management

A Reflection on our National Obsession with Mediocrity (and what it means for business)

Short Summary: If the dangerous belief that mediocrity is acceptable or that experts and intellectuals represent some vague threat has wormed its way into your psyche you have reason to be concerned.

An article by David Rothkopf in Foreign Policy (11/17/2010) decried the rise of a modern version of the mid 19^th-Century "Know-Nothing" movement, generally remembered for its embrace of ignorance at the expense of growth and excellence. Similarly disheartening attempts to discredit those who show tendencies toward intellectualism or who are perceived as experts were all the rage in the 2010 mid-term elections. This is not a political blog, so I won’t go into how much this terrifies me for our society, but it does have some sobering implications for business.

People who disapprove of experts and intellectuals don’t just disapprove of them in politics (wow, I can’t even write that sentence without reflecting on how deeply strange it is). People who disapprove of experts and intellectuals disapprove of them in general.

I have been collecting a little journal of observations of anti-intellectualism since the ever-so-unimpressive-Sarah-Palin smashed onto the American reality show stage. Of course, I stopped collecting hers because there were just so gosh darned many of them. But here are a few that have managed to stop me in my tracks and make me reconsider the intelligence of people who did not seem to be mentally incapacitated otherwise:

I would never go to any doctor other than a family medicine guy. Specialists aren’t any more skilled than anyone else, but they’ll cost you an arm and a leg more to go to them (same version of this statement recorded for auto mechanics).
I don’t trust accountants and I don’t want one nosing in my business. I let a bookkeeper go over everything before tax time and that’s good enough for us.
What is the point of hiring a lawyer? You still end up paying all the same fines and fees but you’ll have the legal bill tagged on too.
My son (a primary school teacher) can use a computer as well as anyone else out there, so why would I pay some expert $10,000 to build a website my son can do for free?
Oh, and my favorite – spouted out during a discussion about the importance of learning to be a critical thinker: “That’s the problem with the universities and all the ideas they use to brainwash children. That’s why they call it a liberal education (insert sneering tone here).”

I’m not suggesting that all experts are preferable to generalists, that experts are inherently better than anyone, or that there aren’t some really sharp generalists out there. I also accept that there are too many highly paid losers masquerading as experts. What I am suggesting is that broad-based bias against expertise and intelligence is inherently bad, because it sets the stage for mediocrity-on-a-pedestal. If this dangerous belief has wormed its way into your psyche even a little bit, and you are a business-owner, you are probably doomed.

Because at the same time that this strange idea that mediocrity, home-grown-ness, and average-Joe-ness are preferable to education, expertise, and intellectual rigor, the world has become a more competitive, more complex place – a place where people slow-on-their-feet or lacking in the abstract thinking skills necessary to grasp multi-level problems are being left behind. Fast.

If you own a business and you are counting on that business for your future wealth and retirement income, you will undermine your future if you do not seek the most talented, most intelligent, most not-average people you can find to fill critical positions and provide you with the business support and advice you require. Yes, it costs. It costs to hire talented people, it costs to go the extra-mile to sift out the good-on-paper from the good-in-reality, it costs to keep talented people, and it costs to pay for genuinely good advice and support.

It also costs a business owner to never have enough cash to pay the bills, to lose out on business opportunities because he can’t afford them, to lose customers because he’s not taking good enough care of them, to lose money because he made poor-but-avoidable choices, and to lose all that sleep and quality of life worrying about how his business is doing. Am I painting an overly bleak picture? I don’t think so. The business failure rate has accelerated from its already high rate of over 70% failures over five years. That’s a lot of lost money and lost time, not to mention ulcers and failed marriages. Want to blame it on the economy? OK, but what’s to explain the fact that that the over 70% failure rate has been documented for over a decade?

As a strategy consultant I analyze a lot of businesses. Want to know the common thread between businesses that are thriving and growing and ones that are struggling?
Quality of employees. I don’t mean just “nice” people – though that’s very important. I mean clear-thinking, intelligent, trained, intellectually competitive people who want to be mentally challenged and rewarded for great performance. The most successful business owners worry about paying the amount necessary to hire talented people in key positions, then pay it anyway because they see the long-term value. The most successful business owners work hard to understand their personal shortcomings, then bolster the business with people who possess offsetting strengths. Just like it’s difficult to stay in tip-top health if a quiet cancer is worming its way through your body, it’s difficult to run a highly competitive business if you subconsciously have reservations about the value of talent.

But what about all those people who are just average? Don’t they deserve to work too? Well of course they do. I firmly believe that there is good, rewarding, skills-appropriate work for every willing worker. You don’t have to be a rocket scientist to work as a retail sales person – and most rocket scientists couldn’t succeed in that role anyway. You do, however, have to be a rocket scientist to be a rocket scientist. And your marketing professionals should have experience and training in the theory and practicum of marketing, your managers should have formal knowledge and experience in the disciplines and practices of management, the best tool & die workers have had the opportunity to work for real masters, and a copy writer is much more than a person with good grammar and spelling. Whatever your critical roles, it’s your job to seek (and seek, and seek, and seek if necessary) the absolute best people for those jobs.

As I said earlier, people who disapprove of experts and intellectuals disapprove of them in general. What I didn’t say is, except when it’s deeply personal. The guy who disapproved of medical specialists? Someone he loves deeply was diagnosed with a very rare illness, one that only the top specialist in the world could hope to cure. At first he struggled with his bias against expertise, but ultimately he moved heaven and earth to get to that specialist. The result? Life for his loved one.

Your business is deeply personal. It’s life for yourself and your loved ones. When you think about it that way, doesn’t it make sense to find and keep the experts that will help you compete and profit? Don’t put mediocrity on a pedestal, not in your personal life, and not in your business. Mediocrity is not profitable. It’s not socially beneficial. Hell, it’s not even fun.

All of the Responsibility, None of the Authority

Short Summary: Here are some of the key structures that are absolutely necessary when converting to a more team-based organization.

In an email one of my readers asked, “If we were interested in moving to a more team-based organization, what are the key things that would need to be in place to support the changes?” It’s a great question, but one that entire books are written about, not blogs. However, there are a couple of support structures that must be in place to support the needs of a team-based (henceforth referred to as flexible) organization, and I’ll mention them briefly here.

1. Fluid and clear communication systems. The communication in a hierarchical organization tends to go lateral in very small groups, and otherwise, up and down a chain of command. Communication is clear in hierarchies, which is one of the reasons that structure is appealing - because communication is the lifeblood of any effective organization. In a flexible organization communication moves out in webs, and it can be extremely confusing to people to know who to talk to about what, and how. By communication systems I mean technology for communication, clear understanding of the best methods of communication, and permission (empowerment) to communicate with the individuals with whom you must communicate.

2. Training training training. Moving into a flexible organization can be daunting for people. They will need training to understand their expanded roles, to understand the inputs and outputs of their roles (in most hierarchical organizations, the individual work units understand little about where the work came from or what happens to it next), how to work in teams, how to communicate effectively, and how to deal with conflict. They also need a much better understanding of business dynamics (a'la Open Book Management), because decision-making can't happen in a vacuum of business understanding.

3. Metrics. In a hierarchical organization control is generally practiced by some form of management oversight. While management oversight is important in any structure, it becomes a bit wild and wooly in a flexible organization. Many organizations lose sight of their control systems in the conversion. By implementing good metric systems for productivity and performance monitoring, an organization can mitigate loss of management oversight from the earliest stages.

4. Change management. Most individuals don't like change because it scares them. A strong change management support system made up of senior management and HR can provide the necessary psychological and interpersonal support necessary for the workers to get through the change successfully.

These are some of the key structures that are absolutely necessary when converting an organization. But the most important characteristic that must be present is the commitment of an organization’s leadership. Management in a flexible organization has been referred to most eloquently by my friend Mark Shipman as “all of the responsibility and none of the authority.” Unless leadership is utterly committed to learning how to lead and manage in entirely new ways, none of the support structures identified here will matter.

An Improved Report Card

Short Summary: If you want a quick insight injection on how to take goal setting and self-assessment to the next level let this be your 5-minute primer.

Most western education trains us to look back on a scheduled basis and evaluate how we have done so far. This process is healthy for assessing past work, but is practically useless for ensuring ongoing improvement.

It would be better if we had each child tape their current report card to the front of their desk where they can see it all the time, though self-esteem advocates would probably have a field day with that. An even more powerful approach would be to immediately set measurable goals with our kids based on report card results, then monitor progress toward those goals through management of intermediate objectives.

Even if you didn’t learn to do that in school, it’s not too late for you.

Start by retrieving your last performance evaluation from wherever you’ve stuffed it, and place it on the desk in front of you. Oh, if what you’re looking for is an employee review, don’t bother. Ninety-nine percent of those are completely worthless. You should be looking for an operating statement, a strategic plan with performance reporting (Balanced Scorecard is a great example of this), or a review of a project. Something with clear goals and objectives attached to it.

As you look at your performance evaluation, you are reviewing what Kaplan* refers to as outcome measures. These are measures that you can no longer influence – they are done, fini, komplett. If all you do is review them, you’ve simply wasted time finding the document. Let’s move on to something more productive.

Identify the four most important things you are planning to accomplish in the next year. If this is the first time you’ve thought about this, it might take a while. Do it! In contrast to simply reviewing your past results, this is NOT a waste of time. This is the most important thing you can do. These four things are your strategic objectives. Now, attach measurements to them. If one of your objectives is increase sales, you need to say by how much. If one of your objectives is to open a new market, you need to define how many customers you are adding, or quantify the anticipated growth in sales. If your objective is to cut costs, you need to offer a percentage of reduction or specify what your target operating budget will be in real dollars. These measurements are referred to as strategic measurements (channeling Kaplan again).

Once you have figured out your strategic objectives and measurements (or if you already know them), write the 3-5 things you must do to accomplish each one. These are your goals. Again, you must attach measurements to make them meaningful. For instance, if your objective is to increase active customers by 10%, your goals might be:

Prospect to 15,000 new customers each month
Send quarterly reactivation offers to customers who have not purchased in 12-18 months
Increase advertising exposure by 15% while maintaining current advertising budget (this is possible, by the way)

Those measurable goals are referred to as performance drivers.

Now you tape your report card to your desk. You make a plan for each upcoming period (I recommend a month, but some folks do this quarterly). The plan must include specific detail regarding what you will do to achieve each of the performance drivers. You break it down by week, so each week you can see an overview of what you are doing that week alongside an overview of what you will be doing that month. Every time you look up from your work, you have a visual reminder of what you are supposed to be doing. When you find yourself consumed by answering email, filing, and producing reports, you have that constant reminder of what is a priority, and you refocus.

If you want to read entire scholarly tomes on how to do this, they are readily available. My favorite is The Balanced Scorecard by the aforementioned Bob Kaplan and his writing buddy David P. Norton. But if you just want a quick insight injection on how to take goal setting and self-assessment to the next level, let this be your 5-minute primer.

*Robert S. Kaplan & David P. Norton, The Balanced Scorecard, 1996, Harvard Business School Press

An Ode to Difficult Geniuses

Short Summary: Every business leader preaches the importance of innovation and outperforming the competition yet business managers are busy squeezing every threatening and/or unconventional element out of their environment.

Dale Dauten’s most recent column should be required business reading. Of course, that’s sort of a teasing thing to say, because I can’t find an electronic link to it anywhere. The title is “Let Us All Praise the Quirky, Weird Ones,” and it starts with a quote by William James that says “A great many people think they are thinking when they are merely rearranging their prejudices.” You could go in a lot of directions with that quote, but where Dauten goes is to the sad reality that business managers these days would prefer to employ safe, average, presumably less imaginative sorts than unruly, challenging, wildly intelligent sorts.

After describing how business managers fear and dislike people who are challenging, a little un-PC (it’s amazing how damaging one little acronym can be, isn’t it?), perhaps prone to scandal on the personal (not the work) side (i.e., “lacking a certain decorum”), difficult to manage, or even egotistical, he says “not only would you fire Winston Churchill, you couldn’t hire John F. Kennedy or Martin Luther King Jr. or Pablo Picasso. Instead, you can staff up with the corporate equivalents of Richard Nixon, Gerald Ford and a pair of Bushes. How did we get to be so small?”

Indeed. Every business leader preaches the importance of innovation and outperforming the competition, yet business managers are busy squeezing every threatening and/or unconventional element out of their environment. The only possible result is the lowest common denominator, which clearly won’t achieve innovation and competitive wins.

I think we are all guilty of this at some time or another. The column caused me to look back over all my years of hiring and firing, and I can think of two specific cases where the difficulty of managing someone won out over their significant creativity with questionable resulting benefit.

On the other hand, there is no question that my most creative experiences at work have been while surrounded with very quirky people. The graphic designer whose psychological insights into others was acute even as he was a complete socio/psychological mess himself; the sarcastic but intensely effective professional who was repeatedly accused of egotism when he really was smarter than everyone else and if I couldn’t help but notice it surely he was aware of it as well; the completely adolescent, self-absorbed writer who could make business writing sound like poetry; the zen-y assistant who repeatedly came from so far in left field that he frequently took the rest of the group on a detour that invariably introduced creativity we never would have stumbled on without him; the cross-dressing analyst who regularly forgot to get all his mascara off before coming to work in the morning, and who freaked out the men around him by flirting with them just like they flirted with all the women in the office; the nuts-o marketer who spoke incomprehensibly fast and always had a personal crisis going on, but who could produce flashes of insight three or four times a year that paid for herself and everyone else in her department four times over; designers who could only work in the wee hours of the night and had to be cajoled into considering another viewpoint; and . . . my experience tells me that the sheer fun and creativity of working with people of superior talent and intelligence is well worth their eccentricities.

Years ago when I was in advertising, an art director, aware that I was frustrated trying to manage a group of what seemed to be overbred, tightly wound creative types, told me that I had to learn how to “ride the white elephant.” He explained that white elephants were believed to be as royal as kings, and moreover, they knew they were as royal as kings. So you couldn’t manage them like regular elephants, because they would refuse to participate. If you wanted to associate yourself with a thing of wonder, you had to accept that you weren’t going to be able to make all the rules. He taught me that I had to learn how to make the rules and not get run over (we did have a business to run) while learning how to accept that sometimes they made their own rules, and most important, how to offer them as much in value as I expected to get from them.

Is it a double-standard that I would never advocate keeping egotistical, difficult, surly, or eccentric people who are NOT smarter, more creative, more productive than everybody else? Maybe, but common sense says, why would you?

In a very funny passage regarding a friend’s sexual deviation and her own mother’s response to it, Dauten share’s the mother’s advice, which was “Unusual people have unusual tastes.” He ends by saying this:

“Whenever I’m tempted to be narrow-minded or judgmental, I think of that little sentence, “Unusual people have unusual tastes,” shrug, and mind my own business. I can only hope that there are executives who’ll do likewise, that they’ll keep eccentric geniuses on the payroll, despite the trouble they cause. Let’s broaden that maternal advice to this business wisdom: If you want unusual ideas, you’re going to have to put up with unusual people.”

Amen.

Are You Writing Your Own Obituary?

Short Summary: The bottom line is that the jewelry industry is going to be fine. But retailers and small manufacturers need to ask of themselves a few vital questions.

Everywhere I travel the talk is of the coming recession. In terms ranging from laconic to histrionic, the nation is coming to grip with an economic adjustment. Though the range of response from person to person is not surprising, the range of response from industry to industry is perplexing.

My work is divided among the apparel, consumer electronics, entertainment, and jewelry industries. All four industries are experiencing similar consumer withdrawal, as customers who once shopped like Lindsay Lohan thanks to their home equity loans are now cutting up their credit cards and rediscovering what it's like to live on their $45,000 annual salary.

There are similarities. The smart companies across industries are evaluating means to reduce their costs, maintain brand, marketing and sales focus, and increase customer value. Savvy operators have switched from a quarterly/monthly financial evaluation strategy to a monthly/weekly financial evaluation strategy. Even the folks who don't care much for reading are watching the financial and business news every day.

But one difference stands out, and it's mystifying to me. In the apparel industry, retailers and design labels alike are aware that tough times are ahead, but most assume they will weather the storm. In consumer electronics everyone is aware that they will no longer benefit from a buyer for absolutely anything that gets thrown on the shelf, but most assume they will weather the storm. And in the entertainment industry all levels are aware that the models will continue to change rapidly and somewhat confusedly, though most all assume they will weather the storm. The jewelry industry, however, seems to be convinced – sometimes seemingly committed to – its own demise.

Why do I say this? Because everywhere I go, everyone I talk to in the jewelry industry asks me "are we going to survive this? What's going to happen to the jewelry industry?" At first I thought this reaction was isolated to a few struggling players. But that's not the case. There seems to be no profile for the jewelry industry death-watcher.

The bottom line is that the jewelry industry is going to be fine. The jewelry industry is simply going through challenges that have affected every other mature industry, including each of the industries I currently serve.

Less expensive imports have threatened nearly every type of industry over the past 50 years. But the apparel and textile manufacturing business in the US is now larger than it was in both shipments and dollars in the mid-80s, when the end of American textile and apparel manufacturing was prophesied. Yes, jobs in those industries have decreased by nearly half. Was it due to cheap imports, outsourcing of jobs, or relocating plants to markets with lower labor costs? While all of those things played a part, their part was arguably small. Textile and apparel industry watchers estimate that 80% of the reduction in jobs was due to the creation of efficiencies, allowing the manufacturing operations to work with less labor.

For the past 50 years Ma-and-Pa retailers have been swallowed up by mass merchants. Yet small business accounts for 50% of total US private sector employment, pays more than 45% of total US private payroll, has generated 70%-80% of net new jobs annually for the past decade, and accounted for over 650,000 start-ups in 2006. As I travel I seek out innovative apparel boutiques, jewelry stores, and independent music/book/video retailers, and I have been delighted to find thriving independent retailers in nearly every community.

So back to my initial question. Why are jewelry retailers so much gloomier about their prospects than business owners in other industries? It's not a rhetorical question – I don't have the answer to that and I'm hoping that some of you do.

I do have an observation about what will set apart the winners from the losers. Actually, it's a question raised by Heraclitus regarding when an object that persists through time transitions into a different object. The story that was told to illustrate Heraclitus' question was this:

“The ship wherein Theseus and the youth of Athens returned had thirty oars, and was preserved by the Athenians down even to the time of Demetrius Phalereus, for they took away the old planks as they decayed, putting in new and stronger timber in their place, insomuch that this ship became a standing example among the philosophers, for the logical question of things that grow; one side holding that the ship remained the same, and the other contending that it was not the same. (Vita Thesei, 22-23)

Businesses that survive over the years take away old planks that are decayed and replace them with newer, stronger timber. One of my favorite retail stores in the world is on Howard Street in Chicago. It has been owned by the same woman for at least 30 years. At times it has been a jewelry store, a clothing store, a costume store, and an antique store. In fact, at all times it has held all of those things, but during different times it has emphasized those things differently. And always that store has been a place that has welcomed its neighborhood, known its shoppers, and offered amusement and conversation to anyone who entered the premise. That seems to be the best recipe for long-term retail success – a formula that has found adherents in nearly every community.

Retailers and small manufacturers need to ask of themselves a few vital questions.

Why do my customers buy my products?
How do my products stand out in my customers' minds?
How do my services stand out in my customers' minds?
What are the biggest hassles my customers encounter when buying from me, and what could I do to eliminate them? (the hassles, not the customers)
Are there any specific barriers to being my customer, and if so, how can I remove them?
Which of my customers require substantially more or less sales attention than the others? Why? What insights can I glean from this?
If my store were shuttered, to whom would it matter, and why?
Which of my customers would miss me most, and why?
How long would it take another company to fill the void?
If I were just starting my business today, would I do the things I am doing now? What would be different?

The asking and answering of these questions will lead to vital insights that can help any business owner figure out which planks are decayed and need to be replaced. Not all businesses will survive the test of time, but some will. Might as well be yours.

Auld Lang Syne

Short Summary: Many companies will conduct their annual employee reviews at the beginning of the new calendar year. Here are the key elements for ensuring a good review process.

Many companies will conduct their annual employee reviews at the beginning of the new calendar year, and if yours is one of them, the time to start preparing is now. Most employees – and nearly all managers – dread the annual review process, but for different reasons.

The employees dread it because A) the review session fails to offer them meaningful feedback or a clear path to advancement, or B) they get surprise negative feedback that frightens them, provides justification for no compensation increase, and foreshadows a time of being watched. The managers dread it because it’s time consuming, they’re not sure what positive feedback to give, and they hate giving negative feedback.

