As I was perusing my online news sources, I came across this headline:
While we’re watching “creative destruction” at its best/worst playing out in front of us, I wonder how many small and mid-size business owners are making the very same mistakes as GM and Chrysler have.
Stories of success and failure are always written in hindsight – and in hindsight, the cues of success and failure are obvious. It’s easy to see where the auto companies screwed up. It’s easy to compare them to Honda and Toyota, whose sustainability is not being questioned.
But, I wonder, how would you look under the glare of the microscope that the autos are under? Are you moving fast enough – or are you incrementalizing like the auto manufactures did?
The absolute worst thing you can do today is to make incremental changes. The market will not respond to incrementalization. You must act big and move boldly. You must accept today for what it is. Determine where you business is now. Determine who are most likely to be your best customers tomorrow and focus maniacally on solving their problems better than anyone else – and I mean anyone else. Discover which revenue streams are taking more resources than they are worth, and reallocate your resources to those areas of revenue that will be profitable tomorrow. You must train your people to perform differently – and that means increasing their business acumen.
If you fail to move fast enough, you don’t have to worry about the President commenting on it – but then again, you probably won’t have a golden parachute like the auto executives have either.
Kelly Spors, the Wall Street Journal Small Biz columnist, is leading a panel A Small Business Survival Guide to the New Economy. She sent out via twitter a request for good questions to lead the panel off with. I recommended, “What can a small business owner do to create confidence for themselves and their employees when soooo much is uncertain?” Kelly liked the question and turned it on me. Given that twitter only allows 140 characters in response, I thought I’d reply via this blog.
- Remember that life has always been uncertain and that today we have only increased our awareness of uncertainty.
- Keep your focus on the future – not on the past. When I was a financial advisor, I used to say that every day you make a buy/sell decision. It doesn’t matter where your stock was, it matters where it is. The key is to focus on the actions that give you the best possible chance for better results in the future.
- This leads me to my third, and by far, my most important, point. When times are difficult, focus is the key to success. Narrow your focus and expand your yield. Prioritize – don’t work on more than five things; and have one area clearly delineated as the most important. Keep a warboard in front of your entire company. Focus on doing something important every day, even if it means you take less action.
- Finally, report the news to your people. Small business owners (and even larger business executives) mistakenly believe that hiding bad news from employees keeps confidence up. Trust me, if you leave your people to assume reality; their assumptions will be far worse than reality. When everyone know what is going on, they can work well together.
What would you do?
As readers of this blog know, my father passed away on Thursday, March 19th. I’ve gotten so many wonderful responses to the post about my dad – both online and off – that it has blown me away. A post I wrote very much for myself seems to have been more than that.
Thank you all for your love, support, and wishes – they mean more than I’ll ever be able to explain.
I work very hard to ensure that this blog focuses on the issues facing fast growth businesses. To that end, I stay away from personal issues and thoughts. Today, I’m making an exception.
This morning, my dad, Philip Gardner Davidoff, passed away. I love my dad. And I owe my mom and my dad for giving me the inspiration to believe that a kid from Bowie, MD could change the world.
My dad wasn’t a role model to me in the traditional sense. He taught me, through word and deed, that I should follow my own path – not his. My dad instilled in me that anything was possible, that one person could fight city hall, and that it didn’t matter how much money you made unless you went to sleep that night comfortable with who you are and excited about what you are going to do the next morning.
Dad showed me that you should follow your dreams – even if that means risk. My parents started a travel agency before most people knew what a travel agency was. He left a comfortable, secure job with the government to work at the agency; and he did this when the world was in a recession that, in my opinion, was worse than what we’re dealing with today.
Dad also taught me the value of original, contrarian ideas. Dad wasn’t easy to get excited (though when he got excited there was no stopping him). He was understated and really smart. To get him engaged in a conversation meant you really had to bring something to the table. Dad showed me that when you have a powerful idea, you owe it to the world to do what it takes to bring it to life – even if that means some people will not treat you well in the process (Mom taught me this too).
I wasn’t the easiest kid to deal with. As an average student with a micro attention span and a little bit of attitude, Dad did for me the most important thing any parent could – he gave me the confidence that no matter how badly I screwed something up, no matter how badly I failed; Dad and Mom would be there accepting me for who I was.
Dad was instrumental in giving me the confidence to doubt the world, set a course, and pursue it. Every post you read here is the result of what Mom and Dad do for me.
I wrote about Dan Sullivan’s advice yesterday. He has another piece of advice that I work everyday to live by. Dan says that “you should always make your future bigger than your past.” I remember the evening I talked to my Dad about this. We discussed that always meant always – that on the day of your death you future can be bigger than your past, if; IF, you inspire enough people to advance your journey.
Dad, your future is bigger than your past. I miss you.
