Hit the hardest issues first!

Reorder your priorities for maximum impact.

There are two reasons to consider reordering your priorities to attack your most critical issues first, before the easiest ones to knock off the list.

First, you are fresher at the start of a day, and your best efforts should come when you are best prepared to address these issues.  Remember how easy it is to put off those final decisions at the end of a tiring and long day?

How about all those daily decisions?

But the real reason to do this is to allow most everything else to fall into place once the critical issues are worked out.  It is true in every business, all the time.

An example to make the point.

Take for example, solving key technology problems that prevent a product from shipment, or from scaling to large production.  If sudden demand for a product takes management by surprise, having solved these key issues will remove the key barrier to ramping production and taking advantage of the opportunity.

How about early-stage companies with unique problems?

In an early-stage company, the key issue is most often finding the way to start the revenue flowing from services and sales.  With enough revenues, the young company can more easily raise equity funds, borrow money, hire top talent, and gain valuable publicity.

The most important issue for young entities.

[Email readers, continue here…]   Next, a critical key issue is finding the way to break-even for a young business – the proxy for stability.  Working on that issue alone can drain a CEO, given its many incarnations – in marketing, sales, finding efficiencies, cutting efforts that are of lesser value, and more.

Hiring key talent should be top of the list.

Hire key talent to develop the product, to create a manufacturing line, establish distribution channels, to organize the sales effort, and you will find that many other less important issues resolve themselves or fall into place, much less important than before the critical issues had been resolved.

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Posted in Growth!, Surrounding yourself with talent | 1 Comment

Can you stretch the truth to make your point?

How easily it happens…

Sometimes it is easy for someone to make a statement that, in the enthusiasm of the moment or to make a point, crosses the line between fact and fiction.  Sometimes it seems to you to be just an unimportant little stretch of the facts. An estimate of the number of customers, of the amount of traffic to your website, of the numbers of products sold or hours spent in development – there are thousands of areas where a number sounds better when it is larger.

What are the risks when there is no authority?

Often, the number you state cannot easily be challenged, sometimes justifying the use of a larger number as a way to impress at potential customer or make a point at an industry meeting.

Ah, but then there is the Internet.

In this age of readily available information, the risk involved in making a statement that can later be proved untrue is too great.  It goes to your credibility itself when discovered or challenged.   And often, when someone discovers or uncovers the truth, you will never hear of it, even as that person lowers his or her trust in your future statements by some level as a result.

Let’s examine motive before result.

[Email readers, continue here…]   Yet, we have all done this in one form or another, some harmlessly, some with intent to deceive.  An often-expressed example seems to come from the salesperson who quotes a larger number of users or customers than the facts support.  Yes, we’ve seen gray areas.  In one example in an industry that I know well, there are direct customers and then central systems that in turn support direct customers.  The company in mind provides systems to serve both, but its salespeople count as customers all the indirect customers served by the one system sold to oversee them.  The result is an inflated number of total customers, which when compared to the competition counting only direct customers, makes the company look much larger and with greater market share.

Is there any harm in this activity? 

Yes, in two ways, this hurts credibility and confidence.  Competitors have every incentive to research the truth of your statements and every incentive to broadcast findings of inaccuracies.  And the creator of the knowingly inaccurate statement will always be a bit wary about being challenged, sapping just a bit of energy away from other communications with the same constituents, and knowing that a previous statement is vulnerable to attack.

It is best just to not make those stretch-the-facts statements in the first place.  They probably don’t do the job expected in enhancing the person’s or company’s reputation as intended anyway.

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Posted in Growth!, Protecting the business, Surrounding yourself with talent | 2 Comments

Do you really need a board of directors?

First, the short answer

No matter what your size, if you intend to grow your business into more than just a lifestyle workplace, you should create a board of directors.  If you take money from knowledgeable investors, you will be required to create a board as a part of the investment process.

So, why go through the effort?

Boards perform two important types of task.  They protect the company by overseeing the expenditure of company money for expansion, acquisitions, purchases of large assets, hiring of senior management and more.  A board is usually composed of a mixture of the senior executives or the CEO, at least one representative of the investors, and at least one industry expert from outside the company.

