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July 7th, 2012

Managing Emotions In The Workplace


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Some managers operate as if their employees are robots. They say,  “Stop your whining.  Suppress your emotions and get the job done.” Understanding the comprehensive makeup of human beings, we realize this drill sergeant, all-business, hard-nosed approach is unrealistic ,and in the long run, counterproductive to the organization’s growth.

Managers must understand that, on all levels of interaction,  emotion and reason (logic) are both connected. Thousands of decisions are facilitated, daily,  by these opposing drivers.  At any given point in the process, one driver might override the other.  But never are they totally separate from each other.

 

This Is The Workplace. No Emotions Allowed!!!

 

Let’s take a moment to examine the hemispheric, neurotransmitting, cranium-enclosed encephalon  … most often referred to as the mind.  Sometimes critical decisions are made by the conscious mind where the decision maker  is fully aware of the options and painstaking process of elimination that renders a single solution. Other times, it’s the subconscious mind that sorts through an endless array of possibilities and then awakens the decision maker  in the middle of the night with an unexpected epiphany.

The creative process that leads to a tangible solution  is elusive and difficult to characterize. Scientists often attribute “creativity” to the right hemisphere of the brain where holistic, intuitive, synthesized thinking takes place. But most business experts  will tell you when it comes down to the rationale and logic necessary to bring a project to a successful conclusion, the left brain, responsible for logic, numbers, analysis and sequences,  is fully engaged.

Thus, when emotions rise to the forefront of the process, why would  a manager tell an employee to get himself or herself together and operate only with one side of his or her brain? In essence, the manager is really asking the employee to do the impossible … like asking them to  breathe out of only one lung.

“I don’t like Suzanne.”

This statement reflects a counterproductive attitude and has the potential to kill an entire project.  It shouldn’t be that way. People should be able to separate their personal feelings from the work at hand. But we know better. Yet, some managers try to force logic into the equation by threatening both parties to either work together or hit the road.

Successfully managing emotions begins with recognizing its irrevocable connection to the workplace and the huge impact it has on our day-to-day lives.  Think about it this way. The objective is not to eliminate emotions from the workplace, but to separate the good from the bad, and then weed out the bad.

Imagine the CEO crying at a Christmas party when the announcement is made the company was able to build a school in Africa or feed one hundred needy families in the community.  Imagine how emotions flowed when NASA orchestrated its first successful liftoff after the 1986 Challenger explosion. Would you want to eliminate that scene simply because it’s emotionally driven?

Now think about two team members who refused to speak to each over a long-standing dispute. Would you want that kind of emotionally driven behavior to continue? Somewhere along the line, anger, frustration and resentment have set in. You can’t just bully the offended parties into pretending it never happened.

Managing emotions in this situation may involve bringing the combatants together in a face-to-face sit-down with a third party mediator, or forcing the parties to submit in writing their perception of the root cause of the dispute, which, by the way may be complicated and multi-layered and interrupted differently by each party. The main thing is to sit down with the parties to make them aware of the long-term consequences of their collective behavior.  Then, move toward repairing the riff, fully aware the triggers you discover may not be the least bit logical or worthy of the dissention they’ve caused.

It’s always a good idea to have the opposing parties to get to know each other better. That requires spending time around each other. Most of us can remember a situation in our careers where we said, “I didn’t like her at first. But once I got to know her…”

If you understand my story, if you understand that I grew up dirt poor, eating out of trash cans, then you understand why I bring my lunch and why I’m so tight with the budget;  or that a young blond fuzzy with a pointed nose stole my husband. That’s why I don’t like Suzanne who, by the way, looks just like her.

We may not get Suzanne to lower her dresses and start carrying a Bible. However, we can have the opposing party spend enough time with her to realize she is not the women who stole her husband.

Here’s the whole point. As a manager,  you cannot bully emotions out of the workplace. The inclination to do so may reflect a void in your own personal management skills.  After all, it’s so much easier to ostracize, threaten and even dismiss an employee, than to employ sophisticated mentoring and nurturing skill you haven’t yet acquired.  Consider emotional obstacles a challenge to up your game. Jack Welch,  legendary former CEO of GE, use to say it’s better to thoroughly water your garden than to spend time pulling up weeds. You can’t kick out everyone. Otherwise, you’ll have to leave too.

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April 23rd, 2012

Taking Ownership

 


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Here’s Why Employees Won’t Take Ownership of Your Projects or Your Business

 

We don’t like you!!!

Okay, relax. That’s not the reason. And, what do you care, anyway? Right? Although you may deny it, multiple psychological studies on self-efficacy and self-esteem say deep down inside, you do care. Of course, that’s another article for another time.

There are basically three reasons why employees … let’s evolve from our antiquated thinking and call them team members … don’t take ownership. The first is the owner/entrepreneur’s inability to inspire. The second is the owner/entrepreneur’s passive/active posture of resistance. The third is the owner/entrepreneur’s refusal to reward. Of course, there are other less frequent, one-of-a-kind scenarios that play out among millions of organizations that, because of their complexity and overlapping nature, cannot be quantified or traced back to the original cause and effect relationship. However, most abdications of ownership by team members fall under these three categories.