I heard some of the most powerful advice for any growth oriented executive or salesperson:
Just because you can’t sell anything right now, doesn’t mean you can’t be useful.
The advice came from Dan Sullivan, the founder of The Strategic Coach – a lifetime focusing program for successful entrepreneurs (on a side note, The Strategic Coach is a great program. If you’re not familiar with it, you should check it out). The advice really hit the mark. I often say that the mark of a great salesperson is one who can “sell” when there is nothing to “buy.” Dan said it better.
The best companies, and the ones who are going to get through downturns stronger, are the ones that focus on being useful to their clients, customers, and prospects first, with making a sale coming in a distant second. The amazing thing is that the more you focus on being useful to someone, the more often, and the easier, you make sales.
The Wall Street Journal has an interesting take on Obama’s recent small business stimulus plan. My comments are at the end of the article. Personally, I think the plan is off the mark. What do you think? Leave your comments here or directly at the article.
We’re in a war for business today. Any reader of this blog knows that I am by no means a “doom-and-gloomer,” but I also don’t want to downplay the urgency and crisis nature of where we are today, especially for small and mid-sized business enterprises (SMEs).
I just got off the phone with a reporter from The Wall Street Journal. We were discussing Obama’s recent “small business stimulus plan” and just how much impact small and mid-sized enterprises (SMEs) were going to fuel any economic and job recovery we would see of the next year to a year and half. The gist of my comments was that if SMEs aren’t the engine, we’re in (what shall I say) deep kimchee.
After hanging up, I realized how much the executives of SMEs are contributing to their own problem. Reviewing a client’s marketing materials, the only thought that came to my mind was: wow, what a reasonable – and BORING – argument. I’ve noticed that reasonable and boring often go together. Seth Godin talks about this all the time. He points out that it’s better to be hated than it is to be liked. The objective, of course, is to be loved; but if you’re not doing something that can be hated – it’s highly unlikely that you’re doing anything worthy of love.
I guess the underlying cause is humility, but I can’t get over just how difficult it is for SME leaders to make the bold statement and to take the bold positioning they need to take. It’s as if SME leaders don’t want to be thought of as crazy. Though I know of nothing great that was ever initiated by someone that wasn’t, at least, a little crazy. Here are some of my crazy role models:
- John F. Kennedy (Going to the moon)
- Richard Branson (A record company, an airline, an insurance company, and hundreds of other companies all under the banner of Virgin)
- Sam Walton (A nationwide network of big box discount retailers)
- Bill Gates (A PC on every desktop)
- Warren Buffet (If you think Buffet wasn’t crazy, just check out the restrictions he put on people who wanted to invest with him early in his career)
- Steve Jobs (A thousand songs on an MP3 player)
- M. Night Shyamalan (I see dead people)
Here’s the point – stop making rational arguments, they are not enough to get through the noise and fear. Embrace the very insanity that led you to start or run an SME to begin with. Be bold. Scare yourself and your staff.
Then work like hell to make it happen!
If you do, you’ll make my role model list. Who are your crazy role models?
I’ve always been a fan of innovation. I firmly believe that innovation is at the core for all value creation, and that any business that fails to innovate is destined to the ash heap of history. When I speak to groups of CEOs, I regularly talk about the importance of innovation. As a result, I’ve learned that there is very little understanding of what innovation really is. Too often, innovation is considered with new product development or, even worse, new hi-tech applications.
Last week, I came across a compelling article about The 12 Different Way for Companies to Innovate. You should check it out – it’s must reading for anyone who wants to harness the power of innovation for their business.
Here’s some of my favorite excerpts (with my comments in green).
- But what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have mistakenly narrow view of it. They might see innovation only as synonymous with new product development or traditional research and development. But such myopia can lead to systematic erosion of competitive advantage. (Right on the mark)
- Viewing innovation too narrowly blinds companies to opportunities and leaves them vulnerable to competitors with broader perspectives. (Again, right on the mark)
- In actuality, “business innovation is far broader in scope than product or technological innovation, as evidenced by some of the most successful companies in a wide range of industries. Starbucks Corp., for example, got consumers to pay $4 for a cup of latte, not because of better-tasting coffee but because the company was able to create an experience referred to as “the third place.” (This is a great example that executives need to grasp. Starbucks didn’t “invent” anything, but they were one of the most innovative companies in the world – and certainly in their market.)
- Conversely, technological innovation in the laboratory does not necessarily translate into customer value. (Simply put, every great innovation starts when someone looks at the world from the standpoint of the customer and identifies gaps. Everything is just guesswork.)
- To avoid innovation myopia, we propose anchoring the discussion on the customer outcomes that result from innovation, (Hallelujah!) and we suggest that managers think holistically in terms of all possible dimensions through which their organizations can innovate. Accordingly, we define business innovation as the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system. (If it doesn’t create value it’s not worth doing.)