I’m a believer in the review process, but not in the way it’s done at most organizations. When managers have skills to give meaningful feedback in real time (this is highly trainable, by the way), the annual performance evaluation can be a less weighty, more informal and informative affair for both parties. An employee should never arrive at a formal review and be surprised by the information given to them during the meeting – pleasantly or otherwise. The definition of review (according to Merriam Webster Unabridged) is “a general survey, as of the events of the period.” In order for both parties to survey the events of the period, they have to be engaged in a collaborative meeting. If one of the parties is on the defensive, hearing for the first time all of the reasons they are performing below expectations, the meeting is definitely not going to be collaborative.

Here are the key elements for ensuring a good review process. This first challenge is to make sure you are not saving all your feedback for the review.

1. Learn to give feedback well, and in real-time. “I don’t have any problem with giving negative feedback,” a manager at a clothing company once boasted to me. I noticed that, indeed, he didn’t. But his employees had a hard time getting it from him. He was disrespectful at best. Another woman I worked with is a champion of giving vicious negative feedback with a look of innocence-cum-righteous-indignation on her unhappy face – and her preferred forum is in a meeting. These are examples of what not to do.

Remember that positive feedback is best done in public, and negative feedback is best done in private. The definition of private could be one-on-one, or it could be within the context of a closely knit work-group if more than one person is impacted by the behavior requiring the feedback. Never give feedback if you are feeling emotional. Easy to say, hard to do – and if you’re like most of us, you’ll spend your entire life learning this lesson. But it’s worth the effort. Nobody ever needs to hear our feedback as much as we need to give it to them. At the point where there are no emotional buttons being pushed, when we are cool-headed and capable of seeing the whole situation, then feedback can be given in a respectful and helpful way (side note – mind how often you decide that feedback is not really necessary when you consider it from this cool place).

When giving negative feedback (have you ever noticed how most people give “positive” and “constructive” feedback – never negative? The truth is, positive means do more of this and negative means do less of this, but we’re all so sensitive that the N-word has been banished from our vocabulary) – OK, so, when giving negative feedback, here are a few things to incorporate:

A) Stop and consider the whole human being first – the good and the bad qualities – and remember that everyone has an abundance of both. If you have turned someone into only a bad actor in your own mind, you are fooling yourself and about to do them an injustice. Don’t be so mentally weak.

B ) Consider what you want to accomplish with the feedback. This is different than considering what feedback you want to give them. If you want someone to stop interrupting others in meetings, then what you are trying to accomplish is better-flowing meetings with more open discourse. The feedback is in service of that objective.

C) Make sure you have let the person know they are getting negative feedback before you haul them into your office! The polite thing to do is ask the employee for a few minutes of his time, and give him about 15 minutes before the meeting takes place to compose himself and prepare for the feedback. A great way to do this is to say “I have some feedback I want to give you. Everything is fine (unless it isn’t – in which case this isn’t a case of normal negative feedback), but I do have an observation I want to share with you so we can have a more effective work place. Can we meet in about 15 minutes?”

D) Try not to sit behind your desk with the employee in front of it – the power imbalance is too symbolic. Sit in one of your guest chairs with them, or meet in a neutral place.

E) Open your feedback with the statement of what you want to accomplish. For instance, “It’s really important to all of us that we have meetings filled with open discourse, because we can accomplish so much together when everyone is participating. So what I wanted to talk with you about is something you’re doing that gets in the way of that discourse. I’m not even sure if you’re aware you’re doing it. But when you interrupt people, they become frustrated, and the communication level in the meeting is reduced.” Give the employee a chance to respond and discuss if they are so inclined, but if they are the type of person that takes time to think about things, simply let them know you’re available if they want to revisit the feedback. Don't beat a dead horse - give your feedback, clarify if asked, but let the employee go as gracefully and quickly as possible.

Real-time feedback also includes the good stuff. People don’t appreciate mindless “Gee, I care about you!” feedback, and if you’re going to pat them on the shoulder and tell them how great they are, make sure you take pains to know their first and last names as well. But specific feedback such as “I appreciate the work you did on that report, the research was excellent,” or “I can always count on you to come in early on your deadlines, thanks,” or “thanks for breaking the tension in that meeting with a joke – it was just what we needed,” all demonstrate that you are aware of that person’s contributions in a very specific way.

So the first key to good performance reviews is to make sure the review serves its real purpose, which is for you and your employee to analyze the previous year together and set goals for the future. Let’s assume you have done a good job of real-time feedback throughout the year, and you’re now preparing for the annual review.

2. If your company provides you with a review preparation process that is adequate, use it. If not, then supplement it. Review preparation should include both parties assessing the past year and highlighting areas of improvement, areas of desired improvement, and lessons learned. Each party should identify goals for the employee for the upcoming year. You should also assess yourself as a manager to the employee, and you should ask your employee to do the same. Specific areas to address are: A) how have I contributed to this employee’s professional growth in the past year? B ) How have I supported this employee’s success in the past year? C) What have I been able to teach this employee in the past year? D) What have I learned from this employee in the past year? And E) How could I better lead this employee in the coming year? The employee being reviewed should answer these same questions about you.

If you can’t fathom setting yourself up for review by your employees, if you can’t imagine that they will be able to be even a little honest with you, then you probably aren’t managing them very effectively to begin with. In my experience, however, most managers have pretty good relationships with their direct reports. If you can’t expect complete candidness (which is rare even in the best situations), you can still expect enough candor to learn something, and it takes time to build trust.

3. At the beginning of the review, let your employee know what your expectations are for that time with them. My preference is to ask the employee to self review. To the extent that they nail the salient points that I identified in my own review of their performance, I am spared the somewhat condescending experience of telling another adult all about herself. Once they are done with their self-review, you can offer them any additional insights that you have. Ideally, this portion becomes a conversation.

4. Make sure you spend most of your time talking about the employee, but save the last 10 or 15 minutes for the review of you as their manager. If your relationship is difficult, you may want to allow for a little more time. When you get to this portion of the review, you go first. If you correctly identify the things you could do better, it will spare the employee the necessity of telling you. But if they do come up with something you hadn’t thought of, make sure you are receptive and simply accept what they offer. If you reject or argue with their feedback during the review, you will never get their honest input again.

If an employee gives you feedback about your management that you disagree with or think is unfair, sleep on it. Try to understand if, from their perspective, there could be truth to it. Even if you can’t find any truth in it, evaluate whether or not you need to respond to it. If you do respond, do it in a manner that says, “I really want to do a good job as your manager. I’ve been thinking about what you told me, and I want to understand it better.” Be open and receptive. Employees can smell a Catch-22 from a mile away. Never underestimate the power imbalance that exists between you and your employees, and take care not to exploit it.

5. After the review, make copies of both sets of preparation notes, give one full set to your employee, and put the other set in their human resource file.

One other thought – something that comes before the first step in this article. If you really want to do a good job of reviewing your employees annually, you have to pay attention throughout the year. I recommend keeping a journal, and making notes when employees make progress in specific areas, contribute particularly well in meetings, complete an excellent project, or present an opportunity for training or other professional growth. You might want to put their initials in the margins if you’re monitoring the progress of multiple employees. When it’s time to prepare for your reviews, flip through your journals and you’ll find the preparation process is much easier with so much information triggering specific memories.

Is this process a guarantee that all your performance reviews will go swimmingly? No, it isn’t. Some relationships are more difficult than others, and some employees will never get you, nor you them. But this process will give you the opportunity to have more meaningful reviews, and there is always value in that.

Be a Better Leader Part 4: Create a Strong Business Culture

Short Summary: Strong leaders are integral to healthy business behavior. To influence the behavior of your organization define a business culture and cultural norms.

This blog post is one in a series of eight articles that explore the most important characteristics of a strong leader. These articles are linked to a Prezi visual presentation, which you can view here.

Create a Strong Business Culture

Every organization has its own business culture - but whether or not it is the right culture is directly related to how intentionally the culture was developed.

If you haven't set out to build a specific culture for your company, then the culture is likely to mirror the strongest personalities in the group or to be defined by the subgroups and their relationships with one another.

A business' culture defines how it operates on the inside, and it has a direct relationship to how the company is perceived on the outside. A truly intentional business culture will be strongly influenced by your value proposition.

How Value Proposition Affects Business Culture

If you're not familiar with the concepts of Value Proposition, the short explanation is this: If you have a company that is extremely focused on customer service and relationships, then a collaborative culture will serve you best. If you have a company that always tries to be on the cutting edge of product development or innovative services, then a competitive culture may be what you need. And if you have a company that is competing on price and speed, then a more controlling culture will help keep those crucial pennies from flying out the window (read more on this topic here).

Culture Defines Relationships and Behavior

Strong leaders are integral to building healthy business behavior. But even with a small organization of less than 10 people, micromanaging relationships is unrealistic (and intrusive!). The one way you can influence the overall behavior of your organization is to define a culture and cultural norms. Then you can speak to, model, and promote those norms as part of your daily business leadership.

Watch the Video: Expertise, Hubris, and Success

Operate from a Principle Base

One of the most compelling ways to define your business culture is to develop a set of principles by which you want your company to operate. Here are the principles we live by at Hill Management Group (StrategyWerx, SupportWerx, and MentorWerx):

Accountability; to ourselves, each other, our customers, and our vendors.
Honesty and Integrity in everything we do.
To work individually and with/for one another to maintain work/life balance.
To have fun and find joy in one another and in our work.
To treat everyone with dignity and respect.
To seek first to understand, then to be understood.
To remain in constant pursuit of personal, intellectual, and creative growth.
To understand what is most important and prioritize accordingly.
To embrace and be open about our mistakes so everyone can learn from them.

This is a terrific list for us, but it might not be the right list for you. The point is, you should spend some time thinking about what type of culture and principles will best serve you, then define them. Once defined, they can become part of your working culture.

Be the Role Model

One of the tough things about putting a defined culture or set of principles in place is that you not only have to abide by them, you must become the model for them. When you fall short of your own cultural goals (as we inevitably all will at some time), you must be openly accountable and make an example of yourself as a person who tries to do better. If you don't take a visible, accountable leadership role in this regard, then any talk you have about culture will just be talk.

Creating a strong business culture is one of the most difficult and rewarding things any leader can do. But the payoff is phenomenal - personally, professionally, and financially.

Be a Better Leader Part 5: Be the Brand Builder

Short Summary: Strong brands are a direct reflection of strong leadership. Embrace your role as the primary brand builder for your organization.

You - the Primary Brand Builder

Strong brands are a direct reflection of strong leadership. Just like your physical health and outward appearance are a direct reflection of what you eat, how you care for yourself, and your state of mind, so is your brand a direct reflection of your culture, your investment in your people and your customers, and the disciplines you follow to maintain a healthy, positive, innovative company. So your role as the primary brand builder for your business is one of your most important responsibilities.

I like to refer to brand (as a concept) as a promise, but more importantly, it’s a promise kept. A brand is the shorthand for an identity. We can't completely control our identity, because we can't control the customer’s perception of the brand. But we can greatly control perceptions through consistency. If everything you do in your business - from the way you speak to one another to the way you put tape on your shipments or bows on your bags - is consistent with your brand identity, then your customers will learn to trust your brand.

The type of consistency that leads to brand trust comes from being consistent from person to person and from message to message within your organization. This can only be achieved when it is cultivated, fostered, and modeled by strong leaders. The leader's job is to set the vision and constantly reinforce the understanding of and attachment to that vision throughout the organization. The more clarity your organization shares about your vision and goals, the better your people - and therefore your operations, marketing, sales, training, manufacturing, and planning - will align themselves to achieve that vision. Clarity leads to alignment, alignment leads to consistency, consistency leads to trust, and trust equals brand.

Take some time to reflect on the things you do to strengthen your brand. Identify areas in which you are undermining your brand or simply not paying attention to it. Your company is making promises every day - in the form of behaviors, messages, visuals, and services, and in every type of communication from face-to-face interactions to social media. The importance of your role as brand builder cannot be overstated.

Being a Better Leader Part 1: The Balancing Act

Short Summary: First in a series of 8 articles on becoming a better leader. How do you balance patience with people against impatience with progress?

Anyone who has ever held a leadership position knows that it can be difficult to get others to share your passion for progress. In fact, one of the things that makes a leader effective is her drive.

Getting others to share that drive, however - particularly people who may not see as much upside to the effort as an owner or a better-compensated manager - can be frustrating at best, or demotivating at worst.

It's easy to end up too far to either end of the pendulum; either too lax with people and their personal timetables (and feelings) or too aggressive about driving the agenda. Neither pole is productive. Here are some tips for maintaining your drive and your impatience with getting there against the need to properly motivate others to run along beside you.

Use Clear External Motivators

To create a sense of urgency, the better leader uses motivational drivers like goals, objectives, and metrics. Setting clear goals about what will be done, when it will be done, and the expected results - reported as a metric like total sales, calls made, packages shipped, orders taken, or customers in attendance - makes expectations visual and measurable. When the expectations are posted on a whiteboard, on a daily computer popup window, or other public visual forum, they become top-of-mind. They also become somewhat separated from you as the leader, and as a result become a driving force unto themselves.

Share the Reasons for your Urgency

"Because I said so" probably didn't work for you when your mom said it, and it doesn't work so well coming from the boss either. But don't believe just because you've never said the words that they weren't inferred. In fact, any time we ask anyone to do anything without clear reasons and benefits for doing so, there's a good chance that "because I said so" will be the underlying message.

So share the reasons for your urgency to get things done. Explain the business need in terms of profitability, cash-flow, the ability to invest in tools/equipment/technology, or to invest in marketing. Outside deadlines (bank requirements, trade show, holiday selling seasons) are also powerful. When people clearly understand why they are being asked to do something, they are better able to embrace the urgency attached to it.

Set Rational Expectations

If you don't have a clear understanding of what people can accomplish - including at what speed and with what proficiency - then you can't have proper expectations. One of the things that really gets in the way of proper expectations - particularly in small businesses - is a failure to establish clear roles and responsibilities. The smaller the business, the broader each individual's range of responsibility will be. Don't let that stop you. Create a mind map, a spreadsheet, an organization chart, or some other visual form to represent who does what in your organization. Then step back. Are there any whats not attached to a who? Fix that!

Next, determine how proficient each of your people are at the things they are expected to do. Chances are, most of your people have some responsibilities that they are completely competent at, and others for which they are still developing skills and understanding. This is where your Patience with People begins. By acknowledging that not all employees are equally prepared to succeed in all tasks, we can create training opportunities, assign them responsibilities with a more seasoned co-worker, or adjust our timetables to accommodate the necessary learning curves. If you provide this space for developing competence alongside clear expectations that people excel at the things for which they already have demonstrated proficiency, you will be sending a loud and fair message to all that this is a place where people can both learn and succeed, and that one leads to the other.

Make it Safe

Everyone makes mistakes. Making the same mistake over and over isn't something you should accept, but first mistakes, learning mistakes, honest mistakes - you must create an environment in which it is safe to make them. Most people beat themselves up for a mistake far more than you would ever think to do. In those cases, don't ignore it or brush it off, but don't rub salt in the wound either. I find the simple question, "Well, what do you think you will do differently next time?" is more than adequate to address most mistakes.

Be Your Own Example

If it's urgency, diligence, and performance to specific goals and objectives that you want, then you must demonstrate the same discipline and dedication, and be openly accountable when you fail to meet your objectives. When you demonstrate grace as a leader - a certain sense of propriety, a clear quality of accountability and thoughtfulness - this is a profound way to demonstrate your patience with people in the midst of impatience with progress.

Watch for the next article in this series, coming in two days!

Being a Better Leader Part 2: Be the Chief Customer Finder

Short Summary: To be a better leader become the Chief Customer Finder. Foster a strong sales and service culture support your sales organization and demonstrate true customer leadership.

This blog post is one in a series of eight articles that explore the most important characteristics of better leaders. These articles are linked to a Prezi visual presentation, which you can view here.

Be the Chief Customer Finder

If you think about it, the words Chief Executive Officer don't have a lot of practical meaning. But tell people you're the Chief Customer Finder, and they'll understand your role in an instant!

Unless you're a born salesperson, chances are good that sales are the first thing you were delighted to give up - maybe even with your first hire. You don't have to be the primary salesperson to be a better leader, but you do have to maintain a primary role in the finding and serving of customers.

What does this mean? To begin with, it means that you put emphasis on finding and training the best salespeople for your organization. You maintain close communication with them, and let them know their insight is vital to the growth and well-being of the company. You support them, motivate them, and take their advocacy for their customers very, very seriously.

It's a funny thing about that. Salespeople often suffer from shoot-the-messenger syndrome. After all, who is most likely to rub the shortcomings of your beloved company in your nose? The customers. And who are those customers entrusting with that information? Your sales people. Don't shoot the messenger!

Seek Personal Contact with Customers and Potential Customers

Look for opportunities to spend time with your customers - even if you're not directly involved in serving them. Take them out for a meal, or to an entertainment event, or just call them on the phone to ask "how are we doing?" Your customers will tell you things about your company (and possibly your competitors!) that they wouldn't think to tell your staff.

Help Integrate Sales and Marketing

Sales and Marketing are two of the most co-dependent departments of any company, yet the larger a company gets, the more likely the two departments are to be at odds with one another. Be the integrator of the two departments. Help them understand each other and their interdependence. Keeping communication open and flowing (and competition between them to the merest whisper) between Sales and Marketing is one of the most important things you can do to ensure the right things happen to find new customers.

And, OK, Keep Selling

You don't have to be the primary salesperson for your company, but you never get to stop selling. After all, if you can't target the right customer, listen to his needs, and tell the story of how you can meet those needs in a compelling way, how can you expect more from the rest of your organization? Always keep your sales skills sharp and effective, because becoming a better leader means taking the lead on representing your organization's compelling benefit and attributes.

I hope you're enjoying this series on becoming a Better Leader! Stay tuned for the next installment in a day or two.

Being a Better Leader Part 3: Be a Student of Business

Short Summary: To be a better leader be a student of business. This article gives advice on what areas to study and where to go to find that information.

Be a Student of Business

Well, that's assuming you're in business. If you're reading this leadership series and you're in some other field, be a student of whatever it is you do! To be a better leader, you must continue learning and investing in yourself.

But let's talk in terms of business, because that's what I know best. What does it mean to be a student of business? It means being interested in the broader world of business thought beyond your own company and beyond your industry. In the broad world of business, the general categories (or disciplines) include management, marketing, sales & distribution, human resources, operations (like warehousing, transportation, distribution, manufacturing), accounting, information technology, finance & planning. Within each of these disciplines every business must deploy training, process improvement, integration of new technologies, and performance measurement.

All these disciplines continuously evolve due to new customer demands, new technology, and competitive innovation. A true student of business never stops thinking about the way business can be improved.

What are some of the ways you can become a lifelong Student of Business?

1. Read read read. Fast Company, Inc. Magazine, Harvard Business Review, Forbes, Wired, and Entrepreneur are all fantastic publications devoted to bringing you the latest and greatest in business thinking and achievement.

2. Join a business development group, like TEC, Vistage, or YPO (Young President's Organization). Membership in one of these organizations will give you a network of other business leaders who are working to improve their skills and performance, and your group will consist of business leaders in many different industries.

3. Subscribe to this blog! Seriously. We give terrific information, and if you're a subscriber you won't ever miss out.

4. Take StrategyWerx classes. StrategyWerx (a business I own) is entirely focused on providing answers and services to small business owners. Our webinars, seminars, and videos will make a meaningful contribution to your business knowledge.

5. Hang out in the business book section at your nearest book store.Build your business book library!

Whatever you choose to do, know that finding a passion for and interest in ongoing business knowledge is sure to make you a better leader.

Watch for our next installment in this 8 part series, coming in the next day or two!

Breakfast Lunch and Gratitude

Short Summary: Focusing on weakness or even mediocrity at the expense of rewarding strength will lower the average performance of your organization.

I'll never forget it. I was making a pitch to the owner of a company I worked for to raise the wages of a team of outstanding individuals. Not just outstanding, but genuinely invested in moving the company forward - demonstrating their loyalty, skill, and dedication in every possible way. We were lucky to employ these individuals.

We had given the group a nice raise the year before. They also possessed a skill-set that had increasing market value, so the raise I was seeking for the subsequent year was another good raise, but not higher than the market would suggest was appropriate.

Boss: "They got 7.5% last year."

Me: "Yes, they did."

Boss: "The company average for last year was 4%"

Me: "I understand. But this team outperformed the rest of the company by every measure, and some of the performance of the rest of the company can be directly attributed to them."