Well, how many should be on my board?

The usual size of a board is five, but legally the number in most states is equal to the number of shareholders up to a maximum of three board members required by law. With three or more shareholders, you must have a three-person board of directors in most states.  The average board for a company taking outside investment money is five.  Beyond seven members, a board is often too cumbersome to be at the most effective value to the CEO.

What are the legal responsibilities of board members?

[Email readers, continue here…]   Each board member is legally tasked with two duties: the duty of care, and the duty of loyalty: care for the living entity that is the corporation itself, and loyalty not to the board member’s constituency, but to the corporation itself.  Sometimes, these duties conflict with the best interests of the board member personally or his or her co-investors. This could happen when a board votes to take in new money at terms that would be unfavorable to the class of investor represented by the board member. It could happen if some early investors and board members want to sell the company at a price below the objective of the later board member, where the relative returns are excellent for the early investors and marginal for the later ones.

Surprise! Board members are legally to protect, not to grow.

There is no legally mandated requirement that members of the board help a corporation to grow.  But it is certainly the goal of the investors, the CEO and even the board members individually, when assuming the position of board member.  Often, a board meeting is entirely devoted to issues of growth, with members chiming in to help the CEO with marketing issues or customer acquisition.

How about legal requirements for board meetings?

It is important to make time for the required duties at board meetings.  Approving the budget and watching over it during the year and approving any actions that would dilute ownership including stock option grants, are two examples.  Much less understood are issues that address the management of risk, such as review of corporate insurance policies, adherence to OSHA or HIPAA safety regulations, and oversight of the terms of real estate and large equipment leases that could affect a company’s ability to maneuver in times of crisis or extreme growth.

But what if you just don’t want a board and have no investors?

Many entrepreneurs would rather not have to answer to a board, and resist creating an entity that could have the power to check management actions, and even to fire the CEO in extreme cases.  Yet, the establishment of a proactive board is the first step toward professionalizing the company and its management.  Properly handled by the CEO with adequate time allocation for individual and group board member updates, the proper use of the board will help control risk and provide resources to management that will pay back in better overall management of the company and more efficient use of its resources.  More importantly, no entrepreneur or CEO can do it all alone, especially in a rapid growth scenario.  Too many things can go wrong, many of which are things that one or more board members have already dealt with in their business lives.

And the conclusion…

Take the establishment and nurture of a board of directors seriously. It is much more than a legal requirement to be resolved.  It is the creation of a vital part of the organization, one that could be of great help in both protection and growth of the enterprise.  Great boards create value for shareholders while protecting them at the same time.

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Posted in Growth!, Protecting the business | 4 Comments

Your time is as valuable as your money.

Enterprise time as a measurable commodity.

Let’s examine the challenges to a CEO in making use of enterprise time, one of your most valuable and often misused assets.  Enterprise time, as opposed to personal time management, is the sum total of resources available to a company expressed in terms of time – time to develop, to debug, to produce, to deploy, to respond to issues, and to make changes in plans that are not working.

The relationship between time and money

By reducing the amount of time to perform any of these actions, a company saves fixed overhead and increases profit or reduces cash burn.  So, this issue becomes one to be dealt with by every manager at every level of your organization.  Building efficiency into every corporate activity should be a corporate mandate, one to be discussed interdepartmentally, to be refereed by the CEO.

The flip side of efficient time management

There is the flip side to making efficient use of time.  I’ve labeled this time bankruptcy to make the point as dramatically as possible that this is a critical, company-threatening sinkhole that must be avoided at all costs.

Time bankruptcy is the ultimate result of the deliberate over-commitment of a company’s most valuable resource(s) by the CEO or a department leader.  There are many ways to fall into this trap.  But first,  identify what those critical resources are in your company.  Most often it is the time of the chief architect of the product or service you provide, or of the best developers of that product. Sometimes it is the time of the CEO, which when overcommitted, prevents others from gaining access to solve critical problems or continue the flow of production.