 

It's YOUR Business

 

To be clear, let’s define ownership, or “agency” as referred to by some management theorists who consider those who take on ownership to be “agents” of change. Ownership is the declared willingness to assume responsibility for a desired end result. Owners of a project, event, business or social entity, philosophy and/or creed understand the full ramifications of the project’s existence and readily embrace obstacles associated with its ultimate success.

Former Vice President Al Gore won a Nobel Prize by taking personal responsibility for the plight of global warming and its overall impact on the environment. Public advocate Ralph Nader led a legendary one-man campaign against the Unsafe At Any Speed Chevrolet Corvair.  Enron Vice President and whistle-blowers Sherron S. Watkins was selected as one of three “People of the Year 2002” by Time Magazine for her unrelenting effort to expose the illegal accounting schemes at Enron.

Of course, the process is not all celebrity peaches and cream, concluding with a ticker tape parade down Main Street. When asking team members to jump into the fray, we must understand that, whether the organization is large or small, taking ownership comes with potential risks and consequences. Business visionary and CEO, Carleton “Carly” Fiorina, was forced out of Hewlett-Packard for here advocacy of the Compaq merger. Martin Luther King, Jr was shot for his stance on civil rights. And how can we forget the horrible persecution and industry blackballing of Jeffrey Wigand, the Brown & Williamson executive who revealed to the world that cigarettes were highly addictive and methodically killing us?

Still, ownership is a desirable proposition for both the entrepreneur and team member. By showing a willingness to take ownership, team members demonstrate a certain leadership quality that every small business needs: The willingness to put one’s reputation on the line, be a risk taker and manage uncertainty.  Isn’t that what you do every hour of the day? Aren’t these the supportive, dependable, motivated people you want to have your back and help your business grow?

So  why aren’t the masses rushing through your door to sign up as advocates for your next big killer invention? Surely, they realize it’s going to take the world by storm?

Let’s deal with the first probable cause.

Quite often, team members don’t take ownership because of the owner/entrepreneur’s inability to inspire. This is a profound irony in that “inspiring others” is one of the things that visionaries are supposed to do best. They take an unfamiliar, untested concept and transform it into something believable, attainable, and beneficial to the participants.  In a way, they are legendary conmen, peddling the truth instead of a lie.  They believe, then make it possible for others to believe; enduring skepticism, criticism and even sabotage along the way.

Your ability to inspire is a critical leadership characteristic and key component in the potential success of your business.  It’s not enough to believe, you must make others believe as well. That entails a whole range of communications   skills based on research, analysis and preparation.

How can you inspire me to believe a car can actually run on vegetable oil when you know nothing about combustible engines? And what will you say when I tell you the fossil fuels used to grow the plants to make vegetable oil actually increases the pollution in the atmosphere by 35%, thus, your endgame to save the planet is really adding to the problem?

Inspiring others is no pie in the sky. It’s actually hard work. Even the conmen will tell you to do your research first, and then open your mouth. To inspire, you must gain trust through words and deeds. And you must be knowledgeable enough to present believable end results.

No, you don’t have to be Steve Jobs. You have to be you, working within your own skin and framework of possibility to capture the attention, enthusiasm and endorsement of relevance from others. If you’re operating by the seat of your pants/dress tail and don’t care enough to thoroughly prepare, this chink in your visionary armor will come shining through. It signals, on a subliminal, subconscious level, your shallow commitment and alerts team member you’re wasting their time.

Let’s talk about this endorsement of relevance, and then we’ll move on.

How much does your new killer invention change the world? It’s impact doesn’t have to be applied to the entire world, just the world in which it’s designed to target.  

London instrument maker, James Watt, changed the world of steam engines, and ultimately, the entire manufacturing industry, by recognizing a basic design flaw in existing steam engines of his time. Precious steam and fuel were being wasted by having both heating and cooling take place inside the piston cylinder. Watt solved the problem by creating the condenser, a separate insulated chamber where steam would be cooled to create the necessary vacuum. This was no less ingenious than Dr. Fredric J. Baur’s creation of his iconic potato flake chip-type product known as Pringles or Steve Jobs’ creation of the iPhone or Mark Zuckerberg’s creation of Facebook.

You have to ask yourself a realistic question. What difference is my killer invention going to make? It’s the same question your team members are going to ask. It’s the measuring stick by which they give your project a “relevance score”. If the iPhone is a ten on the scale, where does your project fall? And if your score is too low, meaning it does not have a perceived impact on their lives or the lives of those existing inside your targeted world, then no one is going to take ownership.

 

The second reason is the owner/entrepreneur’s passive/active posture of resistance. As an owner, exactly how much grassroots, bottom-up clamor for new approaches and new ways of doing things can you tolerate?

I had a friend who briefly worked for a small accounting office, owned by a command-style drill sergeant boss and populated by “yes-men” Baby Boomers. The office used a non-intuitive, problematic version of Peachtree as the accounting software, WordPerfect as the document processor and some kind of email program that did not allow attachments of any kind. My friend proposed changes in the software as well some of the redundant procedures they used internally to pass documents back and forth. The owner and managers were opposed to all changes.

The owner explained that, after twenty plus years in business, when he looked at his bank account, he didn’t see anything wrong. Why fix what wasn’t broken?