Boss: "I'm not saying they shouldn't have gotten the raise they got last year. I just think we should give them the average this year. Keep them from expecting to get a great raise year after year."

Me: "But what if they outperform the rest of the organization year after year? Don't we want to motivate that kind of performance?"

Boss: "They should be glad they have the jobs."

Me: "I don't know if I'd approach it that way boss. Right now, this is a buyer's market for job seekers. And besides, this group of people behaves like owners. They are really dedicated to what we are trying to accomplish."

Boss. "You know what I always say. Feed the family last."

I admit it. I did a completely unmannered thing and dug in my ear. Then I said, "You meant, 'feed the family first', right?"

Boss: "You heard me right. Feed the family last. If they really care about this place, they'll understand we need to keep things fair and equal around here this year. If they're really acting like owners, they'll sacrifice."

Obviously, this wasn't about being fair and equal, though possibly it was about maintaining low expectations (always a poor choice). But mostly, it was a common mistake that companies make. We get so focused on our low performers that they sap all our time and energy. Meanwhile, we let our "A" players run without encouragement, attention, or participation - so glad are we that they can function without our constant management.

Any pediatrician can tell you that if you pay attention to your child only when they are bad, you get a child who is bad all the time. This concept applies to business too. If we only pay attention to our low performers, our "A" performers eventually wither from lack of attention, leaving us with a business full of low and mediocre employees.

Focusing on weakness or even mediocrity at the expense of rewarding strength will lower the average performance of your organization. The boss in this example had it so wrong it's breathtaking.

So here's something to consider. If you have people working for you, what percentage of your time do you spend, or how much energy do you invest, rewarding your strong team members? And if you are an independent, how much time and energy do you focus on doing things that play to your strengths and celebrating your strengths, versus the amount of time you spend bemoaning and trying to correct your weaknesses?

Feed the family first! Give a stranger a hamburger, and he says thanks for the chow and hasta la vista baby. But a well cared for family sticks with you, and then it feeds you back.

Caution! Don't Try This at Home

Short Summary: The truth is nearly every manager demonstrates a little FETCH once in a while.

I have adult and near-adult (or perhaps, all near-adult) children, so I hear a lot of horror stories about bad managers and bad management. I think it’s good for my kids to learn these lessons – it will keep them in college. But I am appalled at the vast amount of unacceptable behavior that passes for management in seemingly responsible businesses.

So, what got me started on this tirade (oh yes, disclaimer . . . this is a tirade)? The buzz of the week is that a woman I respect very much was told, if not by a screaming boss certainly by a boss at the far end of rational, “Just SHUT UP and listen to me!”

Hmm. OK. The woman who was screamed at is definitely not timid. She is dynamic and intelligent and has an extremely high bias to action. So is it possible she was holding her own in a disagreement? Absolutely. Is she the kind of employee every boss wants to have? Well if you could clone her, our economy would improve overnight. What on earth would make an employer, who is dependent on having dynamic, intelligent, active employees, demoralize this one so completely?

I struggle to even answer that question. But here, let’s try. Hey, I haven’t invented any acronyms in at least two years. Let’s do an acronym. How about . . . FETCH. As in, “Go!”

I think this might work.

What does the “F” stand for? Faultfinding. The FETCH manager is the opposite of the ideal leader that Jim Collins defines. Collins says that a Level 5 Leader has a specific relationship to the mirror and the window. When things are going well, the Level 5 Leader looks out the window and recognizes all the contributions of others. When things are going poorly, the Level 5 Leader looks in the mirror at herself. The FETCH manager spends a lot of time looking out the window when things are going poorly, and makes employees pay for his or her personal stress.

“E” stands for Entitlement. The FETCH manager believes they are entitled to treat others poorly. Why? Well there could be a host of reasons, mostly relating to the esteem they believe should go along with the role the FETCH manager possesses.

“T” stands for Thoughtless. The definition of thoughtless is interesting. The most commonly understood meaning is lack of concern for others, and the FETCH manager definitely demonstrates this. But thoughtless also suggests insufficient understanding, a lack of awareness that blinds you to the fact that others just may know something you don’t know. Thoughtless is a good word for the FETCH manager.

“C” stands for Condescension. When one feels entitled by role, one then assumes an air of superiority with others, sufficient to say, yell at them as one might imagine a landowner yelling at a serf.

“H” stands for Hubris. The FETCH manager suffers from exaggerated self-confidence. Surely, if they are the boss, they must be the boss for a reason. And that reason must be that they are right. Or they care more than everyone else cares. Or something.

The truth is, nearly every manager demonstrates a little FETCH once in a while. Most of us don’t go so far overboard as to yell at someone to SHUT UP, but we do have moments that we are embarrassed by later, events that we learn from, and which cause us to resolve to become better people. But there are folks out there who never seem to learn, who make their subordinates GO FETCH again and again. And again.

If you’re laughing and nodding your head as you read this, you’re probably not one of them. If you’re all pissed off and in a sweat, you might want to reexamine your relationship with the mirror. Come on people. Our employees aren’t children. They’re adults – with intelligence, experience, and self-respect of their own. We can disagree with them, sure, but we’d better be prepared to let them disagree with us as well.

I imagine some folks, perhaps these FETCH folks, might try screaming SHUT UP! at their children on occasion, though I don’t see how it would contribute to a healthy family. But do you think they would exercise the option to scream SHUT UP! at their spouses very often? I suspect not. Even they would know better than to use that behavior at home.

Change Mismanagement

Short Summary: The types of changes you should - and should not - make during a recession are the same types of change you should consider during a strong economy.

Ask the average management consultant about organizational change, and he’ll tell you that more organizations need to do a better job of embracing more change. Ask the average CFO about organizational change, and she’ll likely tell you that organizations need to do a better job of maintaining and improving the things they are already doing.

The change/don’t change conflict has existed as long as fathers have had sons, children have taken over family businesses, and marriages have reached 25^th anniversaries. If you had to choose one option over the other, the only option that would carry you into the future would be to choose change. But change is always disruptive, and it can be quite dangerous if not applied with deep knowledge and finesse.

Some elements of a business should be fairly unchanging. The core values of a business should change very little over time, though they may evolve a bit as the business owners and participants deepen their understanding of them. One of the primary reasons for merger and acquisition disasters is the failure to consider differences in core values governing the cultures and brands of the organizations involved. Reconciling conflicting value systems is much more difficult than integrating computer systems (though systems migration is a bear). Business culture and business proposition are related to values, and should be similarly unchanging.

Other elements of a business should be reviewed annually but changed far less often. Strategy is an example. Any business that adopts a new strategy each year has not embraced strategy at all – they are just pursuing serial tactics. Effective strategic planning looks out 7-10 years and creates ambitious multi-year plans and goals to achieve the strategy. Strategy should be monitored monthly and reviewed annually – but it should not be changed unless compelling market reasons to do so are present.

Brand is another element that should be constantly monitored but which should change rarely, and brand change should be subtle and incremental. Customers do not like the shock of adapting to new brand messages. Brand loyalty is based on trust, and trust is shaken when a friend you thought you knew suddenly changes.

Everything a company does to fulfill the promise of its brand and to achieve its strategy should be considered as viable candidates for change. But change should be considered carefully. For instance, if a company decides to implement a new sales strategy to achieve their long-term revenue and margin goals, they should conduct research to find out how long it typically takes for a business to benefit from such a change. If they expect to see immediate benefits, but case studies show that results typically require 18 months, it would be good to know that in advance. Too many companies abandon viable change efforts because they do not have realistic expectations.

Why am I speaking of change when the only news anyone wants to talk about is the economy? That’s why.

Too many companies are abandoning their values, their brands, and their strategies in an attempt to weather the storm – a storm which by all comparisons is bad but not tragic and is certainly precedented and survivable.

Too many companies are cutting loose important (strategic) talent, eliminating their advertising budgets, changing their marketing strategies, and reducing their operations to customer-unfriendly shells in an effort to survive a bad tornado season that’s been billed as an earth-bound meteor.

If your business values, strategy, and brand were sound before the recession, they probably still are. Evaluate them, yes – particularly to see if the irrational reaction of your competitors is creating market opportunity for you. In a recessionary economy the tactics you deploy to achieve your strategy and brand may need to be tweaked, adjusted, and redirected. If you keep your eye on your established strategy and brand, you can modify your approach to take current market conditions into account, and find success.

The types of changes you should – and should not – make during a recession are the same types of change you should consider during a strong economy. Don’t let the economy dictate how you will run your business. To do so would be the last type of change you want to make. A terrible change in leadership.

Cinderella Teams and Giant Killers

Short Summary: Small businesses have a distinct advantage that large businesses do not have and one of the things we must do is exploit this advantage to the maximum extent. What is it? Our ability to be flat networked and flexible.

One of the challenges small business owners face is going up against larger competitors with more resources at their disposal. Not just capital – though competing against highly funded corporations is certainly daunting. But people resources and all of the ideas, creativity, organization, and administration that employees provide. I’m acutely aware of this right now, going as I have from running a business with hundreds of employees to owning a business with less than 10 employees.

But small businesses have a distinct advantage that large businesses do not have, and one of the things we must do is exploit this advantage to the maximum extent. What is it? Our ability to be flat, networked, and flexible.

Walk into any large corporate HR department and those three words – flat/networked/flexible – are on the lips of every MBA’d industrial psychologist. Why are these words so important? Because the nature of the business game has changed. Competitive strength used to come from a combination of first-mover advantage, access to capital markets, and the ability to outspend the competition. But the rules are changing (or have they changed already?). Today’s competitive companies are able to run faster than the competition and at least stay in step with, if not ahead of, the changes taking place in the world. They know how to use relevant technology to their advantage, they are able to take concepts from idea to implementation faster, they are more courageous about killing weak ideas and going on to the next one, and they harness human creativity, enthusiasm, intelligence and will to catapult them past their competitors.

Speaking of competitors – those rules have changed too. Leaders who know how to collaborate with sometime competitors while maintaining independence and brand identity take their organizations into new markets, new products, and new economic opportunities.

So just where does a small business get the advantage? After all, the large corporations can employ legions of McKinsey and Mercer specialists who will show them how to flatten their hierarchies, increase lateral communication, deploy technology to effectively enable teams, and engage their employees in ever-shifting flexible organizations (can you count the buzzwords I just used in that paragraph?). Small businesses don’t have large consulting budgets. Heck, most small businesses don’t have any consulting budget.

But in the area of being flat, networked and flexible, small businesses don’t need consultants. They don’t have the stultifying hierarchies and corporate structures that keep the large competitors from being flexible, flat and networked. There is nothing to undo to achieve the fleet-footedness and creativity that larger organizations crave. But small business owners aren’t capitalizing on this advantage, and that’s unfortunate. Too many small business owners start creating the organizational boxes and policies (the ones big businesses are trying to eliminate) the moment they start hiring staff. After all, creating departments and management layers is a sign of success, right? Well, if it ever was, it’s not any more.

A primary small business weakness is the failure to harness technology effectively. Today’s technology makes it possible for small businesses to look big, big businesses to communicate on an individual level, and for all businesses to create the image they want at relatively low costs. Gone are the days when only big companies could produce classy, persuasive advertising materials and marketing promotions. Technology also makes it possible for people in far flung locations to work together as if they were in one office.

There was a time when acquiring good business advice required access to a fantastic public or university library or the luck of having a competent local SBA. These days there is a wealth of business advice available for free or for nominal fees. Yes, you have to do some work to determine the quality of the advice, but it’s out there.

Small businesses are also failing to capitalize on the collaborative opportunities that exist in their own communities. If we can get out of our mental cubby-holes what we find is an abundance of opportunity to trade services, share services, barter for skills, get free advice, co-develop products, open markets, co-market, and even drum up cash. The big businesses are investing heavily in learning how to form and manage teams, how to stop squashing creativity, and how to get ideas from everywhere in their organization. It’s not impossible to do in a large company, but it’s a lot of work. There are a lot of people who are vested in maintaining the status quo, for their own comfort, job security, or lack of imagination. For a large business, creating these types of teams is an uphill battle.

Small business owners can form themselves into teams any time they want, without having to sell the idea to management, get buy-in, share the vision, create new mission statements, or launch a new initiative (yay, more buzzwords). According to the NFIB, there is a list of over 40 issues that are troubling to small business owners (the number of issues related to taxation and federal government regulation is disheartening, but that’s a conversation for another day). A number of the issues on that list could benefit directly from small business owners teaming up in creative ways, including:

1. Cost of Health Insurance
2. Locating Qualified Employees (skilled AND unskilled)
3. Cost and Availability of Liability Insurance
4. Rent/Property Taxes – Physical Facility Costs
5. Utility costs
6. Telephone Costs and Service
7. Keeping Skilled Employees
8. Cost of Outside Business Help
9. Fixed Costs Too High
10. Controlling My Own Time
11. Projecting Future Sales Changes
12. Finding Out About Regulatory Requirements
13. Ability to Cost-Effectively Advertise
14. Locating Business Help When Needed
15. Pricing My Goods/Services
16. Training Employees
17. Environmental Regulations
18. Keeping Up on Business and Market Developments
19. Purchasing and Using Computers and Technology Effectively
20. Sales Too Dependent on Health of One Business or Industry
21. Employee Turnover

Whether the teaming up is as simple as sharing information, or as creative as sharing space, services, or hosted technology, small business owners could be using one another’s support far more effectively than is currently being done.

All joking about buzzwords aside, imagine for a moment you live in India, China, or any one of the dozens of countries emerging into this century with access to technology and therefore the business opportunities of the developed world. Imagine you have an opportunity to do significantly better than your parents and grandparents, even lift yourself out of poverty. How hungry would you be? How creative would you be in seeking business partners? How unselfconscious would you be about asking for help, advice, for something free? How great would it be to have no prior impression about how business should be, only the sense of tremendous opportunity? Big business feels this pressure already, and they’re trying to figure out how to get flat, flexible, and networked enough to stay ahead. They know they are competing with a burgeoning world filled with people for whom taking risk is positive, because it represents food, shelter, and the prospect of some and security. Not just figurative hunger, but real hunger.

For too many of us, risk represents the specter of losing what we already have. That means we aren’t as hungry as those who haven’t had it yet. So the world keeps surging, big business is trying to figure out how to get in the new groove, and here you sit in the catbird seat, small business owner. Flat, flexible, and as networked as you wanna be. How hungry are you?

Collaborative Management: Consultative vs Consensus

Short Summary: Within collaborative management style there are two approaches - consensus and consultative. Having successfully run a medium-sized enterprise using a consensus approach I can honestly say that consultative is superior.

I was having dinner the other night with a former employee, and I surprised her with something I said. For the previous 11 years we had worked together in a business in which one of my responsibilities was furthering the culture. The culture when I arrived was of the consensus style of collaborative management, and it was made clear that there would be no other approach. Not having run a consensus management approach before, I embraced it and did my best to carry it forward.

As the business grew significantly over the years (it got to well over 500 people), the challenges of requiring full consensus became more and more difficult. Many times I wondered if we were doing the right thing, and my leadership group frequently expressed discouragement and frustration with the process (and sometimes, the results). But consensus style was the requirement, so we created new and useful methods of enhancing communication and encouraging buy-in and performance.

Looking back on it, I believe we did more with a full consensus management approach than any other company I have been able to find information on. And I think the tools we developed will have tremendous application in the years to come. But the thing I said that surprised my dinner date so much was that I would not do it again.

“But, I thought you were a full supporter of it! I thought it was primarily your idea!” she said.

Full supporter, yes. Primarily my idea? Well, the management style was clearly not my idea. A lot (but not all) of the tools were my idea or were tools that I incorporated based on others’ ideas. But sometimes we support something because that’s what we’ve been hired to do. And it was an exciting challenge. I had no reason to believe that full consensus management was a bad thing, nor did I have enough experience (nobody did, back then) to suggest it couldn’t scale to what we were trying to accomplish.

I do believe that with the help of a powerful management team we created tools that will be wildly effective in other environments. But my experience also taught me full consensus management can not be successful beyond a few dozen people.

Learn More About Collaborative Management Tools

However, I do believe in collaborativemanagement.

To be specific, there are three management/cultural styles: control, competitive, and collaborative. Within collaborative management there are two different styles: consensus and consultative.

Consensus is where everyone has a voice and the requirement is for the group to work hard to come to full agreement before proceeding. I think this is very important for marriages and partnerships. It’s important for boards of directors. It is style that can work among people who are essentially equals in intellect, experience and commitment.

Consultative style is where the people in authority say “I’ll gather your opinions, I’ll take them seriously and learn from them, but then I’ll make the decision because it’s my responsibility to do.” Some decisions may be made by one authority, others by a group of similarly responsible authorities. It’s still collaborative management, but with parameters.

Why do I think consultative works where consensus does not? Part of the answer is in this sentence: “Consensus is possible among people who are essentially equals in intellect, experience and commitment.” Part of the answer lies in the fact that people want, deserve, and expect to experience good leadership. And part of the answer is that when you try to export democracy into entities that have fundamental constructs that will prevent them from benefiting from it, all you get is anarchy.

Criticism: The Fire in the Forge of Great Leadership

People respect responsibility and authority when they are appropriately demonstrated. When a business leader spends all his or her time saying, “well, what do you think?” “Maybe we should let an ad hoc address this,” or “I think the answer will present itself if we have the right discussion with the right parties present,” those are not the messages the people hear. What they hear is, “I don’t know,” “I’m hoping an ad hoc will bail my ass out,” and “I’m hoping that if we get more people together you won’t find out that I don’t know.” Even if that leader means to be collaborative and show respect for the opinions of others, the result is that they’re being indecisive and wasting time.

I was told by the founder of the company I mentioned at the beginning of this article that if you get a group of people together and ask them a bunch of questions they’ll come up with the right answer. I was further told that the question-asker didn’t even have to be an expert in that area. Where the heck did he come up with that idea? It’s a complete bastardization of the Socratic concept, preached by someone who never understood it in the first place. Either the question-asker or the question-answerers have to know what they are talking about. Otherwise, it’s that old cliché of the blind leading the blind. And the idea that Socrates only asked questions and didn’t outright teach? Well that’s just not true. Read the dialogues of Plato or of Xenophon and you’ll see that Socrates talked a lot more than he asked! Which is no criticism of Socrates – it was right that he should talk when he had so much to teach.

When people are being led down a blind alley, they don’t appreciate it. And they shouldn’t. They might get beaten up or mugged. Consensus management in its pure, theoretical form would hold out not just for agreement but for complete understanding. Complete understanding on a broad range of topics (such as one confronts in a business) requires an elevated level of knowledge and thinking skills, not to mention maturity. In the absence of that sort of parity, consensus management descends into the abyss of equalness and fairness, along with a strange tendency for everyone involved to think they know more than they actually do.

I will definitely do collaborative management again. I like collaboration. I like creating an environment in which everyone is encouraged to contribute their ideas and their knowledge and to step out on a limb from time to time with something truly outrageous or from left field. I have always loved the thrill of realizing that person working on the dock is actually on the school board of their town, that the guy in receiving skis Switzerland every winter, and that the woman in the Call Center once owned her own business and sold it for nearly a million dollars. People are interesting and intelligent and a lot more complex than most businesses want to recognize. Yep. I want to get to know all those interesting people. I want to incorporate their ideas and their knowledge, and I want to include them to the full extent they wish to be included and at the appropriate level of responsibility for their skills and experience.

But I’ll do it in a consultative style. Because at the end of the day, people have a right and a desire to know who is responsible for what, and to expect their leaders to be well-informed about the topic at hand. They have a right to expect their leaders to be voracious in acquiring new knowledge. And they have a right to expect their leaders to be teachers, passing that knowledge on every chance they get. People don’t mind being led, and when they understand the ground rules, they are great about contributing their ideas. What they dislike is being waffled. Don’t you?

Compensation Advice for Retailers

Short Summary: Bosses and workers often have different ideas on what's equitable. Here's how to make everyone happy.

What is a fair compensation rate for retail sales staff today? And how should commissions be structured? Andrea Hill gives advice for the jewelry industry in this article in InStore Magazine.

From InStore Magazine online, April 2, 2019:

I have an employee who makes $16 an hour and 6 percent on retail (although for loose diamonds, commission is based on gross profit). She earns close to $60,000 a year but feels underpaid and that paying gross profit on diamonds is contrary to the industry standard. How can I convince her she has it pretty good?

