset, we have the opportunity to try to find a way to work together to utilize the asset. Because we are a tight group, I don’t expect it to get much bigger and it could get smaller, each entrepreneur will have the opportunity to get to know the others and develop stronger relationships to engender the trust that will allow this to work.

This is not a new concept. The Japanese have long had business groups called Keiretsu – a set of companies with interlocking business relationships, and in Japan, interlocking ownership.  I am not advocating overlapping ownership, but sort of a first stage keiretsu, where we share non-financial assets.

What does this collaboration look like? I know that everyone in this experiment is an entrepreneur and has an idea that they are trying to execute. I am interested in exploring a community dynamic where the companies involved will have access to the assets of everyone on the team.  The hypothesis is that through the benefits imparted by the assets of the group, the collective revenue for this group of companies will rise.

So what is our goal? If I were to say that in this group, there is a combined 2009 revenue goal of $8 million dollars, then is it possible, through some focused effort through this community that we could see a 25% increase in revenues, that we would be able to recognize an overall $2 million raise? Would that be worthwhile? I think so and I think it is possible.

Let’s talk about three time frames.
Short term – Set up expectations to work together. I introduced everyone at the meeting to the group. After I gave my introduction, which included some key assets that I recognized that the person had, each person explained what their company did, where they felt their strong points were and how they would be willing to help the group. Everyone was able to take notes and ask questions.

Medium term – I will take on the responsibility of group moderator and will keep everyone current with what is going on and progress made. I expect that each of you will take the opportunity to meet with 3 other members of the group over the next 3 months to figure out ways that each can help the other. I will keep track of these meetings to make sure that we are maintaining our focus on creating strong connections.

Long term –  By the next meeting we will have a much better idea of how this is working and can make adjustments based on the first quarter results. Again, the long term goal (over the next year) is an overall 25% increase in revenues.

How many people can you support here? This is a volunteer group. Anyone can drop out at any time, no questions asked, no hard feelings.  We probably aren’t going to be adding people, unless there is a strong reason. Around 15 seems to be the right number for this group.

What does winning look like? Winning is simple – grow your business 25% through the relationships developed through this group.

Our meeting yesterday was successful.  Originally scheduled for 3 hours, there were people talking at the 5 hour mark. There were people who engaged others that I never would have introduced. I am excited to see if this will engage people to figure out ways to utilize their asset base. Over the next year, it will be interesting to see if the original thesis statement can be proved through this experiment — 25% revenue growth.

Essay

Entrepreneurs and the Economy

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The news on the economy is bad.  Unemployment figures, credit woes and stock prices are all continuing to tell the tale of our national (and even worldwide) economy. I am not going to play the optimist here; times are tough.  But within any tough time, there are still opportunities for those willing to put themselves out there.

One of the things that I have noticed lately is that companies are looking at the expense side of their business.  In bad times, companies always look to the expense side.  That is why we see massive layoffs at the big companies.  That is also why product and service contracts are being rebid at a huge rate.

An entrepreneurial company should now be looking to increase revenue by developing clearly defined programs that will look to take advantage of this expense focus.

We know that when the big companies lay off staff, they always cut more than they should.  The common thought is that they go beyond cutting fat to cutting muscle.  Once some muscle is gone, in order to provide their products and services, they will need to go outside to get these tasks done.  The big companies look at paying for subcontractors as an advantage — no payroll taxes, no insurance, only pay when I need them.  Small companies can use this to their advantage.  Find a way to network your way into these companies — LinkedIn, recommendations from service providers, friends and family.  Demonstrate your expertise and get to work showing the big guys your stuff.

The big companies (and lots of smaller ones as well) are also looking at rebidding contracts.  Long time relationships mean less today than the bottom line.  I know of several cases where large suppliers that have a long history of working with customers are being told that the products are going out for rebid.  This is an opportunity for a smaller company, who can deliver better, faster, cheaper and more flexibly, to get into companies that were previously seen as locked down by the major supplier.

For the entrepreneur, this is not the time to huddle in your office and play the woe is me game.  This is the time to ratchet up your marketing — not necessarily in spending, but in execution.  Make sure that your story is compelling  and then:

  • Take a contact out to coffee every day.
  • Go to those networking events. Don’t be the card collector. Try to make a small number of meaningful contacts and be sure to follow-up in a timely manner with a personalized note or call.
  • Join LinkedIn or other social networking sites. Again, not to just join and collect contacts, but to understand how your network can help you find new prospects.
  • Ask someone to introduce you to their biggest client or supplier.
  • Take every opportunity to tell your story. Find any speaking engagement you can.