In 2008, Bear Stearns Companies, a global investment bank and securities broker reported $17 billion in previous year earnings, had $28 billion in assets on the books, and had seen a 52-week high stock price of $132. Before the year was over, the subprime derivative-infested company was sold off at fire-sale prices to JP Morgan Chase for $10 per share. But how marvelous was their bank account before the sky came crashing down.

As smart marketers, privy to all of the worldwide analytics and business trends, we realize in today’s turbulent, ever-changing marketplace, it would be only a matter of time before a more efficient competitor swooped in on the old accountant to take all of his customers. But having created a culture where change was unwelcome, which team member would be willing to take up the banner of ownership in the company’s future and risk losing his or her job?

Let’s face it. Sometimes change is too painful to implement. Your team may eventually come to you and recommend you dismantle the very product line with which you started the business. I wonder how the old managers at Polaroid felt when they discontinued the instant film cameras?  

Think about one of the major trends in today’s market. More and more people are opting to live alone; almost 30% of the population, compared to 9% back in the 1950’s. So what if you sell bags of charcoal that have a tag line or slogan that says, “Great for family outings”. Your old Grampa Henry started the company with that slogan and now it doesn’t fit … sort of like the United Negro College Fund. Are you going to change or hold on?

To shed the familiarity of the past is often complicated and risky. Some business owners just can’t do it. They cling to the old idiom, “It’s my way or the highway.” Or they engage in more subtle, indirect practices of ignoring, belittling or diluting any ideas that, either, didn’t originate from them or extends too far beyond the scope of their own personal creativity.

If you fall into this category, there is no reason to expect team members to take real  ownership in your projects or business. Ultimately, you will create an organization of yes-men and yes-women who resist thoughts of initiative and advocacy. Rather, they do what they’re told and try to ride it out until the next paycheck arrives.

 

The final reason why team members don’t take ownership  is the owner/entrepreneur’s refusal to reward.  

Perhaps, you’ve worked for this kind of owner.  He or she is totally self-centered and doesn’t see a need to share the wealth. They drive into the parking lot in their BMW one day, their Navigator the next, and on their MTT Turbine Superbike motorcycle the next. Then, at the weekly meeting, while punching numbers into their brand new $900 Wi-Fi-enabled, 64GB iPad , they explain why salaries will have to be cut and people will have to be laid off.

In 1978, CEOs at the helm of major corporations earned 35 times as much as the average worker. In 2009, that gap had grown to 300 times as much. According to economist Edward N. Wolff at New York University, the wealthiest 10% of Americans earned 50% of all income, twelve times as much as the bottom 10%.  The top 10% owned 80% of all stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.

Team members, especially those from Generation X, know the score. They’re not interested in making you rich with no indication you plan to take them along for the ride. Google, General Electric, FedEx and others reward, heavily, those who make the company successful.  A simple salary is just not enough. You have to figure out a way to reward initiative and buy-in and ownership.  Otherwise, it’s “YOUR” business. Stop complaining when team members treat it as such.

Here’s a final note pertaining to creating a culture of  advocacy and ownership. You should start to think of it as an absolute necessity. You cannot grow your company and reach your  entrepreneurial goals operating as a one-man band. You need the support of a great team. You must inspire others to take ownership, and then reward them for a job well done.

-Partial Excerpt from the newly released: What’s Wrong With Your Small Business Team [Executive Hardback] by Leander Jackie Grogan -

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March 21st, 2012

A Sad Slow Death

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Failing The Top of Mind Test Could Mean A Sad Slow Death For Your Business

 

If you ordered a pizza during the March Madness basketball tournament, my guess is it came from Pizza Hut, Domino’s, or Papa John’s. No, I’m not peeping through your bedroom window. My teenage friends and I unequivocally discontinued that practice when young widow woman Prewett finally moved out of the neighborhood. Rather, my presumption is based on national studies that show these three brands occupy “top of mind” positions in the brains of most consumers.

 

 

Top of mine awareness is a marketing concept based on the conclusion that customers will most often buy products and services that occupy a “top three” prominent position in their minds. Even impulse buying is often limited to merchants that have been prequalified as worthy recipients of the consumer’s sporadic and unplanned purchases. The customer will say to Pizza Hut, “I came in to order a pizza. But since this is Pizza Hut, I am willing to try your hot wings too.” Inside Antonio’s little corner Pizzeria, the same consumer would not be as adventurous. 

Top of mine awareness is a huge predictor in terms of identifying a company’s future success. In my old consulting days, I insisted my clients take the TOM test at least twice a year. It’s a simple self-evaluation. It asked a single question about the company’s line of products and/or services.

Here’s the question: “Which products or services hold a top 3 position in the minds of your target group?”

If the answer is none, then this is a Captain Kirk red alert. You’re headed for disaster.

So the president of Dell calls to say he heard someone talking about your new computer fastener on a flight from New York. He would like to present the idea to his board which will be discussing laptop innovation in the morning. Can you overnight a proposal to him?

Of course. Who would say not to such an opportunity. Eventually, however, the question arises: which overnight company can you trust to get the proposal to him on time? Probably, FedEx would top the list. But if FedEx  is too expensive, or if they don’t deliver in that area, who would be next to contenders be?

Here’s another example. You’re having surgery, and your doctor has warned that for the next few days, you can eat only soup. Which brand comes to mind?

