Archive for category 14 Point List
Talking money for money with a potential investor
Posted by Steve in Capitalization, Exit Plan on March 1, 2010
Money for money? An investor is going to put money (or something else in your company) and then get money (or something else out). People start throwing around fancy terms like stock, warrants, debentures, etc. Okay, maybe some of those terms are not that fancy, but I like to keep it simple.
What can the investor give you?
What can you give the investor in return?
It boils down to this:
1. What and when do they pay in?
-cash
-effort
-stock in something else
-preferred pricing
-goods & services from another company free or at preferential pricing
2. What do they get for it?
- stock
- sell at IPO
- sell earlier
- when do they get the stock
- can they sell the stock back to the company
- can they buy more stock (warrants)
- preferred pricing on product
- cash out
- other rights
As a reminder, it boils down to these basics. Before you get too fancy, find out what they can provide and what they want! They means investor.
Fitting in at work
Posted by Steve in For Job Seekers, Leadership on February 24, 2010
How important is fitting in with your workplace culture? Its vital. If you do not, then you usually lose your job. And, if someone is not fitting in, should the employer do something? If the odd person is causing problems that prevent the group from working effectively, usually they get rid of that odd person.
An article on CNN, Good job, lousy coworkers, does not address these questions, but rather shows how employees just did not fit one place but fit somewhere else. The incidents were:
1. Colleagues did not want to have lunch with the person or do any outside activities with the person.
2. The employee in question did not participate in extracurricular activities.
3. An employee was older with a family in a company with mostly 20-something singles; and left for the evening to be with his family. The young people centered their life around the company and resentment built up.
4. One employee was very young compared to his coworkers and felt awkward and out of place.
5. A new manager jumped into a situation with everyone creating drama that was counterproductive.
6. The last person could not spout any new ideas as they were all shot down; everyone resisted change.
Given that I do not know the particulars of each situation and in each situation the employee moved on to bigger and better things. However, one thing stuck out. Each one of these situations is common in most companies, and the successful people learn how to leverage the situation, manipulate the people, or move on quickly.
In most of the situations outlined clearly the other parties were being jerks, fearful, resentful or just stupid. In ALL the situations, the employee could have done something about it. Here is my take on each one. You can read about them here: http://money.cnn.com/galleries/2010/news/1002/gallery.workplace_culture/index.html
1. Your colleagues are not your friends and buddies no matter how much they act like that to each other. They do not want to play with you? Invite them to lunch with you and make friends towards them, and do not expect them to initiate. You are probably the outsider. If they still do not want to be friends, then remember, they are colleagues and you are a professional.
2. Participate in extracurricular activities. A big part of getting things done in a company is to have people respect you, not fear you, and be comfortable working with you. This is best done in non-work environments.
3. The young people liked to play video games during their lunches. Join them sometimes. You have a family and they do not; but that does not mean you cannot try to make friends with them in off hours.
4. When you are very young compared to everyone else, keep quiet and listen. Learn. Find a mentor. Figure out how to be helpful. Support and give to others.
5. As a new manager, you are a leader. You do not fraternize yourself with everyones drama. When you realize this is a problem you set the tone right away that people need to get along and focus on the job. If it starts to interfere you need to address it one-on-one. The worst offenders, if it is interfering with work, are fired or transferred if possible.
6. People resist change out of fear for losing their jobs, having to work more for less, or just having to face the possibility of failure. Find out what they want to do to be successful and address that. What are their goals for the year and how can your ideas help them?
In general, here are the rules:
1. Keep your mouth shut. If you really do not like it there, then quietly look elsewhere.
2. Find something early on that you can do that can contribute to the company.
3. Offer friendship, assistance, and smiles. Do not demand it or require it comes to you first.
4. Figure out the culture and do your best to adapt to it and use it to your advantage.
5. Colleagues are colleagues and remain professional at all times. You can become friends, but remember, they are your colleagues.
6. If you are in a role that people work for you, act like a leader and not a manager. If you do not know the difference then learn.