Now my favorite takeaway:
Business Innovation is About New Value, Not New Things.
I’m seeing it all over the place – desperation. The quiet desperation of an entrepreneur or salesperson who needs sales. Who could blame them? It’s a difficult time for everyone (even those who are growing – and there are plenty of businesses that are growing); and an almost impossible time for some.
Desperation is dangerous for many reasons. Among other problems, desperation begets desperation and repels opportunities. The biggest danger is that it creates a disabling form of myopia that kills productivity. Desperation leads to panic, the brain gets overwhelmed with adrenaline, and the first area of the brain to become dis-impaired is executive function where judgment resides. The ability to prioritize and focus also disappears and this further reduces confidence (which was the original cause of the desperation); and thus a vicious-cycle begins.
Because adrenaline is running high, we become more comfortable “doing things,” and we focus on more and more activity. Because our judgment is impaired, we are neither able to think through the implications of the ideas nor are to focus on effectively executing the good ones. The mind focuses more on “what” we are doing and “how much” we are doing; rather than “why” are doing something and “how well” are we doing it. Because we keep piling more on the plate, we under-allocate resources to a wide variety of actions, under the rationalization that “we don’t know what will work or when, so we need to put it all out there.” The end result of this is that we run around faster and faster and get absolutely nowhere – if we’re lucky (what happens even more frequently is we end up worse off than we started).
The effective approach (albeit much harder – physically and mentally) is to focus on progress rather than activity. To do this, we must – MUST – disconnect from our “problems.” We must work with them as if they were not ours. We must deal with reality and be completely honest in all aspects of our analysis (one of my favorite quotes is, “All Progress Begins With Honesty”). It is far better to eliminate activities and over-allocate resources to them, under the premise of “Do one thing, do it well, then do the next thing.” It requires patience to allow change to occur. At the risk of using a trite analogy, growth starts “below the surface” and if you don’t tend to it, you’ll never see it. This approach requires deliberate, focused action, and effective judgment.
I get how difficult this is, but it’s important to remember that the highest value words to deal with difficult times is “No, we’re not going to do that.”
I finally had some time to catch up on some reading and I finished one of my favorite annual publications – Warren Buffet’s annual letter to shareholders. I realize that much has already been written about his letter and I’m not writing to reiterate any of what has been written about the letter.
Interestingly, the most insightful, important insight (IMHO) for business owners got not comment (at least that I saw). In the letter, Buffet shared his four prong focus:
In good years and bad, Charlie and I simply focus on four goals:
- maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;
- widening the “moats” around our operating businesses that give them durable competitive advantages;
- acquiring and developing new and varied streams of earnings; expanding and
- nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.
With the possible exception of point 3, I can’t think of a more succinct, direct and effective filter for management decision-making. (My isssue with point 3 is that it is easily misunderstood by businesses and causes them to diversify their business focus, Berkshire Hathaway is a holding company that owns 60+ highly focused businesses).
Do you want more growth? Give yourself a grade on these three critical pieces to success:
- Improving your financial strength;
- Creating and reinforcing a sustainable, unfair competitive advantage; and
- Recruiting, retaining and recreating great people to support great process.
Now, write down the most important action you can take in the next 90 days, and the next year to improve your grade in each area (or to sustain ‘A’ performance for areas where you gave yourself an ‘A’).
So tell me, what are you going to do?
Steve Yastrow‘s newsletter today was so on the mark that it’s scary. If you are at all serious about succeeding today and in the future, read his article now. Steve talks about two types of people: the hunkerers and the recalibrators.
He accurately points out that the only people with a chance of survival, let alone success, is to recalibrate. He shares how to do this and provides several resources that I personally vouch for to help you recalibrate.
Stop what you’re doing and read this now – you’ll be glad you do.
It should be no surprise to readers of The Fast Growth Blog that I am not a fan of mergers. Today’s latest “we’ll get stronger by merging” announcement between Merck and Schering Plough prompts today’s thoughts.
While it’s the big mergers that get the news, I’m hearing more and more of my clients (Imagine works exclusively with small and mid-sized business enterprises (SMEs)) float the idea of mergers as a way to get through the downturn in the economy). I’m hearing things like:
- “I had a conversation with one of my competitors and we got to talking about how we were dealing with the downturn. We thought, ‘Hey, why struggle when we could combine.’”
- “We’ve been thinking about how if we found a couple of companies that complement what we are doing, we’d be able to go-to-market more powerfully.”
- “You know, I’m getting frustrated working with limited resources. I’m really interested in what I could do with a ‘larger platform.’”