Probably, Campbell’s would top the list. But if the store is out of your favorite flavor, which brand would you look for next? Perhaps, Healthy Choice or Hungry Man would round out your list of potential  selections.  The point is, before you reach the store, you already have a predisposition about your choices. So do your potential customers. And, if you are not in the top three with any of your products or services, there is a good chance you’re the victim of a slow death, just waiting for someone to officially pull the plug.

When was the last time you went to the Black-eyed Pea or Long John Silver or Fuddruckers?  These were once powerful brands that commanded a prominent position in the back of our minds. But in recent years, their magic has faded, and along with it, their prospects for staying afloat.

In 2001, the Phoenix Restaurant Group filed for Chapter 11 bankruptcy protection. This resulted in the closing of 48 Black-eyed Pea locations, reducing the chain to 44 locations. The new strategy was to reformat the brand as a “country casual” chain, adding more appetizers and seafood offerings, along with more grilled items  and increased emphasis on drinks and the bar. However, I recently went into two locations in Texas, and both were empty. I actually went to the second one to see if the first one was a fluke. My heart melted, watching the employees standing around, realizing they were on borrowed time. Further down the street, their country competitor, “Cracker Barrel” was packed.

If you sell nails, screws and bolts, and I keep running to Home Depot, Lowell and Wal-Mart for my nails, why are you selling nails? What can you do to your nails to force me to start buying from you? Perhaps, you could lower the price of screws and bolts hoping a flood of screw and bolt customers would also pick up a few nails. But if your product differentiation is not enough to land you in one of the top three awareness positions, you are just like the employees in the Black-eyed Pea, riding the slow death hearse all the way to the graveyard.

Here’s my point, and obviously, this does not apply to startups just entering the marketplace. If you fail your TOM test, evaluate your product line to determine whether anything you currently sell has the potential to garner top of mind awareness. If not, innovate like crazy, as did Apple and Caterpillar, or get out of that line altogether. As we say under the Anthead Syndrome, it’s time to morph to a new niche. 

Avoid the painful slow death tied to lower tier awareness.  Take action right now to give your company a fighting chance.

 

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February 29th, 2012

Analytical Thinking or Synthetical Thinking

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Someone in the Warehouse is Stealing.  Do We Catch Them with Analytical Thinking or Synthetical Thinking?

 

What is the difference?  And why does it matter?

First, let’s define both. In the simplest of terms, analytical thinking is the process of coming to a conclusion by analyzing a “whole” or complete part to decipher meaning through the separation of that part. Melting down steel to identify its chemical ingredients, or breaking open a pecan to see what kind of nut is inside would be good examples of analytical thinking. We seek knowledge by separating the whole.

 

 

On the other hand, synthetical thinking involves gaining knowledge through the process of combining individual parts. A jury, for instance, may not have been at the scene of the crime when the defendant allegedly committed the murder. However, through synthetical thinking, they are able to piece together the various testimonies, forensics and other evidence to reach a conclusion. The same holds true during the development cycle of new products. No one really knows whether the item is going to sell. However, combining many pieces of critical evidence such as consumer trends, competitive market share, available financing and organizational competencies produce a “synthetical probability” for success or failure. 

Innovation of a new machine is synthetical. Pinpointing why the machine is not operating correctly is analytical. Both methods are critical to the entrepreneur, but at different times. Sometimes the owner may be trying to choose the right individual to oversee a particular project. Unaware of the different applications of thinking, he or she might engage in the wrong approach. It would be easy to start analyzing the potential candidates rather than engaging in a synthetical process which considers individual competencies, along with the goals and objectives at hand.

You don’t want to analyze the person as much as you want to bring together all the pieces so that you might visualize the big picture and potential interactions within.  On the other hand, if a certain individual gets the job and sales bottom out, you want to analyze or tear down each step in the process to see where the person and/or the system went awry. Synthetical thinking located Osama bin Laden. Analytical thinking explained why only one helicopter came back.

You should keep in mind synthetical thinking produces a result that is greater than the sum of all the parts. For instance, a tire, engine and steering wheel are not “individually” capable of taking you to the supermarket. Only when these components are combined do we realize the necessary benefits of transportation, benefits that far exceed the capability of each part.

Team collaboration is like that. The contribution of each team member far exceeds the capabilities of the individuals. A powerful “synthetical profile” will emerge that, otherwise, would have been unavailable to you as you sat in your office, stressing over the details without including others. Synthesis is good for you and the entire organization. Use it whenever you can.

Finally, if you haven’t already used synthetical thinking to piece together the evidence and figure it out, the butler did it. He’s the one out in the warehouse stealing your blind.

 

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February 14th, 2012

Am I Too Late?

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Am I Too Late? It’s A Dumb Question That Will Save You Lots of Money

 

When is it it too late to enter a market?

The answer begins with the use of polarity management, that is, a complex problem solving system that recognizes the existence of more than one right answer. An example would be found in the question, “How do I get to New York?” The answer could be by car, train, bike, plane or bus. There are multiple “right” answers. It all depends on the other priorities driving your need to go.

 

 

This holds true for entering a new market. There are multiple variables that determine the validity of your final solution. One of the first that comes to mind is the existence of competition, both present and potential. Most market analysts would say it’s too late to enter the tablet market. Apple and Samsung are embroiled in heated competition spending millions in promotions and legal maneuvers to block each other and sew up key markets. Amazon has launched Kindle Fire with a huge content library working in conjunction with its savvy tablet to entice customers to buy based on added value . Lenovo has entered with the IdeaPad Tablet PC powered by Android; Acer, with the world’s first 10-finger multitouch ICONIA. Now Dell has announced its  powerful Latitude XT3.