An easy way to fall into time bankruptcy.

[Email readers, continue here…]    One way to fall into the time bankruptcy trap is to release a product too early and pay the price by forcing the architect and most skilled developers to drop off their important tasks to put out fires in the field and fix problems one at a time.

And yet another way to make that mistake

Another is to fail to complete a contracted service for one customer and to do so multiple times, until many customers begin screaming for attention, drawing away all available talent from new, income earning tasks.

Now let’s make this personal to you.

You will surely be able to identify an example of time bankruptcy that you have experienced in your past or present.  It is your job to drive the company out of the time bankruptcy zone and to watch for signs of it occurring in the future, stopping the process before it becomes critical.  That means watching quality control efforts more carefully, developing metrics to track incomplete processes and track remaining time committed to completion, watching the number of customers exposed to a new product or service before general release, and more.

Again, it’s about you at the center of this firestorm.

It also means being careful that you do not become overloaded to the extent that you are unavailable or inefficient in helping those who need your attention to complete their tasks.  Use the term, time bankruptcy, in a planning session, and see what response you get from your managers and employees.  You’ll be surprised at their understanding of the issue as it relates to their being able to complete their tasks successfully and of their contributions to solutions that will benefit everyone and increase process efficiencies.

Relate enterprise time to available cash runway.

Finally, enterprise time equates to available runway, or remaining cash and resources that you can call upon to gain market share and increase corporate value. Spending enterprise time inefficiently burns those resources unnecessarily.  If you have enough reserves in cash and in time, you can dig out of the hole.  But if you are managing a marginal business, the effective use of time as a resource extends your ability to make changes, reposition, react and build.

So, if you wonder why we focus on this subject to the extent of seeming redundant, well then, it’s about time.

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Posted in Protecting the business | 3 Comments

Extending your Runway!

Several years ago, I wrote a book entitled, Extending the Runway, using parallels to piloting a plane to equate to the process of creating and building a small company, making maximum use of resources to get to and beyond breakeven.   It is worth revisiting the most

Extending the Runway book available at Amazon

important point of that book, which was written to prompt discussion between entrepreneurs, professional managers, and their boards of directors about issues that could unite them or strain the relationships between them.

The five resources boards and investors can add to a company

There are five types of resources a great board or active investor can add to a company.   These are:  time, money, relationships, context and process.

Time as a corporate asset

The longer it takes to produce and release a product, the more fixed overhead is consumed, and the runway of remaining cash diminishes.  Expert help and good planning can reduce the time to market, saving cash in the process.

Money is what entrepreneurs expect from us

A board of directors is primarily responsible for oversight in the use of and the raising of money for the company.  There is a fine line between loading the company with too much debt and diluting the shareholders too early with additional equity investments.  But all agree that a good board will express its stewardship well by preventing the company from running out of money.

Further, just because someone volunteers to invest doesn’t make that person into a coach or expert, although many seem to think their investment gives them the right to be that coach or expert.

Relationships are often as valuable as an investment

[Email readers, continue here…]    One reason for having an effective board or connected investors is to give the CEO a resource for tapping into great relationships that are owned by those individuals, so that the CEO can reach out and find help in areas most needed.  In the case of board members, if a board member has few appropriate relationships in his or her field of expertise or from past experience, then perhaps the board member is not appropriate for the company at this time.  And if the board member refuses to volunteer or allow such relationships when needed by the CEO, that board member should be held to task by the other members of the board.  And it is wise to have a private discussion with that person because sometimes the reason for refusal to make such introductions is because of a lack of confidence or passion relating to the company or its founder.

 How about context as a basis for decisions about growth?

Every good board has recruited at least one industry expert, often as the fifth or mutually approved outside member.  With expertise in the company’s industry, that person can and should provide expert advice about the timing of the company’s product entrance and applicability in the industry it addresses.  A great product at the wrong time or a poor product or service unable to address the needs of the industry will fail in the marketplace.  That board member should be actively involved in questioning the positioning, marketing and even the design of the product to avoid just such a disaster.