8 Characteristics of Success
Posted by Steve in For Job Seekers, Leadership on February 16, 2010
This week a lot of news about TED. If you are not aware of it, TED is a series of presentations about cool ideas.
That is it. If you have a cool idea you present at TED.
This one is very appropriate for this blog. What is the SECRET of success. Richard St. John realized that he was at a conference of successful people; so he asked them. He asked 500 people and compiled the data.
His presentation is here: http://www.ted.com/talks/richard_st_john_s_8_secrets_of_success.html..
It is well worth the three minutes.
What leads to success?
Passion
Work (that is fun)
Focus
Persist
Ideas (that are good, which leads to )
Good (be good at something, get to be the best you can be at it)
Push (keep pushing yourself, just like your Mom pushed you)
Serve (remember, you are there to serve others, your customers and your employees)
This combination of eight characteristics leads to success. At least according to Richard St. John.? I agree.
Just makes me wonder what was number nine?
Getting Voice of the Customer for Web design
If you only had a few questions to ask a client prior to making a recommendation for their website what would you ask?
I recently found myself in this situation. I am assisting a group of people in creating their new website by developing the design document. Their business has multiple divisions and each division in located in a different part of the Dallas Metroplex. Furthermore, while they have a commonality that brings them together (the company), each division owner has a certain autonomy that allows them to do what they want.
Given a short amount of time and a lot of people to interview, what questions would I ask? I hit upon just a few:
- What is the mission statement of the organization?
- What is your mission statement as it fits into this organization?
- Who is your audience?
- How do you use the web site, and how would you like to use it?
- What would you like to see on a web site?
- Who will maintain it?
Very simple questions. The first few questions puts me in the context and mindset of this particular person. Questions four and five get into the type of product they want to see. Finally, question six really tells me how interactive they will be with the web site. Combined, this tells me how they see the web site as an extension of themselves.
The answers were very surprising.
I could ask a lot more questions and will probably follow up with them. The point of this exercise is to get started and understand the customer and their fundamental approach. As any company developing a new product, you need to get into the mind of the customer get the voice of the customer in your design. This is one technique I am using now to hear their voice.
Facts or emotion
You can either go with facts or emotion. The problem with using too many facts is that people tend to get bored, forgetful, and unsure of how to digest all the data. As Seth Godin writes in his article, Too much data leads to not enough belief, too much data crowds out faith. Rather, too much data overwhelms and causes the listener to stray.
Going with emotion leads to the wrong choices being made because the facts are not really thought out.
If you are the persuader, then using facts or emotion does not matter as long as you get your idea across and people to your side. To the persuaded, emotion counts NOW but facts count later.
I think the best approach is a balance of the two. Carefully chosen facts that can lead to an emotional response: This choice feels right. However, if the person just chooses not to believe the facts, then you have to address the cause of the emotional need to not believe. In some cases, you just cannot win – with that person.
Move on and persuade other people.
When customers know the how and not the what
When designing a new product you should listen to your customers.? This is the common wisdom today which I agree with 100%. The challenge is that when you question your customers about a potential new product you run into a couple of different situations that can make the listening experience painful:
- The customer cannot articulate the problem but says there is a problem.
- The customer tells you how to improve or how to solve the problem but they never tell you what the problem is.
Before I tackle this issue I think about why the customer hired me. Usually it falls into one of these three categories:
- They do not know how to solve the problem.
- They do know how, but you do it better.
- They do know how, but they have more pressing issues and need you to do it for them.
If the customer cannot articulate the problem I question them about time, cost, return of value, and is it meeting their goals. Usually it is one of those four.? If not, I ask them why they think it is a problem. The dialogue starts opening up the possibilities and when you understand the root cause, then you can identify goals that can be addressed with the development process.
If the customer is busy telling you how the problem can be solved then the best approach is to just let them get that off their mind. Take copious notes. If the customer is really knowledgable they may be making your job very easy and they just need your expertise in executing successfully.
Otherwise you may have to go back and explore the basic problem itself. Sometimes the customer knows how to solve the problem, but does not really know what the problem is. In other words, they want in an improvement. Often this is because someone else told them they needed an improvement but once again, they could not offer any ideas.