She does indeed have it pretty good, says industry consultant Andrea Hill, owner of Hill Management Group, noting that her hourly rate is almost 50 percent higher than the average for retail salespeople of $11.50, and even more than the average of $15 paid by very high-end luxury retailers (think Gucci). The commission is also higher than the industry average of 3-4 percent on retail, although, significantly, Hill notes, “wise” businesses are increasingly moving away from such a formula to pay commission on gross margins. “In this way, sales professionals are challenged to balance the need to get the highest price possible with the need to close the sale. When commissions are paid out on total sales only, then it becomes very easy for the salesperson to sacrifice profits for the easy close,” she says. While exposure to such numbers should mollify your associate, what you really want to do is excite her about the potential of earning as much as $100,000 a year — which is what top luxury salespeople make — although that requires building a “strong book” of customers through active networking, clienteling and prospecting work. Keep in mind, however, that even the most generous commission rate won’t help if you’re not on top of your game, meaning advertising intelligently, keeping up with changing retail trends, providing the right technology for how consumers today want to shop, and maintaining an exciting inventory that reflects current tastes, says Hill. “If the retail business owner does not ensure that they are running a strong merchandising and marketing operation, then even the best salesperson in the world will not be able to turn the promise of commission into actual earnings.”

Criticism: The fire in the forge of great leadership

Short Summary: A great leader goes beyond those characteristics to combine a blend of intense personal will with great humility.

Much of my time is spent working with entrepreneurs, and I have discovered that many, if not most, are uncomfortable with the role and responsibility of leadership. The typical entrepreneur is someone who has a desire to be financially self-determined, who has enough confidence to try something on their own, and who is willing to take some risks. Most of them are comfortable with the idea of being someone else’s boss. But they would prefer to be a boss without being a leader.

What is it about being a leader that is so daunting? Part of the problem may be that we’ve taken the concept of leader and attached it to larger-than-life personalities like Jack Welch, making anyone else who aspires to leadership look like a pallid wanna-be.

Part of the problem may be that our national personality is largely influenced by populism, the idea that the rank and file have greater value than their leaders because of, their, um superior realness (read on to discover the glorious contradiction of this idea). This populist tendency leads to a rather toxic practice of boss-bashing and fault finding. Any intelligent person who wishes to pursue a position of leadership must first consider their own ability to deal with constant criticism. One of the first pieces of management advice I ever received, delivered from a mentor I revered, was “the higher you fly the more you get shot at.” I have often encountered talented workers who were unwilling to break ranks with their fellow workers and train for management because they didn’t want to upset the social applecart.

Another reason some people eschew leadership is because it’s so damned responsible. Myriad scientific and social studies demonstrate that the wildly successful aren’t those who make less mistakes – they are the ones who make more mistakes, because it requires much more action and risk-taking to achieve big wins. Leaders are by their nature flawed. Truly great leaders air all their flaws in public in pursuit of great accomplishments. The responsibility of driving an organization forward is the responsibility of constantly trying to be educated, informed, forward-thinking, and strategic thinking enough to make more decisions than anyone else has to make – frequently at breakneck speed and always at the risk of being wrong. The armchair leadership critique squads get to sit on the sideline and comment on everything from the leader’s personality to their character to their subject knowledge to their style. They are sometimes correct, rarely kind.

No wonder many entrepreneurs would rather be a garden-variety boss than a leader. It’s safer. You get to keep/make more friends. You get to make the vast majority of your mistakes in private.

The problem for entrepreneurs who do not wish to be leaders is that it doesn’t work. People crave leadership, even as they criticize it, even as they resist it. We all want to know where we’re going, how we’re going to get there, what risks we’re going to face, and what our chances are of making it. If nobody takes a leadership role, the result is the social equivalent of sheep milling around in a barnyard. The contradiction of our social populism is our equally great craving for accomplishment, a sense of purpose.

Can a business survive without a leader? Absolutely – I hear about and encounter businesses without leadership every day. Business owners who are described as wishy-washy by their employees, who avoid making difficult decisions, who move the business so incrementally that the evolution is nearly indiscernible (or nonexistent), who push tough decisions off to people like the human resource manager, the operations manager, and the accounting department. They are frequently well-liked, even admired, people. But do their businesses grow and thrive? No, they do not.

When an entrepreneur takes the responsibility for hiring others, they take on a responsibility for other people’s lives. If you’re self-employed and it all falls apart, you’re only damaging yourself and your family. When an employer goes down the drain they take many others with them – employees, vendors, and even customers.

Many entrepreneurs believe that by being very conservative – by not making mistakes – they will preserve their business. But case-study after case-study demonstrates that the typical business failure isn’t made of one bad decision (or even several bad decisions), but of failure to evolve, to chart new territory, to end things that have lost their value (or never had value), to seek new customers in new markets or to invent new ways to create value. Failure is typically the result of stasis.

The practice of leadership is demanding; demanding of skills, knowledge, ability to grow, and ability to maintain self-confidence. Jim Collins asserts that to be a great leader one must first be a great manager. Leadership isn’t about charisma. It’s about having tremendous knowledge about the work (all the work), how to do the work, and what could improve the work. At the same time a leader is looking inside with tremendous insight, understanding, and contribution, they are also looking outside with foresight, a passion for learning, and an eagerness to evolve. The competent leader is assessing all the variables, recognizing that each option presents both pros and cons, and driving in the direction of the greatest pros while working to offset or eliminate the cons.

And great leaders? Jim Collins says that a great leader goes beyond those characteristics to combine a blend of intense personal will with great humility. And there it is. The biggest risk. One does not become a great leader without having first been a not-great leader. Humility is learned on-the-job. The risks of leadership aren’t just technical, strategic, financial. They are personal. Intensely personal. The emerging leader must make peace with a very difficult idea. He (or she) must accept that demands and complaints from the rank and file are part of his growth, because a leader must strive to be more capable, more effective, a better decision-maker than the people they aspire to lead. And he does all this in public, being the flawed human being he is, and holding himself to a higher standard than his critics will ever be held to themselves. More daunting is the fact that this goes on for a long time, because great humility is rarely achieved in one’s 30s or 40s. Great humility is typically pursued over a lifetime, which means someone who aspires to be a great leader is aspiring to decades of humility lessons.

Is it fair? Well, as I often ask my children, “what’s fair anyway?” The more appropriate question is “what do you want to achieve?” If what you wish to achieve is a thriving business that grows and evolves and is capable of producing the retirement income or legacy you desire, you will need to either accept the role of leadership or fully entrust that role to someone else who will. If you choose to learn to be a leader – then a great leader – the financial, intellectual, and psychic rewards can be great, but as with every great reward, you will pay the price every day. You will have to be a striving, mistake-making, earnest, struggling, imperfect human on a public stage. The ultimate risk. And perhaps the greatest reward of all.

Diddy or The Donald? What Should One Expect from an Employer (and what should we expect of ourselves?)

Short Summary: We all owe ourselves and all our present and future employees something very important - a commitment to excellence and continuing knowledge development in our chosen fields of endeavor.

Sean Combs – known to his fan base as Diddy – has taken to You Tube to recruit a new assistant. His last assistant, a gentleman not even allowed to keep his given name for the role, was best known for holding Diddy’s umbrella and primping him for the cameras. Diddy has posted two minutes-long rants online, in which he bellows about the new era we’re in, but fails to describe any of the job responsibilities. In addition to umbrella duty, the last assistant was observed by the press to be involved primarily in menial tasks like running around in Manhattan procuring Diddy’s snack requirements. According to the job posting, only college educated applicants need apply. Apparently, more than 600 applicants have done just that so far.

If Diddy isn’t your speed, you could always fantasize about working for The Donald. Now here’s a man that has delivered far more bad performance in business than good, indicating that his success is significantly dependent on the amounts of money he has had available to him since joining his father’s established real estate business after college, combined with his celebrity profile. Most people don’t realize that many of the properties bearing his name are not even owned by him – real estate developers license his name as a marketing device. Nonetheless, he fancies himself a business mogul. What might you expect as a management employee of Donald Trump’s? There’s no doubt a great deal of experience to be gained, as is true with the job as Diddy’s assistant, but what else will be learned? I'd wager very little, and I can't imagine why anyone who aspires to management would set herself up for such a bereft (and likely demeaning) business experience.

Maybe I’m giving these guys a bad shake. But it seems to me one should pick a boss with the same caution as one buys a house or invests in a business. One should at least employ as much caution as one uses when hiring an employee! And for those of us who are employers, are we thinking about what a responsibility it is?

Employers have a responsibility to thoughtfully employ the functions of management. If you can’t name what the four of them are, you probably are selling your employees short. Employers have a responsibility to have educated, demonstrable skills in the functional areas of their business. Does this mean they have to go to college? There are lots of ways to get an education. While I am a strong advocate of college education, I also recognize that an ambitious and disciplined learner can learn everything they need to know through careful selection and study of references and learning experiences. But there is no excuse for relying on home-grown knowledge. That’s just hubris.

Most of all, employers have a responsibility to lead. People require and deserve the stability and direction that comes from true leadership. They have a right to be managed competently and fairly. Many people climbing corporate America’s many ladders are focused on the reward of achieving executive success and the benefits of self-direction and increase in control that go with it. But being an employer is a responsibility more than it is a right, and frequently it’s as much a burden as it is a benefit.

There is no dearth of opinion about how to run business or specific functions of business. But barely 50% of new business succeeds for more than 5 years, and established businesses fold and downsize every day. As I write, Intel is laying off another 1,000 employees in New Mexico alone, Johnson & Johnson has announced they will eliminate 4,800 jobs (largely due to patent expirations that were not backed by new innovation), Bristol-Myers Squibb is about to launch another restructuring that will significantly cut jobs, and AstraZeneca will lay off 10% of its workforce – or 7,600 workers – in the next few months.

Business isn’t easy, it isn’t intuitive, and it isn’t genetic. Even those who study it carefully regularly make mistakes. But you wouldn’t let an auto detailer repair your timing chain, or a physician’s assistant do your heart surgery, would you?

Whether we are an employer already, or aspire to greater levels of management responsibility, we all owe ourselves and all our present and future employees something very important – a commitment to excellence and continuing knowledge development in our chosen fields of endeavor.

Don't be a Virtual Leader

Short Summary: If you find yourself assembling virtual teams of home-based contract workers you will need to develop new skills and sensitivities to motivate manage and assess them.

Business downsizing is beginning to happen in earnest, and it’s only going to get worse through the first and second quarters of 2009. But there is a lot of work that still needs to get done, so contract workers will be in demand for the foreseeable future. Enter the virtual team.

If you find yourself assembling virtual teams of home-based contract workers, you will need to develop new skills and sensitivities to motivate, manage, and assess them. A lot of folks will put themselves out there as contract workers while they search for permanent employment (white collar workers are going to get hit with downsizing after blue-collar, but they're still going to get hit by this). But not every talented professional is cut out for independent contract work.

In my experience, the people who are successful in virtual work teams tend to be more motivated than the average worker. I think a lot of people try virtual work, or get assigned to virtual teams, but the ones who excel at it tend to be self-motivated self-starters. And they are the ones who return to virtual team assignments again and again (either because they like them, or because their employers recognize they are good at it and keep assigning them). These folks may enjoy the self-employed route so much that they continue to work in this capacity even after the job market opens up again. And if you want to maintain access to these folks, there are a few things about motivation you’ll need to know.

One of the differences in managing a virtual team is recognizing that your high performers require a lot of recognition. People tend to think that self-motivated self-starters don't require as much recognition as other workers, and that's a mistake. They perform for the pride and joy of performing, and while receiving the right monetary compensation is important, receiving the right recognition is critical.

When you are managing a traditional office team, you can convey recognition in a lot of ways - through brief chats to give them personal attention, by responding with laughter or a smile to something they say, by nodding at their recommendations in a meeting. When you are managing a virtual team, you have to work a lot harder to provide the appropriate recognition for their efforts.

This requires more consciousness than some people might think. For instance, a lot of people aren't good at giving specific recognition, but their body language, facial expressions, tone of voice, and other responses convey approval, so the employee still gets recognition. If you are managing virtual employees, you need to take the time to offer specific and effective recognition, and consider whether that recognition should go to the whole group or just the individual (there's a time and place for both).

If using email, you need to state the recognition in written words, then decide whether this is a "reply to all" or just "reply." If on the phone, it's important to include a few extra minutes for chit-chat, so they can warm back up to you as a human and sense your approval through your gift of time. I've found IM and other methods of CHAT to be great ways to send a quick "hey - haven't heard from you all day. Just checking in to make sure you're OK!" I've been told by employees that this was very meaningful to them. I've also found meeting minutes to be a tremendous source of communication beyond the details of the meeting. I take meeting minutes very seriously, because if it's not written down it won't get done, and I've always taken my turn with taking the minutes. People began to look in my minutes for a joke or recognition buried within them, and the person recognized in each case feels pretty good about that.

Don’t take for granted that your virtual team workers are just excited to get the paycheck. Perhaps they are, but with every other business around you downsizing too, the competition for the highly competent virtual workers could be high – and those are the only people you’ll want to hire.

Don't Let This Industrial Revolution Pass You By

Short Summary: Most small business owners have sufficient bookkeeping software or support. But do you have enough information to analyze your business from product to price to timing to turns?

What is the Internet of Things?

I've been holding on to the front page of the Milwaukee Journal for a month now, returning over and over to an article written by John Schmid about the Internet of Things. Mr. Schmid didn't invent the term, referred to in technology circles as IoT. I can find references to it going back to the Consumer Electronics Show in 1994, when remote-controlled thermostats were introduced. In March of 2010 McKinsey & Company referred to the Internet of Things as "sensors and actuators embedded in physical objects—from roadways to pacemakers—linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet."

Until now, the concept has been one explored primarily by big data - Cisco, Rockwell, General Electric, and other massive enterprises that will make their next wave of fortunes by connecting all these things to the internet. But in the Journal Article, Mr. Schmid quoted Keith Nosbusch, CEO of Rockwell Automation Inc. saying, "We are past the inflection point, where there are now more things connected to the Internet than people."

In the article Mr. Schmid states, "The Internet of Things will be defined by the exponential growth of web-enabled "things" that measure, monitor, and control the physical world, talking with each other more than they talk with humans. Among the many examples: thermostats, car keys, public toilets, lake levels, parking meters and parking spaces, refrigerators and televisions, subways and airports, automated teller machines, soil conditions for crops, and garbage cans that can say when they're full." Cisco Systems CEO John Chambers refers to this as the "fourth wave of the internet," but that under-represents the enormity of IoT. This is the next industrial revolution, and we are already in it.

How Does This Apply to Your Business?

It's easy to picture how big companies involved in making microchips and writing code to connect and monitor the things housing those microchips can benefit from (or get left behind by) this trend. But it may be more difficult to see how it applies to you and your business.

First, some of the larger aspects of IoT must be carefully considered:

Privacy (what does Google do with the data about your home or store heating and electricity usage?)
Security (the intersection of hackers and home/business invaders)
Safety

These are already being debated in the tech world, and to a very small extent by Government, and we need join these conversations and move them forward quickly, because once again technology is getting way ahead of our ability to anticipate how it will affect us.

And what about the social implications? Most of my readers are small business owners - we live and breathe in the small microcosms of our communities and our niche industries. What does the IoT mean for us? There must be myriad social implications about this next phase of the world we live in. I think this is why I've been holding on to the newspaper for a month. I can intuit that we need to be very aware of and responsive to this next phase, but I can't quite articulate why. I don't like it when I know something without knowing. Here are a few things that occur to me, and now that I'm considering IoT and its affect on my world, I'm sure that I'll come up with more.

The Internet Made Small Business More Competitive. IoT May Reverse That Trend.

Big business has been trying since WWII to satisfy American consumers' demand for ever cheaper goods. Moving factories from country to country, chasing cheap wages, is only a temporary solution. But the next wave of automation could put each of these large businesses on a brand new track of cost-cutting. Oh sure, we've had automation for years now. But this is a new phase of automation, a world of truly "smart" factories, factories that can sense and correct for quality deficiencies before the products have moved to the next phase. We're talking about factories that can modify and manage production schedules on-the-fly to accommodate changing customer needs and escalations.

If you are a small manufacturer, and you haven't even automated your data yet, this could be bad news for you. We're past the point where knowing your true costs and having visibility to your purchasing needs and production plans is sufficient. Now, those are the minimum standard necessary to compete. How will you take advantage of the next phase of manufacturing technology if you don't have strong technology protocols in place already? And don't just assume that all these automation elements will be too expensive. There is a good chance that much of the technology required to run the Internet of Things will be affordable very early on.

Retailers are on the verge of being able to quickly analyze what's hot and what's not, move inventory around to be more conducive to traffic patterns, make offers more exciting and relevant on-the-fly, and be more proactive to their customers' needs, wants, and timetables. If you're only analyzing your inventory a few times a year, not replacing important items as they are sold, and failing to correct for the unsold walk-outs, your store will feel boring and static.

Some of the Impact will be Perception

When cars were first introduced, horse-and-buggy was still the predominant means of transportation. Eventually cars were dominant, but horse-and-buggy was still an acceptable mode. Then, suddenly, it wasn't. One day the tipping point occurred, and those driving horse-and-buggy were considered quaint at best or hopelessly out-of-touch at worst.

When stores first offered personal check-out computers, they were a novelty, but cool (even though they almost never worked). Younger people were drawn to them, and older people tended to avoid them. So imagine how I cringed last week when I was in a specialty retail store and a consumer complained to the salesperson, "I could check myself out faster at Target." True, the consumer couldn't buy the item she desired at Target, but could she find something else she wanted with that same money? Of course she could. And I'm sure she left that store with an impression of its backwardness, not a perception that it is a relevant business that can meet her needs.

Small business is often quaint and colloquial and community-based, and those are wonderful attributes. But we have to find a way to remain those things while responding to the expectations of our consumers as their expectations evolve. When I was a child, growing up in Iowa, I was acutely aware of how different my clothing and mannerisms were whenever we would visit my cousins who lived just outside New York City. These days I bring my granddaughter -who lives in a town of less than 1,900 people in Wisconsin - to New York, and you wouldn't be able to tell her from the other children. There are no more pockets - at least in the United States - that are immune from the changes taking place. It's probably OK to still take paper tickets at the open-three-months-a-year gift shop in the North Woods, but it's not OK to be perceived as backwards when you are a small business competing for daily traffic on Main Street. For the past few decades we've been driving horse-and-buggy while big business bought cars. But the tipping point is here, and we must move on.

Where Do You Start?

Start by accepting that embracing technology is not optional. I'm not sure if it ever was, but considering the speed of change we are facing, that moment in time is gone. Start with you. Start by recognizing that it is no less possible for you to learn to work a computer or a software than it would be for you to learn to survive in the wild if you had to. Trust me, if you needed to kill a rabbit with your bare hands in order to eat dinner, you'd eventually get hungry enough to do so, and creative enough to figure out how. The reason most technology hold-outs haven't jumped in yet is because it's daunting, and they are busy, and they don't feel like learning something new.

Start by evaluating which aspects of your business are lagging behind the technology curve.

Most small business owners have sufficient bookkeeping software or support. But do you have enough information to analyze your business from product to price to timing to turns? Are you making management decisions based on support from data, and not just using your gut? You need both. And our gut instincts get continuously better as we feed our insights with real data. Data in real-time, not just data at the end of the year.

How easy is your Point of Sale? Is it quick, intuitive, and considerate of the customer's time? The customer wants to spend her time shopping and making decisions, and then she's done. So you need systems that can balance your need for information, that can inform your thinking about which information is most valuable, and can do all that while being transparent to the customer.

How well are you managing your inventory? Do you know exactly what every piece cost to make or buy, how long you've had it, whether or not it's been returned, and what was wrong with it? And can you do all that with a snap of the fingers instead of by digging through old receipts and questioning your staff's memories? Can one of your employees pick up with a customer where the another employee left off? Is your business capable of being the ultimate massage therapist, never taking a hand off the customer?

Most small businesses have become at least somewhat comfortable with social media and the internet of Google and Youtube. But the next phase of our business lives goes way beyond that, and to connect to that grid we need pieces in place that are connect-able. That's not playing on social media - which is in some ways like the Model T. The connect-able pieces are the rest of the elements of your business that allow you to tap into and take advantage of the technology that's right around the corner. Sales and marketing automation, true CRM, enterprise systems that connect your business information from raw materials to finished goods and through the sales process. These things are not cheap, but neither are they out-of-reach for small business owners. What is lacking to date is not just cash. It's the will.

John Schmid ended his Internet of Things article in the journal with a quote from Cisco CEO John Chambers. "The speed of change will spare no one." Don't set your business up as something in need of sparing. You held on to your horse-and-buggy long enough. It's time to learn to drive a Tesla.

Don't Play a Zero Sum Game

Short Summary: Selling is understanding what a customer needs then providing solution to their needs. A good sales effort tells the customer what to decide.