The same holds true for manufacturers of solar panels. Global demand is up 9%. But, because of the falling price of polysilicon and other components, as well as the abundance of suppliers already duking it out for a small slice of rapidly dwindling market share, seven solar panel manufacturers have filed for bankruptcy, and all competitors, including the big boys like First Solar inc and Suntech Power  are reporting weaker profits. Some companies have seen their value fall as much as 90%. A major shakeout is definitely underway.

These two sectors represent a no-brainer in terms of market entry. Unless you have a tablet that prints out $100 bills, or a solar panel that reflects all of the satellite channels for free, it’s too late to get in.

Sometimes, however, the decision to enter or not enter a specific market is more complex and not as clear. There’s an unmet need, the market is in its infancy, there are no major players and the cost to enter is manageable.  At a distance it might appear to be an entrepreneurial dream. But is it?

 

Here are four questions you need to ask:

 

1.      Is the opportunity a match for my organization’s core competencies?

Core competencies represent an individual’s fundamental knowledge, ability, and/or expertise in a specific skill set. Core implies the individual has an intrinsic inclination toward matters in a specific area and is an ideal candidate for future learning in that area and related areas. The cumulative competency mix of all team members, internally and externally (contract workers and key consultants) represents your organization’s core competencies. Thus, if your company roster is made up of Traditionalists and Baby Boomers, a market opportunity to sell Andriod and Apple phones is not a good match. As a proud Baby Boomers, I demand at least one full day to learn how to turn my new phone on. And please don’t trouble me with these things called apps.

 

 2.      Does the threshold to entry make me a sitting duck?

Threshold to entry refers to the difficulty or ease with which anyone can enter the market and compete. If you open up a corner fruit and vegetable stand, what will prevent your neighbor from doing the same?  And how will you compete when you learned that his grandfather has a farm in the country and will provide him with tomatoes and cucumbers for free?

The threshold for getting into a marketplace such as  fruit and vegetable stands, barber shops, pool halls, delivery services, laundry mats, wedding planning, etc.  is low. Therefore, it’s just a matter of time before someone comes along and offers the same product or service, either at a lower price or with more attractive bells and whistles. You are a sitting duck, just waiting to be roasted in the ovens of commerce. It’s too late to get into the market because people have already figured out how to get in, just like you, long before you started thinking about it.  Conversely, not everyone has figured out how to build a nuclear plant or third generation micro-alloyed steel to be used in new fuel-efficient automobiles. But can your company roster of young Millennials handle the job?

 

3.      Is the target I’m about to pursue a trend or fad?

The basic difference between the two is trends last longer. By the time you gear up for a fad like LeBron James T-shirts that read, “Welcome to Miami, LeBron“, or open a health store based on the caveman diet regiment (the assumption that things must have been better when we foraged for food without breads or carbohydrates), someone will have done a poll to show that LeBron is now a goat,  and an archaeological study to show that cavemen died way too soon. In today’s instantaneous society, things change quickly. You can easily be left holding the fad bag.

 

 4.      Has the market matured to the point of diminishing prospects?

Mature markets such as microwaves, watches, credit cards, term life insurance, etc., have reached a point where the products or services are not “significantly” different, most everyone has a “satisfactory” rendition or representation of the product and  there aren’t enough new customers to go around. Market leaders are slashing prices and trying to steal customers from each other, and to add to the misery, the products or services are teetering on obsolescence.

Except for the sake of making a fashion statement, most people are no longer depending on their watch to tell the time. They use their Smartphones. And who’s rushing into the local ATT&T center to buy the latest killer cordless landline phone? Again, people are moving to cell phones.

 

So is it too late to enter your dream market and start to set the world on fire?

The short answer is maybe … maybe not. The point is the process must not be arbitrarily. You must plow into today’s world of smart analytics, data mining and predictive analysis to determine what’s best for your organization. Let me say a few words about this and then I’m through.

Data mining refers to the analytical sifting of data to find new patterns, relationships, sequences and insights critical to the continued existence and growth of your business. The process is discovery-driven and multi-dimensional and tied to the realistic prospect of predicting the future.

The search by small businesses to find compatible niche markets is tied to studying clusters of information that spill the beans about trends that cannot be seen with the naked eye. This process of placing bets on future scenarios and then deploying valuable resources (time, money, human capital) to seize promising opportunities is the lifeblood of any organization. To have a fighting chance in this volatile economy, you have to move to a position of making percentage plays, trying everything in your power to take the guest work out of the equation.

Many years ago, as a marketing consultant, long before the advent of this high-powered number crunching phenomenon, a lady came to my agency seeking help with her dream business. Her husband had died, left her $100,000, and now she could open up the dress shop she’d always dreamed of. I felt like a wet blanket because I spent most of the afternoon trying to talk her out of it. How was she going to compete with Foley’s (which eventually became Macy’s)? She didn’t have the advertising budget. She couldn’t buy in volume to lower the price. She couldn’t offer the size and color selection. She had leased a retail location that was five blocks from a neighborhood with high crime statistics and a disproportionate number of liquor stores and pawn shops. She had absolutely no strategy for differentiation.