Getting to product release: process insights

Here, most experienced board members can help to streamline the process of product development, manufacture, channel management and marketing.  Knowing how to scale from test to release or how to complete a process more quickly saves money and time, making this knowledge as valuable as raising more money for the company, but without the cost in dilution or debt.

Use your board or build one if you don’t have one

Use your board to help you to navigate through control over these five resources.  If you don’t have a viable, relevant board, build one no matter what your size and stage of development.  One thing is usually sure: an entrepreneur cannot successfully do it all alone.

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Posted in Depending upon others, Positioning | 1 Comment

The tender issue of stealing time

It’s a big issue within any company. 

With easy access to Internet shopping, games, social networks and more, employees can find many ways to focus on personal issues while at work, detracting from productivity and demonstrating a disrespect for the time paid for by their employer.  In fact, if we were to be direct, we might label it “stealing time,” and consider it a crime of sorts.

But let us start this conversation by acknowledging that working from home especially in this new world we’re in, most employees don’t use a clock and certainly can and do interrupt their work with play, chores, family issues and shopping.   And that most make up for this by working at any hour of the day or night.  Self-driven, self-policing and effective employees.  But how about those at the office as we return to a more normal workweek – even with split home-office days?

Why should management worry?

Based upon the actual “loaded” cost of an employee per hour, stealing time is certainly not an insignificant cost for the employer.  Certainly, it amounts to many times the cost of stealing something tangible, such as a ream of paper from the supply cabinet.  Yet, many of us treat the latter much more severely than the former.

Consider some counter arguments. 

[Email readers, continue here…]   Attracting great employees often requires us to offer special incentives, including flexible hours, work from home even before and soon after the pandemic, unsupervised time off, and access to perks such as free food and soft drinks.  Often, employees just expect some degree of freedom when they work at the office, to be able to quickly shop or communicate with friends in the middle of their day.  In times past, older generations were perhaps more discrete when making personal phone calls (how ancient this sounds).  But they often did so anyway, and often spending more time and more company money in phone bills in those days than any cost for today’s typical employee distraction.

How about the counter to the counter argument? 

There is no way to sugar-coat the fact that paid time is for work, not for outside play.  The cost may seem small until someone calculates the combined cost over a year of time and screams “thief!”

Is there a middle ground or is this a universally expected perk?

As in all two-sided arguments, there usually is a middle ground. The boss who requires complete adherence to the work-every-minute ethic called for in the employee handbook generates ill will when enforcing the rule.  But the manager, who openly ignores the behavior, encourages more of it from employees who will fall in to follow the example they see openly acknowledged.

My solution in an in-the-office environment

Acknowledge the fact of life, equate it to personal time once used for personal calls, and define a ‘limit of acceptability’ publicly.  “We recognize how difficult and intense your work is.   We think it prudent for you to take breaks as often as every hour if you need them.  We expect your breaks to be self-policed and no longer than ten minutes, to be used for all personal issues including personal use of your workstation.  Remember not to stray out of bounds of corporate decency and confidentiality and be safe in protecting corporate security.”

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Some great coaches are younger than you are.

Especially for social media-based businesses, we all need to recalibrate our thinking about who is the teacher and who is the student.  There is nothing wrong with a manager slowing a conversation to ask for more background when speaking to an often-younger and more involved associate.  You know what I mean… The conversation goes something like this: “We found it on x site and using y app with z as our data object.”

Does a manager need to know every detail?

First, managers could not be paid enough or have enough time to stay entirely current with all the details each employee or associate deals with daily.  Yet, many times that other person tries to explain an important finding or breakthrough, or make a significant comparison, using names of destination sites or apps or tools we have never used or heard of.

Does manager age play into it?

Yes, age often has something to do with it.  And occasionally, a manager has to work to join the club by trying new things, learning new tasks and using new language to relate to those already in the know.

My story of learning to be comfortable as an “adult” manager.