Most business owners approach their P&L (profit & loss statement, often called operating statement) as a zero sum game. They want to know where they can trim spending to have more money left at the end of the month.

I call this the getting-blood-from-a-stone approach. Because for most small business owners, there just isn't enough cash to begin with, and moving the money around isn't going to change much.

I evaluate as many as 10 P&Ls each week for small business owners desperate for different results. And 95 times out of 100 my primary advice is, "Sell more," which is not what people want to hear.

A big part of the problem with increasing sales is that most business owners don't really understand what selling is. So let's start with what it is not:

Selling is not PR or a press kit.
Selling is not a Facebook page that posts pictures of new products and comments or discussion about them.
Selling is not a Twitter feed
Selling is not an national ad - not even if you spent $80,000 for the placement.
Selling is not training

All those things are important, and they certainly support the selling function, but they have their own purposes to fulfill. Selling is the process of understanding what a customer needs, then helping her see a solution to her needs through something you can provide. A good sales effort tells the customer what to decide, because most people (and therefore most buyers) have a hard time making decisions.

One of my favorite examples of good selling without a salesperson present comes home once each year with school-age children. It's the school pictures order form. The bulk of that promotional device shows you how to buy.

Package A has two 8"X10"s, four 5"X7"s, eight over-sized wallets, and 16 mini-wallets
Package B has one 8"X10", three 5"X7"s, eight over-sized wallets, and 8 mini-wallets.
After describing the remaining packages C through F, there is a list of the "add-on" items you can buy to increase your number of 8"X10"s, 5"X7"s, other sizes, CD disks with digital images, etc.

If you have ever experienced an end consumer or potential dealer saying they love your product but then walking away, you have seen what happens when someone can make the decision that they want to buy but can't progress to the decisions of what to buy or how to buy. The buyer often doesn't understand himself why he is walking away - he may think he's making sure there isn't something better out there, he may think he needs to 'think about it', he may think he needs to consult his cash-flow, but all of that is short-hand for the underlying problem that he doesn't know how to make a decision he feels good about.

That's why Facebook, Twitter, PR kits, and training sessions are not selling. Selling is the thing that will tell the customer how to make a decision he feels good about. Selling is interactive, selling tailors itself to the needs of each potential customer, selling makes solutions obvious and achievable.

It's time for you to remove yourself from the zero sum game of cost-cutting and austerity. Instead, sit down and re-imagine what selling should be for your products (or services) and your target customers.

Then get out there and sell. It's 95% sure to solve the cash problems you face.

Ego and Humility: Seeking the Right Balance for Business Success

Short Summary: While a healthy ego is essential to any business success it is the ability to balance ego and humility that leads to the most influential leaders.

It takes a certain amount of ego to start a business, own a business, take a job as the president or CEO of a business - a healthy ego is a prerequisite to a lot of success stories. But what happens when that ego is out of control?

What happens when the personal maturity and wisdom of the business owner/leader/CEO are not equal to the task of leading employees with responsibility, empathy, and humanity?

A recent book by British Journalist Jon Ronson called The Psychopath Test: A Journey Through the Madness of Industry has even found that the incidence of psychopathy in CEOs is about four times that of the general population (4% versus 1%) - psychopathy primarily being characterized by lack of empathy, lack of guilt feelings, poor impulse control, inflated sense of self, etc.

In some cases those with out-of-control egos achieve huge financial results and market success, and are hailed as amazing business leaders - though Ronson suggests these are the anomalies, often representing short-term successes and longer-term failures. I continue to scratch my head about Steve Jobs. Of course he was wildly creative, but I just can't give him a hall pass for all the control-freakish, ego-fueled, belittling of others behavior he entitled himself to over his years at Apple. And of course, his ultimate business legacy is still undecided.

But let's not be fooled. For every ego-maniac who makes it to the heights of business, there must be 10,000 ego-maniacs who get in their own way so much that their businesses falter and fail. All of us have worked for one or more of them at some point in our careers, and if you have young adult children you've probably watched your kids suffer through at least one ego-maniac as well.

Why do I bring all this up? Because one of the most important things we as business owners can do is to constantly work on our own emotional health. When leading small teams of people toward challenging goals like positive cash-flow and profitable growth, it is essential to earn their trust and respect by being people worthy of those feelings. Of course, we all wake up on the wrong side of the bed or let our stresses get the best of us on occasion. But the more often that happens, the less our employees are capable of respecting us and rallying to our side.

Lack of ego strength shows up in a lot of different ways. The most obvious is a loss of temper or failure to communicate in respectful, civil ways. But condescension veiled in civility is almost as bad as a blow-up and ultimately leads to much deeper resentment than throwing a coffee cup. Failure to recognize that others' ideas are as good as our own - even if they are different; the inability to let others' find their own path to an agreed-upon desired end result; the need to tout our own superior concept even as we congratulate someone for their success; a tendency to discount another's intelligence or - God forbid - creativity; these are all indications of a lack of ego strength and examples of the types of behavior that lead our employees to give us less than their best.

A small business owner has immense challenges to overcome and very few resources to provide support. So here's a toast to self-awareness and emotional health - may we all find the balance between ego and humility necessary (in most cases) to achieve the long-term business success and retirement income we ultimately desire.

Embrace the Internet to Increase Business Value

Short Summary: Consumers across all age groups look to the internet for brand quality customer satisfaction and product information using every type of device from desktop computers to phones to tablets. Yet I am still frequently asked “Is it really important for me to have a website?”

I’m a bit of a history buff. I particularly enjoy stories about people who took chances and accepted new ideas, approaches, or technologies despite social pressure to stick with the status quo. Why? Because progress depends on groups of this type or person–risk-takers and visionaries—to propel the rest of us into the future. But just as there must be early adopters to champion new ideas, there always seem to be people who avoid mastering the new ideas for as long as possible.

Don’t Be Left Behind

The internet as a sales and marketing medium has reached critical mass. Consumers across all age groups look to the internet for brand, quality, customer satisfaction, and product information, using every type of device from desktop computers to phones to tablets. Yet I am still frequently asked, “Is it really important for me to have a website?”

And then there’s the question of social media. Only last month I had dinner with a group of jewelry industry leaders where I heard one executive rather forcefully express his opinion that he did not see the value of social media to business, nor did he believe that computers had a significant role to play beyond increasing efficiency and data management.

If you want to increase the value of your business, you must embrace and master internet technology as an important part of your marketing, selling, customer communications, customer service, and brand management strategy.

The Next Wave of Cottage Industry

The publishing and video industries have much to teach small business. Both industries were transformed by big-box retailers—small retailers simply could not compete on inventory or on price. And now, as the behemoths of books and video crumble under their own scale, high-service, high-quality bookstores and video stores are returning to serve discriminating consumers.

But they are not returning in the same configuration as before. New stores offer more knowledgeable customer service, special order services, engaging social media experiences, rich websites to offer a breadth of inventory they cannot afford to carry in the stores, mobile apps to engage with consumers wherever they are, and in-store online technology to supplement the store experience. The stores are staffed with collectors and impassioned readers and film viewers who bring true expertise to their customers.

These changes have created opportunity for independent producers and publishers, who both sell to these more creative independent retailers and sell directly to consumers. Using the same tools, independent producers can now service more dealers and reach more consumers than ever before and sustain those relationships without creating expensive corporate infrastructure to do so.

You Can MustDo This

It’s no longer enough to just have a website. You must have a website that looks and feels current, and offers more than just a few pretty pictures.

About 10 years ago during the first big go-round of website building, many companies got stung by creating websites that were expensive to build—and even more expensive to maintain. Today you have better options. Both technology and the people providing and servicing it have evolved. Here are some tips to help you fully embrace internet marketing technology and all its benefits:

Unless you can program using HTML, HTML5, CSS or PHP yourself, do not let someone create a static website for you that requires programming language to add content, images, or pages. Today you have an abundance of options for building a CMS (content management system) site, from richly designed Wordpress environments to Joomla, Drupal, Radiant, Silver Stripe, and CMS Made Simple.
Have a professional website designer design and produce your website using a mainstream CMS tool. Then have her train you how to use the back-end for your day-to-day operations. After that, you need to use your website professional only for more complicated tasks, such as adding new functionality or changing your design on an as-needed basis.
Yes, you need a Facebook page. If you’re not sure how to set it up yourself, this is a great task for a social-media-savvy college intern. Just getting a page up and running, adding pictures regularly, and beginning to have conversations with your customers is an excellent start.
If you want to add more exciting options to your Facebook presence, such as integration with your website, catalog pages you can sell from, newsletter signups, promotions, forms, surveys, and campaigns, you may need to hire a professional. But you can add these features to your Facebook page as your customer list builds, so you can be sure to reap the benefits—and have the development pay for itself—as quickly as possible.
Using a tablet computer, such as an iPad2 or a Droid device, is a fantastic way to show your work without carrying your entire line. But…you need a full catalog of quality images for this to work. You can download images directly to your device or create an online image catalog to which you can easily connect.
Unless you are a retail store—or are doing a high volume of online sales—you probably don’t need a mobile app right now. But custom mobile apps will be considered as commonly required as websites in a few short years. Right now, spend your time using other companies’ mobile apps and getting comfortable with how the world of mobile marketing works. When the time comes to do it yourself, you’ll know what to expect.

The internet has moved off the dirt roads of its infancy and is now offering a smooth interstate experience at high speeds. If you’re still driving a horse-drawn hay cart and trying to keep up, you’ll not only be left far behind, but also be engulfed in your own dust.

Evaluating Business Software Programs? Dig Deeper From the Beginning

Short Summary: When investigating business software programs always start by evaluating the underlying code and technology and how the software is designed.

Focus on How Business Software Programs are Designed

Are you looking for the perfect business software program? There is no such thing as a perfect software. Every software you evaluate will do some things you like, and others you do not like.

Every software will require some change on the part of your operations to use it efficiently/effectively. And every software company will have some deficiency in the area of support or training. This is the nature of buying complex systems, and the sooner you recognize it the better buying decision you will make.

But there is one starting point that should be universal when investing in business software programs, and that is the evaluation of the what (what underlying code and technology) and how (how the software is designed, maintained, and improved) of the software development. Answer these questions satisfactorily first, and you will be most likely to end up with a business software program investment that serves you for the long-term.

4 Things to Consider

These are the things you must focus on carefully as you evaluate your options:

The Underlying Technology. Do not invest in software that will be outdated in less than 10 years. Software written in older programming languages or databases designed for individual use and not network use (like Access or Filemaker) are inappropriate for most business applications. Likewise, technology owned and supported by private, small (often underfunded) companies - no matter how good - will only be able to continue its investment and development if it's bought by one of the big behemoths. This doesn't mean you have to go with a licensed solution like Microsoft or Oracle - there are also fantastic open source options for business systems. Just make sure that your solution is based on technology that either has a massive international development community or is supported by a technology powerhouse capable of reinvesting in it.
The Best Practices. Invest in software that is well-distributed enough that the software developers are constantly focused on improving the software for the entire industry/user group. Best practice behavior is about creating processes and procedures within the software that force users to engage in the activities that are considered essential or recommended for the best results. Using software with best-practices built in gives you the advantage of industry improvements and innovations without having to come up with all of them yourself.
Ongoing Development. Along with the previous point, make sure that the software developer is actively engaged in meaningful updates and development. The business world and distribution methods are changing dramatically – if the software is not keeping pace it will be an unsatisfactory investment.
Underlying Database Structure and Logic. If a system is designed correctly, then you will always be able to get the reports, functions, and applications you need from it. If the system is not designed correctly, then even reasonable adaptations or developments may be very difficult or even impossible for the developer to produce. For example, in one industry system I have encountered, the underlying table structure is illogical and poorly structured in several key areas. So extracting desired information is nearly impossible without manipulating the data (which is both time consuming and still inaccurate).
(updated 19-3-2019 per a suggestion from Steve Fuller at Acuity Solutions) Choose a business partner with the most appropriate skills, expertise, and experience to help you achieve the best possible implementation of a system for your business!

Most people - particularly non-technology people - pursue technology investment by providing a list to the sales organization asking "can the software do this and this and this . . ." What the software can do is certainly part of your decision-making process. But how it is structured - the bones of the system - are also critical if you want your investment to last for the long-term.

This type of analysis is generally outside the skillset of most small business owners. Even if you can't afford the assistance to properly evaluate the full software solution you are considering, you may at least want to ask for some expert advice on the pros and cons of your options relative to these four concerns before you proceed.

Everything I Need to Know About Sexual Harassment I Learned in Kindergarten

Short Summary: Sexual harassment isn't about sex. It's about power. Still trying to figure out the difference between acceptable behavior and sexual harassment? This will help.

A slightly different version of this article originally ran in InStore Magazine in March, 2017. You can read the original here.

Sexual harassment isn’t about sex. It’s about power.

Where sexual harassment begins and where it ends isn’t always clear. Is a dirty joke sexual harassment? Is a lewd look sexual harassment? If your co-workers are constantly dropping f-bombs in the next cubicle, is that sexual harassment or just garden-variety rudeness? And what about paying a man with the same experience 30% more than what you pay a woman in the same job with the same experience? Is that sexual harassment? Is it gender inequality? And what is the difference? Some people use the lack of clarity around sexual harassment as a reason to dismiss it. So let’s break it down.

Some situations are very clear. If an employer tells an employee “have sex with me or I’ll fire you,” that’s sexual harassment.

The word “or” in that sentence (have sex with me OR . . . ) is the most important word. Consider these threats for a moment:

Have sex with me or . . .
Put up with me rubbing your back or . . .
Let me put my hand on your thigh or . . .
Don’t complain about my lecherous comments to you or . . .
Allow me to look down your blouse or . . .

If the person saying or doing those things is your boss or a person with greater power than you in an organization, then what follows the or – even if it is only implied – can be pretty scary. Or you’ll get fired. Or you won’t get a raise. Or you won’t get a bonus. Or you won’t get a promotion. The powerful person in this scenario is in a position to demand a quid pro quo: you do something for me, and I’ll do something for you. If you don't, you'll suffer a consequence.

If the person doing or saying those things is your peer or subordinate, then what follows the “or?” Or I’ll stop trying? Or I’ll go bother someone else? Or I’ll try to steal your sale? The person in this scenario is not capable of demanding a quid pro quo. He (or she) is, however, creating a hostile work environment.

But quid pro quo sexual harassment and creating a hostile work environment are also something else. They are a terrible abuse of power. That power may be the power of the paycheck, or it may be the power of being larger, stronger, influential among your peer group, or simply capable of making you miserable every day. Either way, the result is the same – a human being who is afraid and angry and doesn’t want to be at work.

Claims of quid pro quo sexual harassment, hostile work environment, and gender inequality have all been leveled at Signet, and Signet has vigorously and consistently refuted them for over 10 years. When discussing this issue among my peers, I was told repeatedly, “But they’re innocent until proven guilty!”

Read About What Happened During the Gold Conference Panel on Gender Bias

But riddle me this Batman: How does a company get to the point where 69,000 of its current and former employees are participating in class action suits against it? Two employee class actions and a new shareholder class action, all stemming from accusations of rampant sexual harassment and pay disparity claims over several decades.

In general, companies find themselves facing sexual harassment lawsuits when they cultivate a culture in which abuse of power is a norm. This type of culture doesn’t just happen in large corporations. It may be happening in yours, even if there is no sex or groping involved. Because sexual harassment isn’t ultimately about sex. It’s about power.

Anyone in an organization with the ability to influence hiring, firing, pay, and promotions has power. This is typically an owner, an executive, or a manager, but it could also be an influential spouse, child, sibling, or adviser. Such power must be wielded with great care.

The manager who automatically pays men a higher wage than women for doing the same work is abusing power.
The boss who screams at and demeans employees is abusing power. After all, if he didn’t have the power to terminate their employment, why would his employees even put up with such behavior?
The manager who insists that employees tell her how they voted is abusing power. After all, if she were just some random stranger on the street, her employees would tell her, “that’s none of your business!”
The executive who tells his assistant, “I’d like you to start wearing more dresses, and keep the lengths above the knee,” is abusing power. After all, if he were a co-worker or some guy at the coffee shop, the woman would likely say, “why would I let you tell me how to dress?”
The business owner who butts in on his employees’ lives outside of work, demanding that they answer phones when not working, lecturing them about their personal lives, or expecting them to listen to his opinions about their boyfriends, parenting skills, and vacation plans is abusing power. Unless that employee is also the business owner’s son or daughter, he has no right to an opinion about their lives outside of work.

What is not an abuse of power? Anything that is relevant to the achievement of the business goals, portrayal of the business brand, and critical to business success that is also applied to everyone in a given role in exactly the same way.

Why is sexual harassment such a hot-button issue? Because the abuse of power in a work environment so often expresses itself in the form of sexual overtones. Psychologists and sociologists have written extensively about why this is, but it all boils down to this: A person who is not inclined to use power to dominate others is unlikely to sexually harass others. But for people who like using their power to take what they want, sexual dominance is often one of the things they want.

If you look at an organization where sexual harassment appears to be rampant, you will see other problems as well. You will see an organization with different sets of rules for different sets of people. You will see favoritism, unequal pay, and unequal access to perks and opportunities. You will see a general atmosphere of fear and insecurity. You will see an organization where those not in power try to survive by staying under the radar. You will likely see as many unhappy men as unhappy women, but they will be unhappy about different things. And eventually, you will see an organization whose internal dysfunction seeps outside to its customers, in the form of poor service, unethical behavior, and erratic performance.

It takes tremendous character not to be corrupted by power. Yet anyone in a position of authority has power, and that power can be used wisely or for selfish reasons. If an organization is permissive of the abuse of power in any form, it’s just a few short steps to someone in the organization using his power to touch a woman inappropriately, comment on her appearance or sexual appeal, or suggest that she give him sexual favors.

Of course, no organization is immune from someone in its ranks abusing a subordinate or fellow employee, but there’s a big difference in the response. In an organization that is not permissive of abusive behavior, such actions will be reprimanded in the strongest terms. In an organization that is permissive of power abuse, a complaint about sexual harassment will be met with denial, shaming, blaming, or framing the accuser. People who are victimized in the future will be silent, for fear of reprisals.

It doesn’t take a rocket scientist to see that a culture permissive of power abuse is bad for business. Sure, the business may do well for a period of time, as long as market conditions are favorable. But eventually, the negative aspects of the culture will have a damaging effect on brand equity, performance, profitability, and shareholder confidence. In contrast, organizations with strong, positive cultures inspire a feeling of ownership, shared commitment, and motivation in their employees – the attributes that are most useful when facing challenging market conditions.

And what of the other types of sexual predation? The person who presumes to grope you with his eyes; the acquaintance who keeps making lewd jokes, even though you don’t laugh along; the guy who insists on continuing to objectify women with the excuse that it's the natural inclination of men to notice what is beautiful about women (blech); the interviewer who won’t give you the time of day because you’re not physically attractive enough (to him); the person who comments on your weight (too skinny, too fat) as if weight is a measure of your worth – what about them? Is that discrimination? Is that sexual harassment?

In the legal sense, only if the behavior violates a person’s rights under Title VII of the Civil Rights Act of 1964. But come on. Do we really need legal frameworks to tell us it's wrong to treat people unequally or to make unwanted sexual advances? Here’s a guideline for the confused: You have no business making a sexual advance, sexual comment, or implying sexual interest in anyone, other than the person with whom you are already in a sexual relationship or unless you are on a date – specifically a date which has become hot and steamy due to mutual and enthusiastic interest in one another.

Here's another: You have no business valuing a person's job responsibilities or job performance based on looks, gender, or anything other than the actual responsibilities and performance.

These guidelines should be easy for everyone to follow.

What about the more subtle encroachments? For instance, is it OK to comment on a woman’s appearance? Well, start with the directive, “If you don’t have something nice to say, don’t say anything at all.” This applies to wives and girlfriends by the way. But what if you want to pay a compliment?

Start by asking yourself, “if this person were a man, would I compliment his appearance?” If the answer is “no,” then just stop already. Women are not here for your visual enjoyment, even though you may visually enjoy them. Keep it to yourself. But if you’re the kind of guy who is likely to say, “great necktie!” “Love the haircut!” or “I like your new shoes, where did you buy them?” Then it’s probably fine to say, “I like your jacket,” “great haircut,” or “purple is a terrific color for you.” Of course, only women who already know you would be aware that you make similar comments to men. Women who don’t know you may still be put off by your presumption to comment on their appearance.