That is your job to get this out of them.? Realizing that, you can question the customer and get their input on the situation. This may lead to the solution. Otherwise, you might have to question other stakeholders (usually you do anyway), and this in turn will lead to the solution.
Recognizing these challenges is key to successfully designing a product with customer input.? All entrepreneurs go through multiple iterations of designing and redesigning their products and services. The problem entrepreneurs face is that customers often feel this is the best opportunity to dictate the solution which often leads to a lot of How without understanding the What. To overcome these challenges, do deep dive questions. Explore the problem itself, and get the input of the customer. With this input, you can design a better product that will appeal to more than just that one customer.
Managing the Large Client List
100 clients is a lot to manage. If you worked only 40 hours per week, you could only spend 20 hours a year with each client (if you spread it out evenly). That is a bit better than 1 1/2 hours per month. That assumes you spend every moment with the client. This does not include all the other things you have to do in your job. Say you are very efficient and can spend 6 hours each day with clients. The other time is spent getting to the client, running your business/job, and dealing with everything else in support of those clients.
Now, you only have 15 hours per year for each client. That is just under two business days. You are not going to be able to do much for each client.
The answer is simple: get less clients or hire another person to split up the load. Or is it that simple? You do not want less clients, because that means less business. You cannot feasibly hire another person, because that is a huge cost.
Reality check: You have 100 clients to manage. They each would benefit from regular phone calls, visits, coaching, etc to grow their business on you. How do you manage them?
The answer is in prioritization. Identify the key metrics you need. In most businesses this is revenue. Most businesses have a metric to grow the revenue from level A to level B. In reality you really have three metrics: the level of revenue, the rate of change of revenue, and the greatest opportunity for change.
The level of revenue is important because clients typically follow the 80-20 rule. Those 20% of clients represent 80% of your business. There are a lot of reasons why this happens, but that is not for this discussion. It just does. Not only do these clients represent the bulk of your revenue, but any changes to them represent the bulk of the changes to your total revenue. Lose one of these, and a lot more of the others have to grow to make up your numbers. Therefore, the answer is to rank them in order of biggest revenue to lowest revenue. Those with the biggest revenue are at the top of the list. Identify the top 20% and put them on your list of regularly contacted customers. If you are new to the assignment, you contact them first.
The growth rate is actually more important when you consider that most businesses want to continue to grow. However, an interesting thing happens to many businesses when they reach a certain point. They stop growing. They might maintain their level of business: gaining customers as fast as they lose them; but they do not grow. You might find that a lot of your top clients fall into this range. Those top clients will maintain your level of revenue, but when you are given growth goals, where do you find them?
The answer is to try to rank your clients by growth over the previous year. You will probably find a big difference in the tables with that of your largest clients. Those at the top of this list, but at the middle or bottom of your total revenue list are those up-and-comers; those clients that are rising stars and will help you in the future. Identify the top group that represents either 80% of your total growth, or 100% of your targeted growth (whichever is more manageable).
Finally, there are always exceptions. You have a client that is very small with your company, but a large customer with a competitor. There may be an opportunity to take them away from that other company. You could have a small client that is made of people from another large company. They broke away to start their own business. They have contacts, knowledge (experience) and some cash. They just need time and some help and they will grow. This third list is hard to quantify and identify. The key thing is to go through every client in your list at least once and just understand a little history about them. What is their current situation and can you exploit it? Are there synergies with your previous two lists? If not, then add these clients as special projects. You evaluate them over time, and if they prove out, then you continue to follow them; otherwise you drop them and focus on your previous two lists.
In a nutshell you have three lists: biggest revenue, biggest growth, and biggest opportunities. These clients get most of your attention. Every now and then you evaluate the other clients to see if they fall into opportunity. Remember, they are already no in revenue or growth so they have to be opportunity.