[Email readers, continue here…]   I recall vividly one such “adult” experience.  I helped to found an Internet game company, playing the role of founding investor, chairman and even temporary CFO.  The company was destined to grow into a large, very valuable enterprise that we sold for many, many times our investment.  But that first day with the new employees was a test for me.  Many years older than any of them, their initiation was to insist that I spend no less than forty-five minutes playing for the first-time first-person shooter games against Internet-based foes.  I had to acknowledge the difficulty of achieving high degrees of skill, and the size and terminology of the extended gamer community.  But most of all, I had to gain acceptance as “one of us” in an environment where my CEO coaching and my money did not count.

Is about respect or knowledge?

That was a lesson for me.  Taking the time to be taught by those able to master a skill or have extra knowledge is an important step to show respect for everyone at all levels in an organization.  And that respect flows in both directions, worth so much more than the time it takes to learn a skill or terminology or meaning.

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How often do you say, “Great job?”

How we usually do this in our businesses.

The best managers we all know are the ones who take the time to praise good work in public, before an employee’s peers.  Most of us have a monthly award for the top person in a group of employees. And if we are big enough to formalize the process in a regular meeting, we make it a regular part of that meeting.

And why it doesn’t work as planned.

If you have not already discovered this fact, such a process quickly becomes routine and predicable.  Small companies have trouble finding new people to honor after a while.  Some employees even disingenuously consider the process an exercise in pandering, discounting the effectiveness of the award, and disenchanting those very managers who thought they were reaching out to do a good thing.

Don’t wait for a scheduled meeting date.

For all of us, we should remember that the best possible way to honor great work is to do so immediately.  A “Great job!” coming at the right moment from the boss is valued as an honest recognition of good work, especially if done in front of an employee’s peers.

My story of unusual but powerful team recognition

[Email readers, continue here…]   At times, it is an entire team that deserves the recognition, again immediately after doing a great job.  I found a formula that worked for me where most of the employees were in several buildings on the same campus.  First arranging for my assistant to obtain the appropriate amount of hundred dollar bills from the bank, and then to follow me around checking off names, I had my own personal holiday celebrating each individual in the team with a handshake, words of thanks, and a C-note.  With lots of laughter and thanks, the celebration and words “Great Job” made for a completely memorable event.  And those pop-up thank you visits from the boss certainly contributed to the culture of the company.  Word does travel.

Remember to reward those not present at the moment, and remember that the amount should be grossed up to take care of taxes and be entered onto the payrolls of the employees so rewarded.

I’m sure you have your own way to making “Good job!” work for you and your team.   Just try not to make it so regular and predictable that it loses its value.

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Posted in Depending upon others, Surrounding yourself with talent | 2 Comments

Do you “over-welcome” your new employees?

A story of a CEO attuned to creating great company culture.

A CEO friend of mine who managed her one-hundred-person remote workforce as a virtual company told me her story of how she welcomed new employees as she grew her firm.  Strike that. She over-welcomed her new employees.

Preparing for the new employee

Days before the official start date, she made sure that the new employee’s business cards arrived in the mail, that the employee’s phone and Internet services were up and running, and that an email account was already established.  But many of us do that, maybe not so timely.

Then she topped her explanation with: “A few days before the start, a package arrived from us at the employee’s home with a welcome letter, a copy of the CEOs book, and a giant fortune cookie, with the fortune cookie message streamer clearly visible.”

“You will be successful at our company!” the fortune stated.

One pleasant surprise after another

What a great touch – especially for someone expected to be self-motivated enough to work long hours from home, to get to know fellow employees through Zoom, Slack or Teams, and texting, and to be productive immediately when hitting the ground.

The benefits of hitting the ground running.

[Email readers, continue here…]   It started me thinking.  How many days or weeks or even months do we expect a new employee to take in becoming acclimated to our company and its culture, to the marketplace, and to our ways of doing business?  For example, most of us expect a salesperson to be truly productive only after about six months of building a territory or client base.  But isn’t there a better way to approach this expensive process of acclimation?

Special considerations for salespeople

For a salesperson, how about paying an override commission to another salesperson for a short period to help find and close new business? Or how about helping the employee gain confidence by handing the first several accounts to the new person ready to close?  How about assigning a big brother or sister to each new employee to show them the culture and process?  How about teaching a class in corporate culture yourself to one or more new employees?  Some of us have done one or more of these things.  But what could we have done better to launch a new employee successfully?