Ultimately, our purpose with one another at the office, at trade shows, and at industry functions is to do business. Anything that causes another human to feel uncomfortable, unsafe, disrespected, confused, or ashamed interferes with the work, and anything that interferes with the work is a waste of time and resources and potentially damaging to our industry. That’s the business reason to speak out against both abuses of power and inappropriate behavior.

Of course, there shouldn’t have to be a business reason, should there? Because it’s never OK to make someone else feel uncomfortable, disrespected, unsafe, confused, or ashamed. It’s never OK to violate someone emotionally or physically. It’s never OK to be a jerk.

So why should we care about what is happening at Signet? Why should we care that women in our industry are regularly sharing personal stories of harassment that occurred at their offices and when attending trade events? It should matter to us because, as I said earlier, organizations that turn a blind eye to terrible behavior eventually suffer economically, and this is true for industries as well.

But mostly, it should matter to each of us on a personal level. It should matter what happens to other human beings. Kindness, integrity, character, and respect should matter. Shouldn’t they?

Everything You Know About Luxury Has Changed

Short Summary: Millennials are changing everything we know about luxury. Here are 5 key areas your luxury business must master to stay relevant.

If you’ve been waiting for the US luxury buyer to return to pre-2008 levels, it’s time for you to move on.

What has happened to the luxury buyer is more than a business cycle; it’s a long-term change.

Let’s quickly do the math. Affluents as a whole are twice as important to any marketer that sells consumer goods and services, regardless of price. When it comes to selling luxury goods, Affluents are four to five times as important. So statistics about Affluents really matter to the jewelry industry.

Luxury industry data shows that younger Affluents (24-44 years old) spend twice as much on luxury items as older Affluents (45 – 70 years old). Back in 2008, the younger Affluents were 17 – 37 years old, which means that a significant percentage of them (half?) hadn’t yet reached their spending power. In the meantime, older Affluents are nearly 8 years older than they were the last time they were big luxury spenders.

Who are these younger Affluents? The older portion are Generation X (35-50 year olds), and the younger are Millennials (18-34 year olds). In sheer numbers there are now more Millennials; ~81 million in 2015, compared to ~50 million GenX (of which many are part of the older Affluents group). So, your new luxury consumer is a Millennial. No surprise there – we’ve all been talking about this for a few years now.

Two social factors make these statistics very important to luxury goods companies:

During the recession we witnessed changing attitudes toward consumption and wealth. Those with wealth became less likely to spend it, felt less wealthy in general (even if they were very wealthy compared to the average American), and became highly conscious of how they are viewed in society (i.e., the 1%). Outside of the richest of the rich financial markets, elitism is out (keep in mind that in much of the country, elitism was never in).
Millenials (and Generation Z – the next consumer frontier) have entirely different attitudes toward luxury than the generations that shored up the luxury industry before them.

If you’re a luxury retailer in the US, that’s about all you need to know. But what if you’re a luxury brand? Is the news just as bad everywhere? Actually, it’s worse.

While elitism and status still play well in most international markets, conflict, social unrest, and weak economic systems are inhibiting consumer spending across the globe. In addition, it’s not a coincidence that strong demand for US luxury goods in Russia, China, India, and Europe coincided with years of a weak US dollar.

So. What do you do with this information if you’re a jewelry retail store owner, designer, or brand? You revitalize, and you start doing it now, because this trend is going to continue. Even if older luxury buyers bounce back a little, it won’t be enough to return us to former spending patterns, because younger luxury buyers are quickly becoming the dominant market.

What’s that you say? Your business model has endured multiple cycles over the past 50-80 years? That may be true, but it’s not relevant, A) because this isn’t just another cycle, and B) because the last 80 years saw the largest era of consumer empowerment the country (and world) had ever seen, empowerment that expressed itself as acquisition. But we’re on the cusp of a new era, an era in which consumer empowerment expresses itself as something else.

Many of the things I’m about to suggest are old news – I’ve suggested them before in my writing and speeches, and you’ve heard them from industry journalists willing to challenge the status quo (Rob Bates is at the top of that list).

So I’ll recap (and reference) the things that have been addressed sufficiently already, then focus more attention on bringing a few important issues to the surface; business concerns that are still not getting adequate attention in our industry.

You Need to Make Changes in Product and in Presentation

Everywhere you look there’s a new article, a new blog, a new interview that talks about how Millennials and Generation Z want something unique, something custom, something special, they want stories, they have problems with diamonds, they don’t care about precious metals. They want quality, it’s about the experience, brand reputation matters, and ownership holds less importance for them. These things matter to them in general, so how high do you think Millennial expectations are regarding luxury? If you want to read more about Millennial expectations of jewelry, here are some terrific articles.

Rethinking Open to Buy: (Matthew Perosi’s jWAG blog from yesterday, 5/26/2015)
Understanding Millennials: How to Sell Lasting Luxury in a Disposable Culture (The Centurion: Hedda Schupak)
Fashion Designers, automakers top millenials’ list of luxury brands (Luxury Daily)

There are 8,162 people on Twitter with “jewelry designer” in their bio (and that’s just the English filter). I know many of them, and there’s a lot of genuine design talent out there. Much of that talent comes with a story, social awareness, trunk shows, and energized social media. But independent jewelry designers can’t get their foot in the door at traditional jewelry retailers. So they sell at art fairs and craft fairs and online, and many of them are learning to do very well selling directly to (your) consumers. Clearly, we have ample information on what matters now, yet not enough people in this industry are reacting to this demand.

Making and Designing are Not the Same Thing

In 2013 Fast Company said, “For Millennials, design is not a differentiator. It’s the cost of entry.” Millennials care about design on two levels: the design of the product, and the design of the experience.

One of the effects of growing up with the internet is that Millennials have seen more art and been influenced by more graphic design than any generation before them. They are intensely visual. They report they will turn down a job rather than work in an ugly or uninspiring environment. They care about beauty, architecture, and public spaces. They won’t spend their hard-earned money on products that are average. Even their kitchen utensils demonstrate good design principles. A solitaire diamond in a setting with a few flourishes may not offend, but it doesn’t excite either.

If you aren’t sure you know the difference between excellent design and meh, enlist some help, because Millennials do.

Now. Here’s the stuff not enough people are talking about

The Jewelry Experience

Everyone is throwing about the word experience in retail, saying experience is the key to consumer loyalty. But what does experience really mean?

Consumers would rather get wine at a wine & cheese bar, coffee at an organic coffee shop or Starbucks, and baked goods at a café. All those places are better at offering food, coffee, and wine than you are. So what do they want from you?

A better buying experience, which is not just about your product offering. It’s also about your store design and your processes.

Experience design is very important to Millennials. They have grown up in a world where they can assemble (on their own) the organizational, communication, and information tools to make their lives easier. It’s second nature to them. They are used to being able to find and purchase any product they desire and can afford, no matter how esoteric. They are used to collaborating over distance and across languages. Studies have shown that Millennials find outdated and cumbersome systems like opening bank accounts, buying a house, and buying a car to be not only distasteful, but enraging.

So how do you think they feel about your current engagement ring sales process? Does the next generation jewelry buyer really want to be led through your store to the bridal area, sit at a counter, and suffer through the diamond-buying experience? They did the research before they arrived. If your selection is six different cases of the same thing followed by a two-week wait, they’re probably not impressed. Jewelers who find a way to reinvent the process of selling engagement rings will really be on to something.

When I walk into my local Verizon store, the sales reps are either actively helping other customers or they are . . . sitting in lounge chairs in the middle of the store, apparently just hanging out. They wave you over warmly, and you go sit with them (there are always empty seats). They pull you into their conversation, which is usually about what’s the latest cool thing in phones. Instant collegiality. You engage in a conversation with them instead of being sold to. They whip out their tablets and talk with you about options – before they ever walk you to a wall display. Ten years ago I preferred a root canal to a visit to the cell phone store. Today, I look forward to checking in with my phone buddies. How does the experience of walking into your store, being greeted, and exchanging information feel? Does it inspire the same feeling of collegiality? Does it stir interest and excitement? Or is it intimidating, cool, and separated by a case and a gate?

The experience of the Apple store is so fantastic that people are writing books about it (check out The Apple Experience, by Carmine Gallo). The average store generates $5,600 per square foot, which makes it the most profitable retail store on the planet. There are a lot of facets to the Apple experience, but let’s focus on the store design for a moment. Steve Jobs was adamant that their stores be more than four walls with stuff to sell inside; Apple stores are a stage. Apple didn’t build every store, but they did the absolute most with the locations they chose. Architectural and design beauty are highlighted, and where possible they integrate into their surroundings as part of the experience (you can’t really tell where the Grand Central Apple Store ends and the Station begins). Apple took products that are typically in the box, behind-the-glass, and put them front and center. They made it clear that people are supposed to come in, play, experiment, and even hang out with one another in the store. The customer who comes, stays, and leaves without a purchase is treated with as much warmth and attention as the person who walks in and presents a credit card. They offer immersive training experiences to build customer attachment to and comfort with their products. And finally, the stores are devoid of anything that is irrelevant to the experience of Apple products. They’re streamlined, purposeful, and immaculate. What is the visual experience of your store? Is it inspiring to approach and enter? Is there junk behind the counter? Tape on the front of a case? Three-year-old posters or signs? Are there elements in play that have nothing to do with the simple goal of telling your compelling story, connecting with your customer, and selling your exciting products? Millennials notice these things.

I’m a knitter, and for me, knitting is all about fiber. If you buy skein of yarn at Michael’s or Walmart, it will cost you anywhere from $2 - $15. A typical skein of yarn for me is upwards of $50. I shop at a very special little fiber shop that knows its customers are buying luxuries. The shop is definitely knitty and not high-endy. The shop owner does a dozen things worth mentioning, but let’s talk about the checkout experience for a moment. She doesn’t have a cash register. She has a few comfy chairs around a coffee table, and on the coffee table is a tablet. When you’re done with your purchases, you sit in one of the chairs and you drop all your balls of yarn on the table. While you chat with the store owner, she rings up your purchases on her tablet, but it all feels like you’re just drinking coffee and knitting together. She’s so good at scanning and ringing up the sale that she remains present with me and our conversation the entire time. Something else of interest; I often find myself giving knitting advice and tips to the women in the other chairs, because I’m the oldest one there. Michael’s and the craft section at Walmart aren't exactly Millennial or Generation Z hangouts, but this shop attracts them every day.

The one interactive process you have that likely elicits a certain amount of excitement is custom design. But even then, most jewelers aren’t prepared to collaborate with Millennial customers the way they want to be collaborated with. The process itself must be seamless – from initial discussion to jewelry delivery. If it’s not, Millennials will scoff at your organizational clumsiness. And what tools are you using? Do you make them come back to the store to review design options? Do you have an endless stream of email going back and forth (Millennials would rather not deal with email unless at work). If you’re not prepared to have your seamless process either available through a phone app or at least through a shared folder in something like Evernote, your process needs improvement.

If you’re a retailer, you have all these processes in your store. People enter, they browse, they have questions, they may need to finance something, they may want to do a custom design, and they have a check-out experience. If you’re not actively experimenting with updating the processes in your store to meet the demands of a very different generation of consumers, you’re going to watch your current customer base slowly die off until you go out of business.

Embrace Technology

The fashion industry is going after technology-as-experience in a big way after falling behind consumer expectations (though not as behind as the jewelry industry). Live-streaming of fashion shows, virtual stores, wearable technology, and other types of digital innovation are now at the forefront of fashion thinking. Fashion brand Rebecca Minkoff has dressing rooms that make suggestions about complementary items to try. Even Fabergé has enabled ecommerce, after years of insisting that ecommerce would tarnish their brand.

The consumer currency of the future is information information information. The kind of information that helps consumers make buying decisions. The kind of information that tells an interesting story. The kind of information that holds their attention for longer than 20 seconds. The kind of information that helps them satisfy concerns about the provenance or manufacture or sustainability or morality of the things they buy. In addition, they want much of that information before they ever make time in their busy schedules to come to your store. It takes technology to do that.

Delivering that information doesn’t start with your website. That’s like hiking the Pacific Trail for weeks with no shower and then putting on lipstick (yes, Wild reference there). Your management of the information that fuels your business must start much deeper in your business processes.

Think about how you approach technology in your business. If you’re like most people, you probably have a pretty current smart phone. But how old is your computer? How often do you explore new software to make your job more efficient? Are you using cloud services or still trying to figure out where the cloud is? Do you and your staff use technology to make you more communicative, more efficient, and more relevant to your customers? Is social media just an extension of your break room, or are you using it for serious marketing insight? Can you make fast, effective decisions about your inventory; decisions that enable you to innovate and respond to a changing market? How is your product database? Do you use all the bells and whistles for product detail and descriptions? Do you collect all the customer information you can collect? Most important of all, do you use all this data to help you run a better business?

There are technology tools that can help you with every single operational and marketing need. Everything I’ve discussed in this article can be enhanced with technology. And even if you’re way behind the curve on your technical skills, you need to start developing them now, because business is going to keep changing faster and faster, and if you think the Millennials have high expectations of your competence, wait until you start serving Generation Z.

Get Fast. Get Diversified. Get Lean.

Getting Lean is the process of streamlining, automating, and de-cluttering your business processes, from manufacturing to stocking, from hiring to sales. Many business owners think that getting lean is for the purpose of reducing prices. While it can certainly be used for that purpose, there’s another major reason to do so. It’s to get fast and to get diversified.

Think back to the late ‘90s and early 2000s when the US jewelry manufacturing base outsourced itself to Asia. Why did that happen? Because reducing the cost of labor was the quickest way to reduce the cost per piece. Of course, that had its downsides. The economics only held if you produced a minimum of hundreds of those pieces. Hindsight being 20/20, we can see that we were selling off our manufacturing expertise at the same time a new generation was being born – a generation that doesn’t want to wear or own the same things everyone else has.

Beyond the excellence of their design, there is a reason that designer brands like Todd Reed, Omi Prive, Just Jules and Pamela Froman have such consumer appeal. There is an element of customization to many (or even most) of the pieces they produce - something you simply can't do if you're manufacturing in China. To accomplish a steady flow of product customization, brands must constantly attend to the operational efficiency of their workshops, because customization gets harder to manage the farther it gets from home.

The other advantage to lean, local(ish) operations is that you can keep your inventory of finished goods to a minimum, which allows you to respond more quickly to changing consumer demand. Yes, yes, jewelry is more expensive to produce than fashion, so it’s harder to change it. But the consumers don’t really care about that difficulty, so the retailers, designers, and brands who figure out the keys to keeping inventory fresh and exciting will win this game.

Retailers need to buy less product more often to keep the store fresh and consumers interested (hint – doing all your buying once each year in Vegas is not going to cut it – inventory needs to change more often than annually). Designers and wholesalers need to create policies that will support smaller, more frequent purchases, and they must migrate to release schedules that satisfy consumer desire for diversity and change. But as you can imagine, if designers and wholesalers are only receiving new orders once each year – with a small number of reorders occurring during the holidays – they simply won’t be able to invest in the merchandising strategies that consumers want.

Each of the concepts in this article could, itself, be a very long blog (and we didn’t even touch on how to market to Millennials. Maybe later). But it’s a good overview of where your head needs to be if you want your retail store, designer label, shop, or brand to become and remain relevant to the next generations of luxury buyers.

First Things First: There's an Order to Profitability

Long Summary: The building blocks of profitability are clear, and they even have a required sequence to them. But without knowledge of the building blocks - or awareness that these building blocks even exist! - your business will suffer.
Short Summary: The building blocks of profitability are clear and they even have a required sequence to them. But without knowledge of the building blocks - or awareness that these building blocks even exist! - your marketing can underperform for years (or decades).

Our son was insanely bored in high school and we didn’t have better education options where we lived at the time. So we let him get his GED and finish early rather than ruining education for him forever. When he entered the University environment we discovered something very quickly. He had not developed the writing skills he needed to express his ideas effectively and at the level of a university student. He worked extra-hard his first semester and caught up, but it was an important lesson: building blocks and foundations should never be underestimated.

I encounter a similar situation with small business owners on an almost-daily basis. The building blocks of profitability are clear and they even have a required sequence to them. But without knowledge of the building blocks – or awareness that these building blocks even exist! – business owners suffer for years (or decades) trying to turn the corner and achieve true profitability.

What Happens When You’re Out-of-Order

Many years ago I joined a company that had not been profitable in some time. I attended a trade event where I had the opportunity to meet customers, and I asked the same two questions of each of them:

How do you feel about this company?
Are we your primary supplier?

To the first question I received raves: “We love you!” “You have the best salespeople!” and “You are the nicest people” were among the most common responses. But the answer to the second question was consistently a firm “No.” How could that be? The answers were varied but all shared the same theme:

“You’re always late.”

“You’re constantly out-of-stock.”

“You make a lot of mistakes.”

“I often have to wait for you to figure out what’s going on with my orders.”

“Your prices are too high.”

“The quality of your products isn’t consistent.”

In that company we were paying premium dollar for the best salespeople we could find and training them extremely well. We also had a strong emphasis on treating customers very well. On the one hand, it’s a darn good thing that we did, because that seemed to be the only thing keeping the customers coming back. But do you think that the money we spent on sales staff – very likely more per person than our competitors were spending on their sales staff – was yielding better bottom line? No, it wasn’t. Because we were undermining all that terrific customer value with terrible operations.

Value Comes in Waves

Wave 1: Operations

If you want to see bottom line profits, the very first thing you must focus on is your operations. To achieve strong operations you must achieve the following things:

Efficiency in everything you do and touch
Tight control over product costs and purchasing behaviors
Excellent inventory management at all levels – from finished goods to components and raw materials.
Well-defined processes that ensure your staff works with efficiency and consistency
Well-defined roles and responsibilities
Quality built into all production processes (and not just policed at the end)
Metrics in place to monitor your performance in all operational areas (sales, manufacturing/production, product development, marketing, purchasing/inventory control)

If you have terrific customer service and terrific products – but your operations are weak – you risk throwing away all that extra value on the customer dissatisfaction, bloated costs and bloated inventories that come with poor operational controls. If you want to see your profit picture turn rosy, focus on operations.

Wave 2: Customer Experience

Once your operations are in strong working order, then next Value Wave comes from Customer Experience. To deliver the kind of customer service that turns happy customers into profitable customers, you must focus on the following things:

Face your customers with sales staff and service staff of the highest quality – in personalities, positive energy, professionalism, training, effectiveness, and warmth.
Achieve maximum dependability – orders on time, at quality expectations, call-backs when promised, prices within expectations for your market, the right products available, and strong inter-dependent relationships established.
Improve your product and service offerings in a strategic way to turn occasional customers into regular customers
Include customers in your product selection and development. Ask their opinions and invite them to offer ideas. Letting customers behind the veil of your organization is a fantastic way to help them feel integral to your business (which, of course, they are!).

When you compare the lists of what you must do to achieve operational value and what you must do to achieve customer value, clearly it is next-to-impossible to achieve the customer portion without first accomplishing the operations portion. And that’s the point of the value waves – each wave of value commitment lays the groundwork for the wave that follows.

Wave 3: Product Offering

Once you can deliver operational and customer experience excellence, your products will yield greater profitability and customer enthusiasm. Many retailers to lean hard on product offering at the expense of the other two waves, but that just doesn’t work. Of course, you can’t coast on products once you get to this point either. Strong merchandising strategies include:

Offering the right products and price points for your target market
Constantly introducing new products (that’s right – not just once or twice a year!) to keep customer enthusiasm and interest high
Moving aged, tired products out of the store (customers tune out when they see the same old things over and over)
Moving merchandise around to create a fresh look and new interest

This week, take some time to analyze your operations, customer experience, and product offering. Consider the improvements you would like to make in each area, and then look at how improvements in a “prior” wave could make the difference. You may find that improvements you have tried to make for a long time are finally within your reach.

Getting Employee Reviews Right

Short Summary: An annual employee review process can be a powerful driver for business growth and innovation. Unfortunately in most companies it's not used for that at all. Here's how to improve.

When my oldest child was eight years old, I stumbled upon a brilliant method of doling out consequences for less-than-desirable behavior. Instead of telling her what her punishment was, I asked her to decide on the punishment herself.

Invariably she came up with a more harsh punishment than I would have suggested – often more harsh than I could support. But what really struck me about the approach was how much she hated the process of creating her own consequences. On one memorable occasion she stomped her foot and ran from the room screaming “Why can’t you just punish me and get it over with like normal parents?”

Though we went through our fair share of trials and tribulations on the way to adulthood, now she is 25 years old and one of the most personally accountable, self-disciplined people I know, able to defer personal gratification for good cause, possessed of an incredible work ethic, and filled with a sense of purpose in her life. Can we blame it all on forcing her to come up with her own consequences? Certainly not, but even she credits that early accountability as among the most influential experiences of her life.