Of course, every quarter you do a check to see if everyone stays in revenue and growth. Typically, you will not see much change over quarter by quarter, but year by year you might see some significant shifts. Since you are looking at which clients switch from low revenue to high revenue, or low growth to high growth, and only concerned with the crossover you will typically only see a small percentage of clients change in this list.
This way you can manage your priorities, maintain your revenue, and grow your company.
Secret to successful negotiations
Why do some people succeed at negotiations when others do not?
The most likely cause is that neither side seriously considers what the other side wants.? Instead they only think about what they want. They may only think about the surface but they never dive deep.
The next time you are negotiating a deal, after you decide on your points, take out a separate sheet of paper.? Put yourself in the other side
Distributed workers is a problem not an answer
Companies that have all their workers in one location have the primary advantage of being able to communicate in person faster with each other but the primary disadvantage of being too geographically confined in thought and not being able to meet broader world requirements. On the other hand companies that are too decentralized and distributed often fall prey to the problem of being unable to execute quickly within themselves for a variety of reasons.
In the last ten or twenty years there has been a big push for working from home. They point out the benefits of lower costs due to no office space, more productivity due to less time traveling between office and home, and happier workers. The advocates also point out those companies that are distributed that work well: companies with design centers in India, marketing in the US and production in China. They further point out that people in an office environment suffer too many distractions: too many emails, water cooler talk, physical interruptions, etc.
I think that a lot of these advocates have not really worked in both environments and do not understand how humans behave as social creatures. These companies that are distributed are distributed along lines of centers of excellence, factories, and other functional entities. Within those specific geographic locations an entire entity will exist that has common goals. When the job crosses boundaries, it is managed for that boundary crossing. Maybe it is at a higher level, has coordinators, or treated like internal customers with set expectations.
On Dec 28 I wrote about some MIT research that said that people with face-to-face networks were 30% more productive than those without. And those that were distributed that developed digital networks were only 7% more effective. This applies whether the people are working in a centralized office or are extremely distributed. Logic dictates though that those in a centralized office CAN develop those face-to-face networks a lot easier.
23% more effective.? Thats a lot of extra people. Or that is like having an extra day in the work week without you having to do any work.
All the problems that distributed advocates state about centralized companies can be solved except one: the ability to work in from home. Short of everyone moving in together this is not going to be solved. But I do not think that is a problem. My friends and colleagues that work from home say they actually have to work more hours to get things done. Why? Because everyone is so distributed they have to spend more time corralling everyone together. Too many formal meetings have to be set up that take too long.
Sales people have to be distributed to effectively serve clients and develop the face-to-face relationship with the client. Wait a minute. The advocates point out that sales people are distributed and they work well. True, but they are distributed so that they can physically meet with clients and form the face-to-face relationship.? A face-to-face IS needed, but the one with the client is more important for this job function. This never seems to be mentioned.
In the end, you have to put the priority on productivity and effectiveness. Face-to-face seems to be winning over distributed. However, the demands of face-to-face need to be addressed. It becomes a bigger challenge when you are dealing with a start-up which may not be able to afford an office or to have everyone in the same location.
Maybe we should spend some time discussing that in the future because now we are addressing how a startup can execute successfully?
Office versus Remote
Which is better for productivity? People working in an office or remotely? A lot of arguments for both sides, but I recently found actual metrics for the difference. In the book, The HBR List – Breakthrough Ideas for 2009, there is an article by Alex Pentland titled How Social Networks Network Best.
His article is about how organizations should manage discovery and then integration and decision making. His point is that organizations that alternate between a centralized structure and a richly connected network can optimize these processes.
His article really does not address the differences between working in an office versus remotely but there is an interesting metric. To quote:
A recent MIT study found that in one organization the employees with the most extensive personal digital networks were 7% more productive than their colleagues…In the same organization, however; employees with the most cohesive face-to-face networks were 30% more productive.
What does this mean? I will address that more in my next article but there is definite concerns when an organization is geographically broken up and how that organization can address challenges, overcome obstacles and then executive quickly
As for startups, they are very prone to wanting to work remotely because of the cost of office space and the need to find the right workers. Compromising on the need to physically be together could impare the startups effectiveness.