These all sound like logical, reasonable thoughts – worthy of consideration. They’re not. Why? Two reasons:
- Mergers rarely work. (I define “work” as after everything is said and done – do the resources (time, money and energy) that go into making the merger work produce better results than the same amount of resources going into growing the company/companies organically. Simply put, do I make more money for my resources after the merger.)
- All of the above reasons for a merger come from a position of weakness. The ideas are prompted because of frustration and struggles – not because of success and strength.
While I’m certainly over-simplifying (and possibly overstating) let me share the advice I give all of my clients who are considering a merger.
Never merge from weakness. Mergers from weakness fail 95% of the time. If you’re going to merge, only merge from strength. Mergers from strength only fail 60% of the time.
Now, I understand (and I hope you do as well) that no merger was ever undertaken where the parties merging didn’t believe it would succeed; yet most don’t. So realize, no matter how good the rationale for a merger is – the vast majority fail.
The reason mergers fail (especially for SMEs) is because they are a distraction. Making a merger work requires significant time, energy and focus to be spent on the internal areas of the company – not on the market. Additionally, if you want to find out what every weakness of a company is, merge. You’re sure to find them after the merger takes place.
Companies that are in a very strong position are capable (at times) of being distracted. Companies that are not firing on all cylinders cannot afford the distraction. They must be maniacally focused on the market – and nothing else.
Once you’re strong, feel free to consider the merger. Though my experience proves that once you get strong, executives no longer feel the “urge to merge.”
I’ve been thinking a lot of the title of a book. Three months ago on a trip to visit a client in Buffalo, I came across Jack Trout’s new book, In Search of The Obvious. (Please note that I have not read this book and while I like much of what Trout has written, I’ve also taken him to task for some old thinking.) While I haven’t read the book, I’ve been obsessing about the concept of the obvious.
Here’s what I’ve come to understand. Experts hate (HATE) obvious, because, well, it just doesn’t require any expertise to understand. Any six-year-old can understand the obvious. There’s no nuance in obvious – and experts love (LOVE) nuance. Here’s how Dictionary.com defines obvious:
I guess it violates cocktail party manners to “lack subtlety.”
Since I’ve been thinking about obvious, I’ve become shocked by just how difficult salespeople and entrepreneurs make it for people to understand them. We use complex words (too many and too embarrassing to mention), complex drawings, and complex concepts to highlight what need to be obvious conclusions.
Here’s the thing, unless you are selling a pure commodity to a fundamental buyer, your buyer has a lot more in common with a six-year-old than an expert. The more obvious the better. Obvious doesn’t mean stupid – quite the contrary. Obvious requires genius. Obvious is different. Obvious requires that you occupy the mind of your buyer, that you make your buyer feel understood. Obvious means you care.
Increasing sales and building a business have very little in common with cocktail parties; so drop the nuance and the subtlety and be obvious. It’s the key to fast, sustainable, profitable growth.
Okay, I think the world is beginning to take itself too seriously. It’s time to relax, let up, turn off the TV, play, and have some fun. If you’re not feeling the type of forward momentum you would like, here’s an idea that will get it started: do something dramatically different. Change it up.
I’ve been on a couple of calls with clients and prospects discussing how to charge their pipelines. The most frequent complaint for an idea – “Well, we’ve never really done that here.” Right – that’s the point.
The second more frequent complaint – “How do we know that will work in this environment?” We don’t know, but we do know that what you’re doing isn’t working.
Not to sound off a rant, but I feel as though we need to be reminded of three critical quotes (the first two from Albert Einstein, the last from Thomas Edison):
- The definition of insanity is to do the same thing again and again and expect a different result.
- We cannot solve the problems we have at the same level of thinking we were at when we created them.
- I did not fail – I successfully found 2,000 ways that did not work (in response to failed attempts on creating a filament lightbulb).
What’s the point? Stop thinking, moaning, or analyzing. Get out there and do something fun, exciting – and different! Who knows, even if it doesn’t work, you may just get the breakthrough you were looking for.
Everyday, I see companies and salespeople in constant “convince mode.” Why should you buy from us? How are we better than our competition? How are we different?
Every time, I see these claims, these “we are better” value propositions, I think to myself, “why do salespeople and selling organizations make things so much more difficult than they need to be.”
Think about this for a moment. If you had 10 ideal prospects (as defined by you) and all 10 of these prospects made the right decision (as defined by you), the right way (as defined by you), how many of them would buy from you? Take a moment and answer the question. No, it’s not a trick question.
The right answer is:
That’s right, all of them.
The moral of the story:
- Stop trying to convince people to buy from you, and instead
- Teach them how to make the right decision,
- The right way.
When you take these three actions, you’re no longer working against your buyer, but with them. Believe it or not, sales happen much faster this way.