This reflection comes to me as I help clients prepare for the oh-so-common annual employee review process.

Recent publications indicate that human resource professionals are beginning to doubt the value of the employee review process, and many companies have abolished it altogether. Considering that most employee reviews consist of a manager making a hasty and vague list of canned desired improvements and delivering them impersonally in a 15-minute stress session, this is not surprising. Having been at the receiving end of that type of review myself, I see no value in wasting any corporate time on such activities. But what if the employee review could provide the adult version of the strong sense of personal accountability and purpose that my daughter gained when asked to create her own consequences? Isn’t there room for meaningful employee-manager exchange about goals, objectives, accomplishments, and potential?

I think there is, but it requires commitment and preparation on the part of the manager to achieve. It starts with engaging the employee in the process from the very beginning. It starts by asking the employee to be his own reviewer.

The most successful review process involves providing employees with a self review questionnaire, asking them to take time to consider their performance over the past year, and giving them the opportunity to present their assessments during a private, relaxed, sufficiently scheduled time for discussion. By putting responsibility for self-assessment in your employees’ hands you open the door to insight you could not gain if you were to review them and ask for their compliance. You also walk the fine line of approaching them as an adult peer while appropriately acknowledging your role difference, which can make all the difference between a successful or resentful working relationship.

When asking employees to prepare a self-review, suggest that they answer the following questions:

1. How did my performance contribute to my department’s achievement of our strategic goals?

2. What was the impact of my performance on the challenges faced by my teammates?
Did I accomplish goals that were set for me during my last performance review? (Please be specific.)

3. Please explain how you understand and are working to convey the company brand?
Please explain how you understand and are working to convey the company philosophy (or principles)?

4. Were there any actions or factors that inhibited your work performance? If so, please describe:

5. The new skills I have developed and demonstrated are:

6. How did these new skills add value to your team or the company?

7. How can my supervisor facilitate my contribution to the achievement of my personal goals?

8. How can my supervisor facilitate my contribution to the achievement of the company goals?

9. My goals for next year are:

Managers should answer the same questions for each employee they plan to review. A manager who doesn’t have enough information to answer those questions about each of her direct reports isn’t paying enough attention – an important form of self review for the manager.

On review day, set aside enough time (45-60 minutes) and a private space to have the discussion. Ask the employee to present his review first, in its entirety. This gives the manager the opportunity to listen carefully and learn about each direct report, which will help her be a more effective manager and will help the two of them together to provide greater value for the company and a better working experience for themselves. Once the employee has completed his review, the manager should first acknowledge all the things about which they agree, congratulating the employee on accomplishments and offering support for improvements the employee wishes to make. After that, the manager can offer insights from her own review that did not appear in the employee review. Finally, invite discussion about those points and come to agreement about the most positive goals and objectives for the coming year.

If you have a trusting relationship with your employees – and the requisite amount of confidence yourself – you can also ask for input on your own performance as a manager. Your employees possess insight about your performance that is relevant to your long-term success and different from what your boss has to offer (of course, none of this process has value without trust. If a manager has a conflicting relationship with an employee, the employee will feel set-up and unsafe when asked to come in and review himself).

One of the most common objections I hear to this approach to annual employee review is that it will take too much time. To respond to that, I like to retrieve a copy of the P&L/Operating Statement for the year. The largest company expense is almost always product cost. The second largest? Human resource. The ultimate key to competitiveness lies in the excellence and happiness of your employees. Invest in that, and you are investing in profitability.

Happy Reviewing!

Getting Focused

Short Summary: Do these things on a regular basis and train your brain to love the feeling of getting focused more than it loves the feeling of multi-tasking.

If you ever worry that you have adult onset ADD, you're not alone. Maybe you do, or maybe your life is just filled with way too many distractions. Before you go running to the doctor for help, consider these tips for getting focused and staying that way.

Getting Focused Requires a Plan

One of the best ways to waste an entire day on minutiae is to start without a plan. You know those days. You start with high energy and big ideas, but by lunch you realize you've been doing nothing but email and trouble-shooting, and by the end of the day you're experiencing the bad sort of tired; the antsy, agitated, tired-with-nothing-to-show-for-it tired.

When you start the day with a plan, your efficient brain will help keep you on track all day long, even if that plan is just lurking somewhere in the back of your subconscious. The plan doesn't have to be some big Microsoft-Project-worthy thing either. All you need to do is start each day with writing down the one or two or three things you intend to accomplish that day. So simple, yet so profoundly effective. And if you get to lunchtime and realize you're totally off track, write your plan at lunch and rescue the rest of your day.

Getting Focused Means Managing Distractions

If your email is binging, sending a popup to your screen, or otherwise alerting you every time a new email comes in, then you have turned the management of your life over to Google, Microsoft, or Apple. This goes for your phone too! In fact, any app that alerts you about new information is being given an inappropriate amount of control. If you want to know what the temperature is outside, you can check it. Trust me - your phone really doesn't know specifically when you need to know these things - it only knows that something has changed and you have asked to be alerted.

I love technology and all the information and advantages it can provide. But the best way to get focused and stay focused each day is to take control of your devices. Turn off your notifications (OK, I leave on severe weather alerts), and check email, weather, Instagram, Facebook, etc. when it's the right time for you to check those things -- not when your devices tell you to.

How Your Brain Works

Your brain loves stimulation. When interesting things are cropping up all around you, your brain wants to take it all in. And different parts of your brain respond to different stimuli, so when there are lots of distractions, your brain looks like a little thunderstorm, with lightning in the back, then in the front, then on the side . . . you get my drift. And all that activity in the brain actually feels pretty good, so we let it happen.

But do you know what feels even better? Flow. When you get into a state of concentration - and manage to tune out the distractions for about 15 minutes - you settle into that ultra focused, high-quality, high-productivity thinking called flow. You can stay in a state of flow for hours if you're not disrupted. Not all tasks require hours of concentration, but think how effective you would be if every task or project that required more than 15 minutes of your attention benefited from your highest quality thinking!

So put your cell phone on silent and check voice mail later. Turn off the email, and turn it back on at a specified time. Tell your studio mates, employees and loved ones that you are unavailable for a few hours. Do this on a regular basis, and train your brain to love the feeling of focus more than it loves the feeling of multi-tasking.

And believe it or not . . . that's it. If you simply start each day with a conscious plan, eliminate unnecessary distractions, and allow yourself to get into a state of flow, you will become the most focused version of you that you have ever known.

Have fun getting focused!

Giddy’up

Short Summary: Managing risk requires an ability to analyze the pros and cons of each decision from an objective place. Here are some tips on how to do it.

As I said yesterday, the challenge of business leadership is often the demand to choose between very difficult options and managing risks. I promised a second example from my experience with a slightly different angle.

The example that comes to mind is a company that was doing a large website launch. This website required shopping carts, security, a catalog of products, services, and informational content (no GoDaddy template for them . . . ). The company had only recently implemented operations that would enable them to be on the internet, which caused them to be behind the curve in terms of website marketing. Of course, this is one of the oldest stories in the book. Company finds itself behind the 8-ball on a product or service, company panics and wants to figure out how to make up for lost time, company then has to choose between A) launch quickly with a substandard offering, or B) launch later with a brand befitting option.

In this example the owner wanted to launch fast, anything, even just a portion of the product offering, just to get out there and start getting orders on the web. He wasn't interested in managing risk. He wanted to go after immediate gratification and short-term gain. The potential downside was that the customers who depended on the company for a variety of services and products would be completely dissatisfied with the limited appeal of the website, leading to rushing the additional development to respond to customer activism.

The alternative was to stay off the net while completing the development without the additional customer dissatisfaction and pressure, but potentially losing out on lower-cost sales that could have been realized in the interim, and losing some respect due to the perception that the company was falling behind its competitors in web marketing.

Once again, deciding which option is “right” is very difficult. Both have significant upsides and downsides. I can share how I analyzed the situation, but as with all business-case scenarios, the devil is in the details and in the quality of the analysis – so the suggestions I made on this scenario may not apply to something that on the surface looks remarkably similar.

If a company in this position was known for highly unique, hard-to-compete-against products, and could put those products on the internet quickly, that may represent a good argument for rushing the web services. If that company was also unable to hire sales staff and desperately needed to offload orders to the web to offset customer dissatisfaction related to long wait times or poor sales/service support, that may also have made a rushed web presence more desirable than the existing alternative. So the benefits of easy access to superior/unique products and a better sales experience on those products would outweigh the downside of a partial response to overall customer requirements.

On the other hand, if a company in this position was known for offering a broad range of easily competed against products, if current sales and service performance was satisfactory or highly satisfactory, and if they had a brand which needed to be protected against erosion, they would be better off waiting to release a more desirable and functional website – even if it meant staying “behind” the rest of their competitors for a bit longer than they desired.

Obviously, neither option is perfect. And that is my point. Business owners often feel completely thwarted when they can’t have it all. Why is that? In our personal lives we are prepared to make compromises and sacrifices (or we don’t have healthy relationships), in our social life we make concessions to accommodate many different people and situations. But in business we don’t like the idea that sometimes we must make difficult choices (my favorite is the expectation that a computer can do anything, so why is the IT department intentionally thwarting them? Perhaps more on that another day).

After yesterday’s blog I heard from a customer who was faced with making a terribly difficult choice between two options. In this case, she had two excellent opportunities but was only able to pursue one. She had an inkling of how she wanted to proceed, but was nervous about making the final commitment – so nervous that she had simply avoided making a decision for nearly four weeks.

We dissected her business similarly to what I described above. We considered:

Business strategy
Business brand (i.e., what customers expect from the business)
Current operational capabilities and weaknesses
Cash flow
Core business problems that must be solved

We looked at the upsides and downsides of each option compared to those business considerations, and rated each projection (negative and positive) on a “likelihood of happening” scale. The decision that emerged as superior (but still not a sure bet) was the one she was instinctually prepared to make.

In some cases, the decision one wants to make and the decision that one should make are different. When I encounter a customer in that state of mind I always look for an underlying motivation. It usually comes back to three things: ego (I have some aspect of my identity wrapped up in this option – even if it’s not the best option), fear (I fear the potential downside of one option much more than I fear the potential downside of the other – even though the one I fear the most has the least likelihood of occurring), and short-sightedness (I want the option that will give me the greatest short-term gratification).

Of course, sometimes demonstrating even a slight superiority of one option over another is not possible. Then we’re back to the conclusion of yesterday’s column. Who the hell knows. Have the guts to make a decision, take the reins, and ride. And what if you fail? Well, if you literally bet the bank, you could be out of business. I don’t recommend taking risks like that (though sometimes they seem inevitable – more on that in a moment).

Warren Buffet offers investing advice that can provide insight for those unsure how to avoid taking business-killing risks. He says to never risk anything you do have and do need for something you don’t have and don’t need. The more you think about this statement, the more sense it makes. Even if your investment style is considerably more open to risk, this guidance is important.

Now, what about when you absolutely have to bet the bank? This is the favorite theoretical curve ball that people arguing about this topic love to throw. So let’s address it.

The only time you absolutely have to bet the bank occurs when your back is against the wall, and you’re going to fail if you don’t. Hmm. I guess that means you’ve bet the bank already, doesn’t it. In that case . . . you’ve got it . . . break it down. Compare the relative risks of not acting to the relative risks of your alternative option or options. Consider your strategy, brand, operational capabilities, and cash flow. Then make a decision, take the reins, and ride. Business case studies in every industry will demonstrate the following truth: Not making a decision – even when your back is up against the wall – is the surest way to bring your company down.

Give Better Feedback - Get Better Results

Short Summary: If business is about continuous improvement then people must be continuously improving too. Giving better feedback will help your business improve.

Better Feedback Means Better Productivity and Higher Morale

Engaging in effective communication is one of the most important – and difficult – things for a team to do. Communication becomes particularly difficult when we need to give feedback of an uncomfortable or possibly critical nature to a teammate. The “I Statement” approach will help you give better feedback and get better results.

An I Statement takes the you out of hurt feelings, as in you hurt my feelings. Instead, it helps you describe the behavior that contributed to your feelings getting hurt, and helps you express how you interpreted that behavior and why your feelings were hurt as a result. In other words – someone else did a behavior, and you own your own feelings. Expressing feedback in this way leads to far more productive conversations!

So here is the format of the “I Statement.” The more you use it, the more naturally it will come to you.

What You Say	Fill-in-Your-Blank	Instructions
When you	(specific action)	Did a specific behavior; i.e., rolled your eyes, cut me off when I was talking, shared my personal information with someone else, etc.
I felt	(feeling word or words)	Feeling word; i.e., sad, frustrated, angry, confused, etc.
Because I interpreted that to mean	( )	This is when you share what you thought the other person’s intention or meaning was. Our interpretation of others’ actions are also often incorrect or only partially correct
Am I interpreting this correctly?	(discuss)	Excellent opportunity for discussion and coming to a new shared understanding.
What I would like in the future is:	(ask for what you want)	In some cases it’s important to make agreements about future behaviors. If the situation was truly a misunderstanding though, then it may not be necessary. You’ll know whether or not you need this.

Giving better feedback is one of the most important things a company can do to improve productivity and morale. Most all of us want to do a good job - in our interpersonal relationships and in our work. We deserve to receive the feedback that will help us accomplish that. Using the I Statement helps everyone become more comfortable giving - and receiving - that important feedback.

Hello Kitty

Short Summary: The question of how to create and sustain accountability for behavior is one that comes up regularly in business. The answer to this question is clear but it's not easy.

The New York Times reported yesterday that police officers in Bangkok who violate minor laws or policies themselves will be required to wear a mark of shame. Their choice of shameful object? A pink Hello Kitty armband with linked hearts. Their police chief reported that other measures of minor reprimand had not worked, and they hoped this “cute icon for young girls” would induce levels of shame that adult conscience was unable to produce. Wow. Psychologists and feminists around the world have to be having a really good time with that one.

The question of how to create and sustain accountability for behavior is one that comes up regularly in business. The answer to this question is clear, but it’s not easy. There are some things you can control, and others you can not.

You can not create an accountable individual. You can only hire one. The fundamental attributes that must be present to ensure accountability are self-respect, an even deeper respect for others, honesty, courage, humbleness, confidence, and a genuine desire to improve oneself. There isn’t a management trainer or inspiring leader in the world who can cause those traits to exist in an adult where they did not exist before. And possessing some but not all of those traits won’t cut it. Self respect + honesty + courage + desire to improve oneself without the other traits gives you an overly confident human being who does not value others, may be threatened by those smarter than them, and can’t learn from them. Not much accountability there. Play around with the list yourself, leave a few things (or only one thing) out, and see whether or not you have a recipe for accountability. You definitely have to hire for accountability.

A business can construct systems that drive responsibility. Too many business managers and professionals don’t understand that there is a science to designing an effective business machine. They approach business design like casual cooking. When you are cooking, if you understand a lot of basic ingredients, you can mix them for reasonably good results without looking at a recipe. Ever wonder why someone else’s dishes consistently taste better than yours? They probably understand the rules better, which ultimately leads to being able to improvise better. Baking is unforgiving. There is a specific chemical interaction that must occur for the basic ingredients to transform into an excellent baked good. Unless you are a very accomplished baker (i.e., understand all the basic rules), you better follow the recipe.

You can run a business like a casual cook and do OK some of the time (businesses run by casual bakers fail in just a few years). But if you want to get great results more consistently, you have to understand the fundamental rules and how they interact to drive successful business execution. Creating systems that result in performance is part of both the organizing and the controlling functions of management. Organizing includes structuring workgroups to create clear lines of responsibility, and staffing them with the right skills and attributes to ensure the work can be done competently. Controlling includes designing measurement systems that visibly and regularly monitor performance and quickly highlight things that are out of tolerance. Without these systems, you won’t know what performance you are looking for, your employees won’t know what performance to deliver, and unaccountable individuals will skate around in the margin enjoying the ride.

When you have designed the right organizing and control environment, individuals who are not accountable will either drive themselves to behave accordingly, or will be recognized and removed.

There is nothing more frustrating than observing substandard performance, not being able to put your finger on why the performance is substandard, or suspecting that individuals are aware and unapologetic about their uninspiring contribution. I suppose you could have a bunch of pink Hello Kitty armbands made up, or find another scarlet letter with which to brand the folks who either actively game the system or barely manage to show up for work at all. But my guess is that those pretty pink armbands will become another fun way to joke about personal deficiencies while refusing to improve. To belabor the cooking analogy a little further, if you only buy the best ingredients, and faithfully follow the inherent rules of the process, you can cook up an accountable environment that feels better to everyone.

Help is On the Way! (but did you ask for help?)

Short Summary: Knowing you need help and willingness to ask for help are very different. Only those who truly want help can benefit. And help often determines success.

Help is a funny thing. We often - in fact, almost always at some level - need it. But we don't always get it. Is that because the universe is unkind?

No. It's because we only get help when we actively seek it, we only actively seek help when we genuinely want it, and wanting help is not the same as understanding we need help.

In fact, I have known people who were aware for years that they needed help, but all the same did not want it.

The reasons for not wanting help when one needs it are probably as myriad as the genetic combinations that define us physically. Maybe we judge ourselves and think we shouldn't need help. Maybe we think help is a sign of weakness. Maybe we struggle to accept that someone else knows something we don't know. Maybe we worry what others will think. Maybe we don't like the uncomfortable feeling of being helped. Maybe we don't believe that others will do things as well as we would. I'm sure there are dozens more reasons than those.

I am confident that people who need help and don't ask for help use the justifications that they can't afford it or that they don't know who to ask as mere excuses - when someone genuinely wants help they always find a way to acquire it.

So why is this important? Because throughout our careers we all need help. We need assistance, people to whom we can delegate, people from whom we can ask advice, and people to kick us in the rear end and tell us the truth. The people who achieve the most have something in common . . . they accept the necessity and value of help, and therefore the reality that they cannot do everything themselves.

This doesn't just apply to one-man operations. I have met many entrepreneurs with 20, 30, 40 employees who still insist on having a hand in every single aspect of their business. They are only satisfied when the people helping them do things exactly as they would do them - which is impossible, of course. Those businesses are hobbled as clearly as if the entrepreneur hadn't hired anyone.

I have been asked several times lately how we sell our services, and I reply, "we don't. You can't sell help." I can't court people I think need help, or promote our services to people who appear to need help, you can't close someone on help. I am an adamant teacher of selling, yet in the case of my own business, selling our services is anathema. Someone who merely suspects she needs help will make for a difficult client. When someone approaches us and says they really really really need help, and are willing to make the changes - both personal and organizational - required to benefit from help, then we can get a lot of excellent work done (and make the hourly rate worthwhile for them). In the case of help, the seeker must be the aggressive one to truly benefit from it.

So ask yourself, in what areas of your life and business do you need help, and what is holding you back from seeking it? Once you have your list (we all have a list), do the inner work to figure out what's holding you back. Then go on . . . ask for help. You deserve it.

How a Micro Management Style Diminishes Your Impact

Long Summary: Micromanagement limits your business. By focusing on the strategic aspects of managing, you cultivate more innovative, effective employees. Your bottom line -and your employees!- will thank you. #ManagementStyles #Leadership
Related Article 1 Link: Visit Link
Related Article 1 Label: How to Let Go of Control
Short Summary: A micro management style diminishes your business and limits employee initiative. Identify & correct micromanagement tendencies for greater success.
Related Article 2 Link: Visit Link
Related Article 2 Label: Be a Better Leader

Micromanagement limits your business. By focusing on the strategic aspects of managing, you cultivate more innovative, effective employees. Your bottom line -and your employees!- will thank you. #ManagementStyles #Leadership

How to Be a Terrific Manager Without Trying

Short Summary: What do good managers do and are you doing those things? Regularly practice these 11 points and you'll become a better manager every day.

It’s one thing to have a bad job experience; it’s another thing entirely to watch one’s children go through one. Yet, that’s what they must do. When young people enter the workforce, they are typically subjected to a series of bad managers with poor training and insufficient communication skills. For years I had to watch my children live through a series of crappy jobs. It's part of the learning experience, but it isn't fun to watch!Now my oldest child is a nurse, and at 29 she is finally in her dream job. It’s not just that she loves the work, she loves everything about her manager, the corporate structure, and the company philosophy. The result is that she is completely dedicated and motivated.

There are a few reliable things that good managers and management organizations do that make them rewarding to work for, and my daughter’s new employer appears to do all of them.