I don’t know when this economy will turn around.  But I do know that playing the victim will not get you where you want to be.  And the opportunities are out there.

Essay

Measuring and Rewarding Customer Service

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Most of my career has been in managing services businesses. You know, the kind where people actually work on some sort of problem for a client for a fee. I have been blessed to work with really great teams of folks who care about their clients, understand the products and environments and are willing to go the extra mile (actually lots of airline miles) for their project teams.

One of the difficult management issues that arise is how to evaluate these folks and provide an incentive compensation program that works.  Sure, you can measure billable hours, profitability, utilization or professional growth.  Those are relatively easy to track, but are not always under the consultant’s control. As my friend and incentive guru David Kelly says, there are lots of ways to demotivate your staff.

But, you say, the real measure of what your staff is doing is Customer Satisfaction, right? Just measure Customer Satisfaction and then reward people on that. Of course, why didn’t I think of that?  Oh yes, it’s because there is really no good way to measure it in a service business.  In a product business, you can look at returns, customer complaints, help desk issues etc.  But in a pure services business, you need to look at project progress plans, client politics, change orders, working conditions, rework, team dynamics, systems —lots of interrelated pieces that can’t be readily quantified. Wait, I know… What if we were to give the client a survey that asked how we were doing?  That would solve the problem, right?

Not so fast. Sure, you could give the client a survey.  Now the consultant or project manager needs to get the client to fill it out.  Many times the client will not fill it out — legal won’t let them, no time, not on the critical path.  How do we rate the consultant then?  Other times it is either all 1’s or all 5’s (it doesn’t matter for this discussion whether 1 is best or 5 is best).  And much of that is related to the client’s demeanor and general angst at the time that the consultant does the asking.  And that is not even bringing up the subject of the “you scratch my back and I’ll scratch yours” type of discussion between the project leader and the client.

I have recently been involved with two transactions that furthered my discomfort over the use of client surveys.  Over the December holidays, my family took a cruise with Holland America. Our cruise was good in many areas, but not overwhelming.  On the last day of the cruise we were handed Cruise Surveys and the Cruise Director explained how the surveys should be filled out.  Everything on the form was ranked 1 to 9, where 9 was outstanding.  Our instructions included: “The highest score is 9 because, of course, 10 is perfect and we don’t pretend to be perfect.  However, if you enjoyed your cruise you should mark 9’s on the survey.  The crew gets paid based upon your filling out 9’s.  Feel free to add comments, but if you were happy, remember to give us all 9’s.” You get the picture.

If I was the COO of Holland America, that Cruise Director would have been history at the conclusion of his speech.  What is the point of a customer survey if you embarrass or cajole your customers into giving you the scores you want? How can Holland America Corporate understand how satisfied their clients are with the service they receive?  As you might guess, my survey was not all 9’s and had plenty of comments.  I don’t know how the surveys were evaluated, but I never received a call from Holland America (the surveys were coded to indicate the cabin), so I can only assume that they were happy with the way that their crew performed according to my survey.

Lest you think that I am only taking aim at Holland America, it happens in other places too. Last time I brought my car in for service, the service manager delivered the fixed car to me and said that I should expect a call from “Corporate” asking about my service experience.  If there was any reason that I could not give them a 5 down the board, to please call the service director at the dealership.  Now this was a little more benign.  Sure the service manager would have an opportunity to fix my problem, but he was predicating this on getting all 5’s on the survey.

There are too many ways that a Customer Survey that is used for incentive compensation can be misused.  Remember that the behavior that you get is the behavior that you incent.  If you want all 9’s on a survey, you will get them.  Perhaps not the underlying business behaviors that cause 9’s, however. David expounds on this topic as well in Commission Plans – Let the Games Begin.

If you have some good ideas on how to incent Service Providers or how to measure Customer Service in a services environment, please let me know in the comments.