I begged her not to do it. I even refused to design her logo and signage, hoping this would discourage her. But this was her dream. She did it anyway.

It took about eight months to run through the $100,000.  I got a huge knot in my stomach when I drove by the location and saw the going-out-of-business sign. From the very moment she entered the market it was already too late. But she wasn’t willing to ask the dumb question … or accept the cruel, dream-killing answer.

A killer (Facebook) product and innovative (Domino Pizza) strategy can pave the way into existing markets and propel you past the competition to a position of success and dominance. That’s what we all hope for, isn’t it? That’s the essence of the dream  we all share. But the process must start with a realistic assessment of our chances for success. We need to ask the dumb question. And if the answer is not favorable, we must learn to move on.

 

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January 12th, 2012

A New Year / A New Approach

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A New Year Does Not Necessarily Dictate A New Approach

New, fresh, different, innovative … these words are frequently thrown around at the beginning of each year to set the tone for strategic change. In a fast-moving, ever competitive marketplace, it seems counterintuitive, maybe even downright sinful, to advocate a plan that maintains the status quo. And yet, in many instances maintaining the status quo is exactly the key to achieving product growth and protecting your position in the marketplace.

Most everyone remembers the New (and improved) Coca-Cola.  Back in the late 1980s, Coke opted to reformulate its legendary flagship Original brand in an effort to compete more effectively with its upcoming market rival, Pepsi-Cola. Just after World War II Coca-Cola’s flagship beverage held a market share of 60%. By 1983, however, due to Pepsi’s aggressive marketing and youth appeal, Coca-Cola’s market share had declined to under 24%. Something new, fresh, different and innovative had to be done; not because it was a new year, but because the competition was beating them into the ground.

 

My first point:

Don’t change for the sake of change or for the sake of the calendar or the warm and fuzzy, avangard feeling change might bring about. New for the sake of new is usually a mistake. Change should be a necessity based on market trends and perceived competitive forces. The nasty national backlash to Coke’s replacement of its Original beverage with the New Coke formula is legendary and infamous and a wonderful lesson in the value of a “functioning” status quo.  If it’s not broken (The Original Coke formula was not broken), you don’t need to fix it.

What if it is broken and you try to fix it the wrong way. This is precisely what Coke did, trying to fix the formula rather than the old folks image and marketing techniques. So did Bank of America with its new $5 a month debit card fee, a sleazy way to gain more revenue for the same old service. So did Netflix when it temporarily eliminated its popular $9.99-a-month DVD rental and unlimited streaming plan, a false calculation that users had nowhere else to go. The outcry from customers was so vocal and visceral; each company was forced to rescind its initial decision.

 

My second point:

You’re not perfect. You’re going to make mistakes. But don’t wait too long to clean up your mess. Don’t be like President Nixon and hold on to a false reality. Be like President Clinton.  Pull out the Kleenex, cry real hard and come clean. Re-strategize based on an updated perspective and cautiously implement a new plan.

Most often, added value is better than raising prices, especially in this economy. You can get more revenue. But you might have to shine up the tires, install a satellite radio in the dash and replace that Daewoo decal with a Lexus decal. Then watch the additional revenue roll in.

 

My final point:

If change is necessary, keep it in sync with the needs and expectations of your customers. It’s the critical process of product differentiation. If your candy bar is both chocolate and peanuts, why upgrade the peanuts if 80% of your customers say they buy it because of the delicious chocolate? Customers rule. Netflix found that out the hard way.

You may very well have to make changes this year. But do it because of the customer and not because of the calendar.

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December 27th, 2011

Incompetence Is Embedded Within Your Organization

Yes, Incompetence Is Embedded Within Your Organization.

No, It Will Never Completely Go Away.

I see at least three reasons why incompetence survives within most organizations.

First, humans are multi-functional; they do well in some areas and poorly in others. Sometimes, they are thrown into situations where their skill set is not a match. But because of their previous successes, or because no one else wants to do that job, they remain in place as an incompetent operator trying to feel their way through.

 

Secondly, and this is tied closely to the first example, some people are more proficient at socialization than actually getting the job done. How many times have you seen an under-qualified team member move up the ladder based on attending all of the boss’ birthday parties, playing golf with the decision-makers, and brown nosing in general? Their incompetence is tolerated or overlooked based on their popularity. Remember the kid that brought the teacher an apple each day? These individuals have learned to compensate for ineptness on an emotional level, which is actually more effective than analytics and metric-based results.

Finally, incompetence is sometimes tolerated because the organization is not capable of measuring competence. A small company may not have the personnel to oversee the IT guy or database specialist in order to identify the areas of weakness. The stuff is too complicated and the IT guy says it’s an old server and not his fault the computers keep going down.

Although incompetence can be minimized within an organization, it will never completely go away.

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December 17th, 2011

A Brutal End-of-Year Self-Assessment

 

I attended a special needs Christmas party last night and left with a knot in my stomach. Most of the people looked like this.
 
 

I rode home thinking about all of the bellyaching and complaining I had done this past year. “Why is this month’s royalty check so small? Why am I not yet #1 on the chart? Why don’t these people have the decency to return a simple phone call? Who blocked the street off? Why is gas so high? Why did my friend lie? Why did my kids disregard my instructions?”