The outcome from “over-welcoming”

My CEO friend created a great company with a culture so strong, every single employee was able to work from their home, wherever in the world it might be, and contribute at the highest level to the success of the enterprise.  And oh, yes, she sold her company recently for a tidy sum to a buyer anxious to spread such enviable practices throughout the parent organization.

So, considering the benefits, maybe we should start with a surprise fortune cookie with a personal welcome message.

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Six ways to make your site-app-product go viral.

It doesn’t happen by accident.  Not every new game-related site is a Steam, and surely not every social network is a Facebook. And not every texting application is a Twitter.

A story of an app from nowhere to near dominance

Then how did Discord “suddenly” become so hot that even Microsoft was rumored to want to buy it for staggering amount?  Discord is a great example of a company going viral mostly from word of mouth.  From its start in 2015, the number of registered users has “suddenly” climbed from 45 million in 2017 to a reported 300 million by the end of 2020.   That compares with a reported 330 million for Twitter which had a nine-year head start and so much more free press from famous users over the years.

Soon, Discord could become dominant, even before an entire generation of millennials even knows the name.  How has this happened, and are there lessons for us in this?

How do you make your product go viral?

What are the elements needed to focus upon in making the attempt to take a product viral?  Intrigued by the thought, I recently made a list. It was as much in reaction to my getting blank stares from entrepreneurs when I asked the above question as it was for me to better understand the problem itself.

Here is my list.

First: Planning. Retail or end user web sites aren’t even noticed  by potential users or customers without being discovered through a real marketing program, aimed at finding the flywheel effect (the moment of going viral that makes all the difference between failure and success.) In today’s world of social marketing, it takes someone knowledgeable if not expert in understanding how to use available resources in promotion and marketing.  Some apps, like Discord, attach a brand link to the bottom of each message so that every recipient can click upon the link and become a user of the product without further marketing by the company.  So, the lesson is: always find a way to make a second-generation recipient or buyer a future raving fan.

[Email readers, continue here…]   Second: channels.  I was chairman of a company that distributed its product through over one hundred fifty retail Internet travel channels, all websites where someone else spent the money attracting their users and attempting to go viral. We could not have begun to reach a fraction of that audience with any amount of money if we did not reach through these channels.  Sometimes, it is just the right idea to brand your product inside that of a known presence.

Third: cost. Even a great marketing plan to gain an audience fails if there is not enough money to prime the pump and start the flywheel effect moving.  And of course, that could easily require a large amount, far beyond the capability of a small company looking for its initial audience. And yet, word of mouth sometimes is all that is needed. Google became an overnight industry standard for search strictly by word of mouth, never spending a dime on advertising in its early years. Marketing cost is not the best measure of success. Accurate targeting measured by acceptance is more important, even if the cost is near nil.

Fourth: measurement. If you can’t measure the results of your attempts to gain a viral response, how can you know when to focus upon reinforcing or changing the effort?  Well-tuned metrics are an absolute must. And the tools for most are available, sometimes free, for the educated marketer.  You cannot be successful if you cannot measure the results of your effort.

Fifth: reactionIf everything goes right in finding the right plan, channel, cost, and measure of success, and if you do nothing to reinforce the success or change the focus, the rest of the effort can easily die a slow death.  Respond to positive niche adoption with increased focus upon those niches.

And sixth: the pivot.  A reaction is not often enough. Many times, it takes an intelligent repositioning of the entire offering to try again with revised ideas based upon learned experience.   And, like the story of Discord and Twitter, it takes continual product and feature updates to stay ahead of the competition or overtake a sleepy competitor.  A pivot or product enhancement in reaction to user or customer comments will advance your chances of success.

It is a cycle that must be learned and followed to successfully maximize an opportunity in any industry and for any product or brand.  So, where in that cycle are you today?

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Posted in Finding your ideal niche, Positioning | 1 Comment