Essay

The Young Entrepreneur – Tools

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In my last column on The Young Entrepreneur, I urged those of you with great ideas to adopt some habits that will further your enterprise.  I have gotten some good feedback on that article.  A couple of people asked if only Young Entrepreneurs were targeted in that post.  Certainly not.  I have been advising both young (twenty-somethings) and more traveled (forty and fifty-somethings) for some time now and the habits that I talked about were beneficial for all of us, even, gasp, those folks who are happily ensconced in Corporate America.

Today, I want to talk about tools.  I review a lot of business plans and one thing that entrepreneurs tend to do is overspend on tools.  Specifically computer tools.  There can also be a tendency to not look at IT management things like computer security and backup strategies.  In some cases, legalities are involved.  Let’s take a look at some specific areas.

Understand Your Needs

The first thing that you should do is clarify exactly what your business does.  Of course, you know what that is.  But really what technology is critical to your success?  For example, a printing business probably needs to purchase licenses to Photoshop.  An accounting firm probably needs the most fully laden copy of Quickbooks. For these products, bite the bullet and buy the correct number of licenses.  You don’t need the Business Software Alliance on your case (although my take their methods of enforcement should make another post).  You will get support and know that you will be able to perform your role with your clients.

If these products are critical, look to potentially become a development partner with the software company.  You may be able to get some very nice perks for joining as a partner, although it might stifle some of your creativity.  Your mileage will vary.

If your company needs to utilize software to build your product or service, be sure to get qualified legal advice before choosing a platform to build upon.  There are a lot of open-source products out there and as many different licensing agreements.  If you choose products with the wrong open-source licenses, you may lose out on patent protection or have other intellectual property issues.  This is an area that you need to spend the money to ensure that you are protected.  When you go out for financing, intellectual property rights can be critical to the investment decision.

Software

For all extraneous (non-critical) software, look for free alternatives.  Do you really need to use Microsoft Office?  At $250 a pop, this is a serious question.  Sure, you could buy the Student and Teacher Edition, but remember the BSA…  There are a lot of other alternatives.  If you decide that your documents and spreadsheets should be kept locally, Open Office is a fine substitute.  There is a no charge license, it will read and write Microsoft standard documents and it offers most of the functionality of the name brand.

I would think seriously about alternatives on the web.  In this case, you may lose some functionality (much of which few people utilize), but have the advantage of easily sharing documents and collaboratively editing them.  Two good free examples are Google Docs and Zoho Office. Google docs allows you to create (and import/export Microsoft formatted) documents, spreadsheets and presentations. Multiple people can edit the document concurrently.  The spreadsheet has functionality that allows you to present a form for data entry and distribute it to others to allow them to build a spreadsheet — good for things like party invites or benefits signups. Zoho Office has many modules, including standards such as spreadsheets, documents and databases and stretching to Customer Relationship Managment (CRM) and Human Resources Management.  The CRM solution is free for up to 3 users and rivals SalesForce.com for the functionality for the small business marketplace.

The benefit of web based alternatives go beyond the free price and collaboration.  You will have the confidence that the files are backed up and available securely, anywhere there is a browser.  If needed, you could update that contract from an Internet Cafe in Kauai.  If you need help with this, please call me, I would love to help.

For managing your finances, lots of times people will start out with Microsoft Excel or another spreadsheet based product.  I would recommend starting out with the smallest version of QuickBooks that you can.  I have had experience with a number of other products.  They all work fine, but QuickBooks is the standard and your accountant will be sure to be able to take downloads of your files and work on them.  I have tried the QuickBooks online version and was very impressed with it.  If you have less than 20 customers, the service is free.  More fully functional versions are available.  The one including time and expense tracking for services firms is priced at $34.95 per month and can be well worth it for a company with a significant billable work force.

For other tasks, there are open-source or free products that work as well as the boxed software you can get at Fry’s or TigerDirect.

  • Diagramming software: Instead of Visio (MSRP $269) check out Dia or online using LovelyCharts
  • Graphical software: Instead of Photoshop (MSRP $999) check out GIMP
  • Programming Language: Instead of Microsoft Visual Studio (MSRP $799) check out Ruby On Rails or Java
  • Operating systems: Instead of Microsoft Vista (MSRP $270) check out Linux

Do you have others that you use and can recommend?  Let me know in the comments.