I just took for granted I’d wake up in the morning and be able to think and see and have the activity of my limbs. No one had to wheel me around or take me to the toilet. I just assumed God would bless me to deal with bigger problems than that.
Sitting there last night I was reminded there are no bigger problems than drooping over and slavering down the side of a wheel chair, hoping someone will be kind enough to feed you, and trying to keep your bowels in at least until the program is over.

“Oh Lord, forgive our arrogance, forgive our assumptions, forgive our ungratefulness. Bless those who have real problems. Touch them with your mighty hand of mercy, in the name of Jesus … Amen.”

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August 20th, 2011

How “High MACH” Small Business Owners Abuse Power

Empowering others puts forth the assumption you have power and are in a position to relinquish it or use it to give others the knowledge, tools, and support to carry out their assignments. By owning the company, you do have some power. But it is not necessarily the most effective kind.

Machiavellianism, named after Niccolo Machiavelli, the 16th-century Italian philosopher who wrote The Prince, is a term social psychologists use to describe a person’s tendency to deceive and manipulate other people for their personal gain. Their approach to gaining power is “by all means necessary”, which may include lying, cheating, bullying, sabotaging, and even withdrawing from the process. Back in the 60s, Richard Christie and Florence L. Geis developed the MACH-IV personality test to help hiring mangers identify individuals with these unwanted tendencies. But who’s responsible for testing the owner?
For all practical purposes, a Machiavellian owner represents a worst case scenario. Inside the bureaucratic hierarchy of large corporations, there are some checks and balances that prevent a high MACH personality from completely devastating his coworkers. But as a small business owner, he represents the ultimate source of checks and balances, with free reign to devastate the lives of employees as he sees fit. In most instances, the high rate of turnover leaves the owner surrounded by yes-men with limited career options and a willingness to accept the abuse. These reward-oriented workers would never question his conduct or rebel in any way.

Machiavellian owners have power. But this is definitely not the kind of power you want.

Reverent power is the ability to influence others because they identify with and respect you. Reverent power attempts to motivate and inspire rather than control. This inspiration is most effective when managers take the time to know their employees, that is to say, their personal preferences, goals and aspirations.
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July 8th, 2011

Infighting, Turf Wars and Self-Preservation

The advent of management systems in the 20th century was a much-needed innovation to control masses of workers, unstable resources, complex assembly lines, and distribution channels never seen before the industrial revolution. Managers were viewed as heroes who came in and developed systems to tame the unruly beasts known as business organizations. Visionaries like Henry Ford and John D. Rockefeller created complex metrics and automated systems to harness the maximum production of man and machine.

But with these systems came the ugly by-products of bureaucracy, political entrenchment and self-perpetuation. More and more, managers became bureaucrats making decisions based on their private agendas and instinct to survive.

It was a classic case of the dark side of human nature taking over? People routinely rejected the call to give up power in order to usher in a more qualified leader or superior plan of action? No one was willing to go quietly into the night? Only one thought prevailed and that was the ability to survive at all cost.

A composite of this survival mentality can be seen in the current gridlock between the White House and both Houses of Congress. Everyone knows the systems of healthcare, education and tax assessment are broken. But with so many vested interests and political agendas, how can enough people come together to fix the problem.

Look at it this way. If 50% of your campaign contributions came from the beer companies, what kind of selfless, high principled Ralph Nader crusader would you have to be to vote for a ban on alcohol?

I can hear you now. “Distinguished ladies and gentlemen of the House of Representatives, my humble recommendation is that we adjourn for the weekend and settle our minor differences over an ingenuously drunken delectation of Budweiser mini-kegs.”

So it has become with managers, drunk on power within the corporations. Territorial wars are being waged, power struggles continue to escalate and precious human capital is being expended on issues which have nothing to do with the efficiency of the organization.

I mentioned the Hershey’s Corporation’s entire Board of Directors resigning. This is an excellent example of the ongoing power struggles that persist in most large organizations. To make a long story short, the Hershey’s Board of Directors, along with the CEO, is responsible for running the company. But the charitable trust, the Hershey’s Trust Board, has veto power over everything the corporate board does. Back in 2002, Wrigley offered to buy Hershey’s for the sweet sum of $12.5 billion. The CEO and corporate board said yes, but the Trust Board turned it down. And then the Trust Board proceeded to announce publicly that it was unhappy with the corporation’s earning performance.

Hey, isn’t this the same corporation that garnered a $12.5 billion buyout offer with a hefty premium over the stock price, an offer you “Trust Board” people just turned down?

Another nasty fight broke out when, against the wishes of powerful board members, Hewlett-Packard acquired Compaq Computer in a $25 billion stock swap. When the dust settled, Carleton “Carly” Fiorina, the first woman chairman and chief executive of HP, was forced to resign.

There are thousands of stories of power struggles and infighting throughout corporate America. The problem is, with the hyperactive, accelerated volatility of the marketplace, these unproductive management practices have placed respective companies in jeopardy.

Globalization, deregulation, accelerated convergence, protracted litigation strategies and rapid technological innovation have combined in a perfect storm of destruction to wipe out formidable, well known, highly-praised market leaders in the blink of an eye.