Online Identity

For your online identity, you will need to buy a domain.  Look out for deals from GoDaddy and 1&1 and Dreamhost, all of whom also offer low cost hosting.  If your product or service will require lots of access or usage will grow significantly over time, look for the ability to buy additional space or bandwidth, as needed. Potentially, you might want to look into dedicated server and facilities for managing multiple servers.  Day one, try to find a vendor that you can grow with. And check out the service level agreements.  These documents explain what the hosting company will agree to provide to you in terms of uptime and security.  Comparing pricing and service level agreements will lead you to the right value proposition for you.

Google Apps for Business can be a great way to keep everyone in the company on a single platform that will allow for web access to authorized users from anywhere.  This service will encompass email, calendaring, intranet, search, documents and spreadsheets and other Google based services.  You will get to use your domain, such as www.yourbusiness.com, to allow you to utilize your corporate identity. Google updates their products regularly and will take care of backing up and managing your servers.

Another solution for web developers is Amazon S3 (Simple Storage Service). Amazon provides as much storage for objects as you need and charges you for just what you utilize.

IT Management

IT Management is a key topic, even (or especially) in small companies.  You need to have a planned backup strategy.  It could be just copying your working files daily to a USB drive and keeping it at an alternative location.  It could be to use a service like Mozy or Carbonite.  Of course, the use of web based software could obviate the need for significant local backup capability.

In any case, make sure that you try out your data recovery.  If you needed to recover a file that was deleted, could you do it easily?  What would happen if your desktop computer broke on a Wednesday afternoon?  How would you recover so that you could still conduct business?  What if the problem was more widespread than just your desktop, say a natural disaster?  Could you still run your business?  All of these are key concerns and deserve a solid plan to support your business.

Security is also a concern.  Be sure to develop your applications and access to your systems with strong security.  If your business has to take broader precautions, for example if it takes credit cards or is obligated to follow the HIPAA laws, you will need to invest in stricter security systems.  Work with a security expert to protect your systems and data.  A lawsuit for a breach of security in any business is bad news.

Be sure to look at the costs of telecom systems.  The costs for VOIP (voice over internet protocol) service have decreased and the features of phone systems to integrate with your office systems have increased.  Get a free conference call number at The Basement Ventures. There is even an open source package for telephone management – Asterisk, where you can set up your own telephone system for your office, just like the big guys.

There are a lot of alternatives out there for reducing the costs and increasing the capabilities of your data tools.  If you have questions or other products that work well for you, please let me know in the comments.

Essay

The Tyranny of Dead Ideas

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I am currently reading The Tyranny of Dead Ideas: Letting Go of the Old Ways of Thinking to Unleash a New Prosperity. The author, Matt Miller is a former White House aide during the Clinton administration and a contributing editor at Fortune. The premise of the book is that there are a number of dead ideas that we as citizens and elected officials deal with every day. The six that he discusses in detail are:

  • Our kids will earn more than we do
  • Free trade is always good, no matter who gets hurt
  • Employers should be responsible for health coverage
  • Taxes hurt the economy
  • Schools are a local matter
  • Money follows merit

In a remarkably non-partisan way, Miller describes the historical basis of these ideas and how world events have overtaken them.  He then prescribes some ways to change our national discussion on each of these ideas.

Dealing with dead ideas is not only on the national agenda.  Imagine yourself in a room with colleagues and a moderator.  You are trying to solve a vexing business problem.  The moderator urges each attendee to “think outside the box”.  Even with all of the brainstorming techniques available, it is exceedingly difficult to break through our ingrained thought processes.

Essentially, humans use shortcuts in critical thinking.  These shortcuts are called experience.  If we have burned our fingers on a hot stove, we learn that we shouldn’t touch the stove.  But what happens when the environment changes?  If we use an induction cooker, since the range does not generate heat, you can safely touch the stove.

It’s the same in our businesses.  Think about how often we say “Oh, we can’t do a fixed bid” or “We have to offer this product in 30 different sizes”.  What old baggage is holding us up from even thinking about potential solutions?

What dead idea can you challenge today?

Essay

The Young Entrepreneur

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Over my career, I have managed many young adults, many of them in their first real jobs. In my current life, I have the privilege of working with a number of young entrepreneurs. It is a great experience for me as I get to help shape the ideas of and learn from some of these great young adults.

In general, the young entrepreneur is blessed with a number of advantages:

  • Energy
  • Lots of ideas
  • Unbridled optimism
  • No jaded perspective
  • Low cost of living
  • Self sufficiency

However, there are life lessons that they need to be aware of as well (with apologies to Robert Fulghum):

  • Grammar and punctuation count.
    People will sometimes judge you based upon how well you can present yourself in writing. Make sure to use your spell checker, but don’t leave it at that. Make sure you understand the difference between their and there, its and it’s and your and you’re. The caps key is there for a reason. Use it to start sentences. If you aren’t sure about the usage of something, find somebody who does know and ask them to review the piece before you send it out. If you have a table of numbers in your document, make sure the totals foot.
  • Communications is 90% of the game.
    Show up when you say you’re going to show up. Deliver when and what you promise. Document your understanding with your partner, client, vendor, investor. Get out from behind your computer or desk and meet people. Find opportunities to take people out to lunch or coffee. Yes, I know that sometimes we all have ADD, but your customers are counting on you to do what you say you are going to do. If you can stand out in this area, people will recommend you to others who can use your product or services.
  • Listen. Intently.
    When client describe what they require. When investors talk about what is important to them. When vendors explain how their product is different. I know that you are very keen on your idea. People will give you an opportunity to talk about what you are doing. If you have listened intently, you can make your presentation that much more relevant to your communications partner.
  • Always say thank you.
    I know that it sounds like I am talking to a three year old, but it is critical that you recognize when people help you. Saying thanks in a personal way (not a Hallmark card, but a handwritten note or personalized email) in a timely manner will make a huge difference in how people perceive you, the person and by association, your company.
  • Share.
    Find ways to connect people. Start to build a contact list of people that you admire or who have specific skillsets. When you meet with someone who has a need that you can help to connect to one of your contacts, do so in a professional way. Send an article that you think might be compelling. Point someone to a blog you like. Being perceived as a connector can only help to pay dividends for you in the future.
  • Dress well.
    It never hurts to dress one step higher than you think is necessary. Worst case, you can always take off that darned tie. Even if your company is in an edgy marketplace, see if there is a way to make it classy edgy rather than raw edgy. Again, people do sometimes make quick impressions that stick. I know people that console themselves with “If they only cared about what we wore and not what we do, we don’t want to work with them.”. However, often this comes up only as sour grapes, once the contract has been lost. It is always better to be ahead of the game.
  • Underpromise and overdeliver.
    While the true bean counters will not be happy that you were ahead of your forecast, everybody else will be delighted that you were able to do better than you promised.
  • Give something extra.
    The Cajuns have a word for this – Lagniappe, something extra. In many Cajun restaurants, you will get a little something extra – perhaps a small dessert or trial of another entree. It costs next to nothing and has people talking. Look at it as an almost free focus group.

More life lessons on young entrepreneurs to come in future postings.

Essay

Advertising

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n,v: a public promotion of some good or service

This time of year, we are all forced to pay more attention to advertising.  The nation’s attention to the Super Bowl (excuse me, The Big Game) is half about the game and half about the commercials that are presented.  After the game, the media spends more time going over the picks and pans than the picks and points. This year, for some reason, lots of people enjoyed seeing a glass paperweight hit a man in the groin.  Others went for more prosaic fare like the love story between a Clydesdale horse and a circus horse.

I understand that there are a lot of reasons for advertising.  Brand awareness, new product announcement, to create industry buzz and to help employee morale are just some.  What I don’t get, is annoying a potential customer to get attention. I guess part of it is that advertising execs are being pushed ever harder to come up with creative campaigns.

There is one commercial running in the Chicago radio markets that just makes me crazy.  Mark my words, I will never buy a Sunsetter Retractable Awning.  If I even hear the beginning 5 seconds of the ad, I will change the station.  The pitch is that there is a reasonable guy telling the audience about the benefits of the aforementioned awning system.  Every 10 seconds, a woman’s screeching voice comes on and orders “Harry, tell them about the discount”.  Finally, at the end, the man gives in and tells us all about the discount. Perhaps the ad exec in charge of this account is a henpecked guy who is just expressing his life story.  Perhaps the company thinks that the discount is so critical that they can devalue the experience of listening to the whole case for an awning system.

On one hand, the company has won.  I certainly know the company and the ad, and can put them together.  But I can guarantee that if I ever have the opportunity to purchase an awning system, I will find another solution.  In fact, if I am ever in a conversation with anybody about remodeling, I might just go out of my way to help them find another solution.

What are the ads that make you crazy enough to boycott the product?