Perhaps, you remember when Blockbuster Video was king of the hill. Back in 1985, using a Wal-Mart style brick and mortar business model, Blockbuster entered the video tape and DVD rental market, quickly driving many of its mom-and-pop competitors out of business. By 2004, Blockbuster was a cash cow with 9100 stores in 25 countries, and a commanding market share of 40%.

Then along came a spider and sat down beside her. Its name was Netflix which had developed a “cool” Xer-friendly process by which customers could sign up online for a monthly subscription and have the movies delivered to their door. With the population growing more time-starved and internet credit card transactions becoming more trustworthy, the marketplace opened up to a viable alternative to visiting physical locations. Years earlier. change and diversification of product deliver had been discussed within Blockbuster’s strategic brain trust. But opposing views created a stalemate and nothing was done until it was too late.

The primary problem Netflix created for Blockbuster was the elimination of $250 million in late fee revenue to which the company had grown accustomed. It also put pressure on Blockbuster to create an online interface equal to or better than Netflix’s user-friendly approach in delivering the same product. Even with $3 billion in revenue in 2009, Blockbuster’s outdated business model was still in deep water.

Fast-forward to 2010:

Dearly beloved, we are gathered together today to announce the bankruptcy filing of Blockbuster Video. Those of you who spent so many years paying late fees and standing in line, waiting for a movie to come in, will have to find some other form of amusement to occupy your time.

I know what I’m going to do. I’m going over to Washington Mutual Bank, draw some money out of my account and go to Circuit City to buy me some VCR movies. The GM dealership is on the way. Maybe, I’ll stop by to see if the new Saturn Vue has come in, or maybe test drive a new Pontiac G8. All that shopping is sure to make me hungry, so I’ll waltz into Steak & Ale to have a glass of that upscale Charles Shaw Merlot 2001 and devour one of those great salads.

You get the picture. In these turbulent times, you are here today and gone tomorrow … no, gone today.

This may come as a shock to you, but the primary reason for these ongoing internal confrontations and non-negotiable stalemates is the classic battle between innovation and status quo. There are hundreds of books on change management because the implementation of change in an organization can be a company’s worst nightmare.

Within the bureaucracies that have built up over the years, the flashpoint is not about who’s right and who’s wrong, or what’s best for the company and what’s not best. Instead, it is about who will benefit and who will suffer.

If I manage the East coast units and you manage the West Coast units, and the company decides to merge all units, who will be the manager left standing? And if it’s not me, how will that impact my career path and salary?

Let me rehearse my recommendations out loud:

I don’t think it’s a good idea.

It doesn’t make sense for our operation.

The timing is not right.

It’s going to cost too much.

It’s going to cause confusion and send the wrong signal.

We need to study it a bit longer.

As an entrepreneur, it’s important you recognize how change will potentially be received within your organization. There is a fear factor, followed by an effort to discourage or even sabotage the new agenda. Don’t take it personal. People are just trying to survive.

Resistance to change extends far beyond the business arena. Austrian economist Joseph Schumpeter refers to a century old cultural phenomenon that perpetually opposes change, especially change based on accelerated growth. It’s called creative destruction. It’s the belief that as the creative process unfolds, rapid change always destroys the old to make way for the new. In that process, it detaches us from our roots and those values, priorities and beliefs that made us who we are.

The industrial revolution is an excellent example of this phenomenon. It unraveled our agrarian society, displaced family units, elevated corruption and greed, took mothers out of the home and into the factories, polluted the air, drove up prices and in essence, changed the world forever. But in the process, it made us the most powerful nation in the world.

That is still the most profound argument against using creative destruction as a justification to resist change. We simply cannot ignore the end results. Whether we agree with it or not, change has always been the engine that gave us the potential to sore like eagles, to be better in the future than we were in the past.

But change is a two-edged sword. It can reward as well as destroy. In fact, most effective change cannot be implemented without creating casualties. Thus, we find ourselves face to face with the original dilemma that continues to polarize large organizations. If change is implemented, who will be left standing? Who will the casualties be?

Pressured by an evolving marketplace, and desperately needing innovation in order to survive, most small businesses have no choice. They must constantly embrace change. This mindset, along with the minimal bureaucracy through which change must flow, gives small businesses a strategic advantage over large corporations. Remember, the more layers of management within an organization, the greater the chances change will be suppressed.

In his book, The Innovator’s Dilemma, Clayton M. Christensen explains how difficult it is for innovation to reach the top. Resistance, especially in the United States, is built into the current management apparatus. And with capital in the bank, there is no need to correct bad market assumptions right away.

With small business organizations, however, innovation has a much better chance of surviving and actually being implemented. The bureaucracy that lobbies for the status quo will not have been firmly established in your company. This gives you a competitive advantage to receive, evaluate, and implement game-changing strategies before large business can capitalize on the opportunity.

Based on what the deep-thinkers are saying, are all businesses and management systems in trouble?

The simple answer is yes, to varying degrees. I’m sure it would be difficult to envision Google, with a stock price hovering above $525 per share, being in trouble. But eighteen years ago, Blockbuster was where Google is now. The prevailing wisdom suggests all companies have points of vulnerability. We wake up in the morning and hear on the news that someone has created a Google worm which has permanently destroyed all of its servers and stolen all of its proprietary secrets. Then what?

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