1. Good managers have a clear purpose. This is true if the manager is the business owner and set the purpose himself, or if the manager is several rungs down the ladder and had to learn the purpose from his own managers. A good manager always takes the time to understand and share the company’s purpose and how his team can best fulfill it. This vision and direction enables a team to come together and work with one another for common goals.

2. Good managers hire good people. You can tell a good manager from the quality of employees that surrounded him. A good manager always looks for the brightest, most ambitious, most capable people he can find. Weak managers avoid any employee that could potentially take his job or outshine him.

3. Good managers are team players. A good manager knows how to let his employees take the lead, and encourages employees to practice leadership skills frequently. Leading from the middle is a powerful way to build a strong team by strengthening each person’s leadership skills, and it builds team confidence in their manager, as it demonstrates that he is willing to be a member of the team and not just the boss.

4. Good managers motivate with reasons and benefits. People don’t want to just be told what to do, they want to understand why they are doing it. A good manager has reasons and benefits for everything he requests, and he facilitates discussions around those reasons and benefits when necessary. I’ll never forget a manager I once had when I was younger; a Vice President in a large corporation. He had to ask our team to do something that was stupid. Not unethical, just misguided. But he didn’t duck it. He said, “Look, we all know this isn’t the best thing for us to do, and I’ve already tried to argue our position with my boss. But this is a good company, and we’re all going to make a bad judgment call from time to time. So let’s do this enthusiastically, and figure that it’s a good learning experience for everyone, including my boss!” We stayed motivated and even developed a sense of humor about it.

5. Good managers respect that people work for more than just money. A good manager takes the time to know and appreciate each individual employee. Every person has something that makes him or her tick, and a good manager wants to know what that thing is. It may be pride in a good job, a sense of responsibility, coming to work with people they enjoy, or learning new skills on the road to a more challenging career. Whatever it is, the good manager figures it out and then finds ways to keep the employee motivated by appealing to those values.

6. Good managers really notice their employees. They take the time to observe and learn each employee’s strengths and weaknesses, and they find ways to play to the strengths. When a good manager plays to an employee’s strengths, the employee experiences greater success and growth. Then, the really good manager specifically recognizes his employees’ successes, both publicly and privately.

7. Good managers don’t mix positive and negative feedback. Feedback should always be specific and timely, and in the case of negative feedback, should include some information about what is desired. When you mix positive and negative feedback, both areas suffer. Let positive feedback be a cause for unhampered happiness, and let negative feedback serve its purpose by allowing the employee to reflect on it and improve.

8. Good managers set clear goals with and for their employees. These goals must be directly related to the purpose that was discussed in Step 1. Having clear goals motivates employees, helps them stay focused, and enables them to measure their progress and celebrate achievement.

9. Good managers delegate. This isn’t simply to spread the work around (though that is important). When done correctly, delegation helps employees stretch and learn. When employees accomplish new challenges, their confidence and their value to the team and company grow.

10. Good managers are accountable. They share the glory when the team has accomplished something, and they accept responsibility for team or individual failures. This level of responsibility is essential to building a culture of trust and safety. There is no innovation without mistakes, so a culture that punishes mistakes won’t have any innovation. When a manager is accountable for the team, team members learn from their mistakes and grow, and innovation thrives.

11. Good managers treat each employee with dignity and respect. They listen carefully, speak honestly and thoughtfully, and always work from the premise that people may have different skills but never have different value.

I would love to write an article called “How to be a Terrific Manager Without Really Trying.” Great title, right? Unfortunately, that article cannot be written. There’s simply no way to be a terrific manager without making an effort. However, if you regularly practice these 11 points, you will become a better manager every day.

I Had This Wrong for 20 Years: Profit is Not a Purpose

Short Summary: Had I stopped to think deeply about it I would have realized much sooner that profit and a higher purpose are not mutually exclusive.

From my earliest days as a business leader, I understood that a business had to have a clear, unified purpose in order to be successful. It was drilled into me – in school, by business thought leaders, by my Boards of Directors, that the ultimate purpose of a business had to be profit. I believed it. No – I accepted and embraced it. At my last business, we articulated our purpose as “to make more money now and in the future.”

I was wrong.

It always felt a little hollow, to be working for profit above all else. Yet it also made sense. After all, why have a business that doesn’t make a profit? But had I stopped to think deeply about it, I would have realized much sooner that profit and a higher purpose are not mutually exclusive.

The first real challenge to my profit-purpose-assumption came when I started my current company. As I began the strategy process, I started from the top down. “The ultimate purpose of this business is to make more money now and in the future.” But it didn’t sit right with me. Without partners to negotiate with or a Board of Directors to appease, I kept recoiling at the idea of being primarily focused on “making more money now and in the future.”

So I threw that purpose out and began to list the reasons I was opening this business. Some were very personal, such as the freedom to always put my family first, the desire to put into action business concepts that I have long pondered but which met with resistance, and working within an ethical framework from which I never felt pressure to deviate.

Other reasons were more philanthropic. I wanted to create a very human, uplifting and creative employment experience. I wanted to further refine the practice of collaborative management. I wanted to pay a meaningful wage for meaningful work. I wanted to serve a specific community of customers with services they needed, and I wanted to see that community become increasingly successful.

What I realized is that a business must have a bigger purpose than profit. That instead, the purpose of profit was to serve the higher purpose of the business. It was like I had been wearing my slacks inside-out for 20 years. Suddenly, with the pockets and buttons on the outside, they felt better. Everything fit better.

Does this make me a granola-eating-Birkenstock-wearing-naïve-excuse-for-a-business-owner? Well, I am some of those things, but I don’t believe I am naïve. What I am is more motivated. More motivated to have my business produce a profit so I can remain committed to our higher purpose, which is:

To create a fulfilling, enriching, and life-balanced work experience for my employees and myself while making significant contributions to the success and well-being of small business owners and entrepreneurs.

Eight years later, this purpose continues to serve my company well. When we have discussions about wage increases, we discuss them in terms of creating the profit to support them. When we discuss creating new services or products for our customers, we talk about them in terms of the profit we must generate with them to make them widely available. Over and over again, profit serves purpose.

More importantly, the stakeholders in this company understand that this company exists for them and for the customers to whom they have become committed. If the purpose was merely profit, how could they possibly feel as committed, even if a portion of that profit was set aside for them?

I’m sure there are people for whom money as a purpose is very exciting. But I suspect that far more people are motivated by the things that money can do, can create, can cause. Now that I understand that profit is the means to an end, and not the end in itself, I will never look at business purpose the same way again.

What’s your business purpose?

Integrity is A Russian Doll

Short Summary: An integrity-infused business is all-or-nothing. You're either feeling it or you're not and if you're not feeling it it will bite you in the bottom line.

Look in a thesaurus for synonyms for integrity and you get a lot of stuffy, judgy words. Probity and rectitude on the mildly gross end, virtue and purity on the annoying end. So as you might imagine, it’s hard to write about integrity without coming off like a prude. Yet, here I go, because I like a challenge I guess.

As I write this I’m still in Jewelry Week mode, though certainly it applies to every type of business. Yet, I do think the stakes are higher right now for the jewelry industry than most.

There was never a time when honesty in business didn’t matter, but there have been times when businesses could get away with, um, less. Times when business wasn’t under a microscope, times when communication was from business-to-consumer, and the only way consumers could talk back was to call the Better Business Bureau. Times when the moral compass of the country wasn’t the topic of hundreds of thousands of conversations each day on Twitter, Facebook, and Google+. We are no longer in those times, and I think that’s a good thing. A great thing.

But here’s the deal. An integrity-infused approach to business is all-or-nothing. You’re either feeling it or you’re not. If you’re not fully feeling it, you’re not going to be fully acting on it. And if you’re not fully acting on it, it’s going to bite you in the reputation/employee-turnover/vendor-relationships/bottom-line. So if self-accountability isn’t enough for you (and I do believe it is for most of us), perhaps market accountability can serve as a more potent motivation.

What do I mean by all-or-nothing? I mean that integrity is a cultural thing. I’ll never forget my first sales call, over 30 years ago. I was sent out with one of the top salesmen in the firm; a hard-driving, competitive guy with a strong South Side Chicago persona. During the sales call, I oversold our capabilities. I could tell he didn’t like what I was saying, and somehow I managed to shut up. When we got back to his car he scolded me. He told me, “That’s not how this company works. We only promise what we can deliver with confidence. Don’t ever do that again.” Here was a guy whose entire paycheck was based on how much he sold, and yet the company ethic was that ingrained in him.

You know that moment when you don’t feel like paying one vendor bill because others are due and you’re unsure of your cash flow in the next few weeks? It’s not as simple as saying, “Just pay the bill,” because there’s a good chance there’s nothing to pay it with. Integrity goes deeper. It’s about doing (learning how to do) all the things you can do to anticipate and manage cash flow in the first place, so you don’t put your vendors in that position. After all, they have vendors to pay too. Yes, it really is a thing, anticipating and managing cash flow. It’s a business owners’ ethical responsibility to learn it.

We all know people who blatantly take credit for others’ ideas, and those people are ultimately made pathetic and laughable by their actions (or they just fade away). But integrity goes deeper; it’s about all of us trying to see if our ideas are original before forging on. You know that idea that just popped into your head? Maybe it’s for a design, maybe it’s just for a social media post. Do you stop and think about whether or not that idea actually came from you? I know that sounds funny, but it happens to all of us every day. Our brains hold on to every impression and every experience we’ve ever had, and then dish those thoughts up at random times. We do a lot of writing at my company, and one of our disciplines is to run every idea through Google Search and an academic plagiarism database. Very few ideas are genuinely new, but we have a responsibility to ensure that we are offering at least a new perspective and/or to acknowledge the originator.

The way we talk about people is an important part of integrity. Some women in my town are having a field day posting Facebook pictures of a very handsome yet very odd man who is seen about town. They aren’t cruel about him, but they are catty. I know these women – they’re good people. They also own businesses. I just cringe every time a new post goes up, because I can imagine how this reflects on them professionally, and I’m terrified that poor guy will somehow get wind of it and be hurt.

I’m also still surprised by how some people talk to other people. It really doesn’t matter if the other person is an employee, a family member, a competitor, a stranger, or a business colleague – there is never an excuse for approaching another person without concern for their dignity. When someone yells at, talks down to, or in any way belittles (passive aggression and left-handed compliments included) another human being, they are stating clearly and emphatically that they lack self-control and respect for others.

In the jewelry industry we have these crazy debates over doing the right thing. Doing the right thing isn’t the crazy part, and some of the issues (particularly as they relate to human welfare in countries we depend on for our industry wealth) are extremely important. So we should be debating the issues, but we get in our own way when we start splitting hairs over what the right thing is. That speaks more to our desire to rationalize and equivocate than our desire to do the right thing. I suspect a lot of people don’t even realize when they’re doing it.

Having integrity involves looking at yourself carefully, and questioning whether or not you are putting self-interest over the interest of others. I’m not suggesting we all become a bunch of martyrs – we each have a responsibility to look out for the welfare of ourselves, our families, our businesses, and our communities. But welfare is not a zero-sum game. When people are committed to ethical behavior, they seek solutions that benefit all with vigor, open-mindedness, and a dose of humility.

My dad is a retired federal judge, and he spent his adult life adjudicating the rights and wrongs of things. I remember how he would sit at his desk late at night with just the desk lamp on, poring over his notes with his hand on his forehead. Deciding what is right and wrong is heavy work. But for his own children, his advice was simple. We were taught that a small wrong is essentially as bad as a big wrong, because if you can rationalize wrong at all, even just a little bit, even for just a minute, you’ve given yourself permission to accept wrong as right, and once you do that, everything else is just a matter of degree.

So now, in our world of intense market scrutiny, awareness, and discussion, the stakes are very high for doing the right thing. If we want to do the right thing on the big stuff, we need to make sure we’re looking at all the little stuff. Because integrity is an all-or-nothing proposition. We will stumble and be human about it, but let’s get on the path and stay on it. If we are accepting of anything less than integrity from ourselves, then everything else is just a matter of degree. And I suspect that the market will ultimately judge us on that. Harshly.

Is it about the economy? It's about the leadership stupid.

Short Summary: The job of leadership is a big one - whether it is leading a country or leading a department.

The past few weeks have been wildly encouraging for those of us who like to think. We have gone from a dearth of national discussion to a continuous spirited debate. Of course presidential election cycles are filled with debate, but in seasons past the debate has come to a halt once the election is over and the governing begins. This time the debate continues. Whether you like our new president or not, whether you agree with his cabinet choices or not, whether you are worried about the stimulus or not, the overall discourse has become a lot more intelligent simply because it is a lot more inclusive. There are many lessons in this, but let’s focus on three lessons for leadership today.

Lesson One: Our leaders are responsible for moving us, not getting approval from us. The job of leadership is a big one – whether it is leading a country or leading a department. It comes with responsibility to sort out the best path from among many possible paths. It comes with the necessity that you make peace with your mistakes as well as your successes – because there will definitely be both. On many occasions the leader finds himself faced with making the better of two bad decisions, and the certain knowledge that they will get flamed either way. Want to be a leader? Then set aside any personal need for people to like you or approve of you, and instead invest in the strength of will and character to do the right things for the right reasons as often as possible and as difficult as it may be to figure out.

Lesson Two: Communication must be filled with content. No matter how effective an organization is at communicating, its leaders will always be criticized for not communicating enough. Is that because its members are unreasonable? For the most part, no. It’s because in any complex organization there is more communication need than there is time to fill the need. Good leaders make sure that the time they spend communicating is marked by the high quality of the content. It doesn’t have to be content everyone agrees with (see Lesson One), it has to be content that is meaningful.

Lesson Three: Good leaders benefit from dissension. Yes, there is a reference to Lesson One here, but there is more to it than that. Dissent is always instructive. Dissent teaches the leader about the many angles of each issue; how people of various backgrounds, intelligence, and experience view the issue; and points out opportunities to learn more about each issue. Dissent also teaches the leader about who they can rely on as thinkers and who they cannot. A good leader doesn’t ultimately have to do what the followers want or expect, because he is being paid to make good decisions with presumably better information, skills, and experience than the others. But it is in the leader’s and the organization’s best interests for the leader to lead as publicly and openly as possible, in order to generate the dissension and debate that leads to better decision-making.

Every administration contributes its own chapters to the global book of leadership knowledge, and this one will be no different. But we can all take immediate insight from current events. For those of us who are or aspire to be leaders, the choice must be about more than the increased paycheck. Besides, given the hours a really good leader works, the hourly rate can look pretty meager. The choice must be about having a passion to lead, a belief that you can make a positive difference, and a willingness to be criticized, disliked, and argued with for the sake of progress. For those who do not wish to lead but who expect to have a voice in the process, there is a responsibility to make sure the arguments we proffer are grounded in a desire to help our leaders make better decisions and in a commitment to be informed enough, objective enough, and open enough to be part of dissent-with-purpose, and not just dissent-with-negativity.

It's Just Conflict

Short Summary: Conflict has value. Any alliance without an occasional clash of diverging ideas will be as satisfying as a diet of chicken broth or a dip in a tepid bath.

One of my earliest jobs was at an advertising agency, and the main thing I remember about working there is that everybody screamed at each other all the time. Sometimes the screaming was loud, sometimes it was more of a hiss, sometimes it was profane, but invariably, the people who worked there were entrenched in conflict with one another. Everything was an argument, from who made the coffee to who was smarter than whom. They fought over ideas, handling of clients, kissing of asses, and compensation. I left that job as soon as possible, and with a minor case of PTSD.

Each subsequent job I took involved a careful screening of the environment. I was not going to work in an angry and competitive culture ever again.

And I never did. Instead, I found something even more disturbing. A place where nobody was supposed to argue or dissent at all. Over anything. It wasn’t nice. It wasn’t part of the culture. It was conflict.

I am neither a screamer nor a fighter. I am, however, very comfortable with argument, and I am very direct. Some of that is just my personality, but some of it is purposeful self-development. Two of the things I value are clarity and progress, and a good argument can be a tremendous facilitator of both. So working at a company that stifled anything that looked like conflict was very disturbing. And as you might guess, the company had stagnated. Everyone was happy, though nobody got a raise. Everybody was equal, but the company had dropped to the lowest common denominator.

You company – heck, your life, your marriage, your relationships – need argument. Argument isn’t necessary all the time, nor does it need to be disrespectful or demeaning, but it must exist for change and progress to occur. A collaboration of any sort without at least an occasional clash of diverging or opposite ideas will be as satisfying as a diet of chicken broth and as energizing as a dip in a tepid bath.

Progress, innovation, and breakthroughs happen in the space between assumptions and ideas. When two or more people engage in a passionate discussion, throwing all their experience and beliefs out on the table for dissection and examination, great things can happen. Of course, it’s not actually an argument if nobody is listening. An argument is defined as an exchange of ideas. If each side is only throwing and not catching, that’s a game of dodgeball.

If you want to cultivate an environment that encourages people to bring their whole self to work, you need to encourage an environment that makes it safe to argue. That means helping people who like to argue do so in a respectful manner, and it means making argument safe for people who are terrified of argument. It means helping managers understand that the exchange of ideas must also come from their subordinates, and it means creating a safe environment for subordinates to bring their ideas to the table and even fight for them.

One of the best ways to do this is to create a culture that identifies and encourages arguments as debates. First, you must help everyone understand that a debate is a structured forum in which opposing ideas are presented, supported with facts or evidence, and dissected to find the flaws. In a debate, one side listens while the other side speaks. Speaking with passion and heat are perfectly OK, but attacking the other side professionally or personally is not. The goal is to at least decide on the best course of action among the alternatives, or at best to determine an even better course of action than anyone had thought of prior.

In the early stages of introducing this idea to a culture, the debates must be moderated – and some companies get so much out of the format that they continue to moderate forever, just to get the best results possible. The most common time to find such an argument brewing is in a meeting. It should be acceptable for anyone in the room to say, “It looks like we have a few conflicting ideas here. Let’s debate it.” This simple statement validates that it is perfectly acceptable to have conflicting ideas, and it serves as the cue for the group to move into the debate structure. One person should be at the white board, capturing the main ideas of each participant. A moderator is needed to summarize and reflect back what is said (which ensures understanding) and to make sure people wait their turn to talk (and to remind them to write a note so they don’t forget what they wanted to say). It helps if the moderator is an extremely good listener with an ability to see the points of agreement among the debaters. And if a few raucous free-for-alls break out with everyone talking at once? The moderator steps in, cools things off, tells everyone to write down what they wanted the rest of the group to hear, and moves the group back into the debate structure – without judgment or criticism. Just re-focus.

Will every debate end up with a group hug? Definitely not. But neither does most passive aggression and conflict avoidance. By implementing this approach and practicing it over time, your company can gain skills in the cultivation of new ideas. Eventually people in the organization will get comfortable enough to realize that conflict is neither good nor bad, but how we embrace it makes all the difference in the world.

Karma Crackers in My Soup

Short Summary: Push people because you owe it to them not because they'll appreciate it - because they won't.

I received an email from a former employee this morning that surprised me. She was always someone with whom I had a fairly prickly relationship. Never contentious, but I never got around to feeling like she quite trusted me either. That didn’t keep us from working together or keep her from getting raises and recognition. I just know that it was never terribly comfortable.

In her email she said, “I’ll be honest. When you first left I thought all right! Things will get easier for me now. And they are easier, but I’m not sure any more that’s a good thing. Its more than just that there’s no guidance around here. But there’s nobody to push me. I met my folks last night at dinner, and I told them how things were going, and about for the first time how hard you were on me when you were there. And they said that you must have believed in my abilities to push me so hard. And I think you must have and that I didn’t appreciate it and I just wanted to let you know that I can see that now.”

There are two things that I was taught early on in my career that I have taken to heart. The first is ‘the higher you fly, the more you get shot at.’ So don’t pursue leadership if you’re too thin skinned to handle getting treated like skeet.

The second is ‘Push people because you owe it to them, not because they’ll appreciate it – because they won’t.’

This is an extremely difficult adage to live by, particularly if you’re the type of person who wants others to like you. It requires a tremendous amount of self-doubt to do it well. You have to question why you are pushing, and if you are pushing in a direction they can be successful in, and are you giving them enough training and information and support to ensure they have access to what they need to learn, and are you letting them know simultaneously that you believe in them? Then there are the times when you are pushing someone to move out or move on. Is it because they really can’t be successful where they are? Or is it because you’ve run out of patience before they’ve run out of potential? And are you hinting around hoping they’ll catch on, or doing the grown-up thing and being really direct?

There are always a few people who appreciate the pushing. They take it as a form of positive attention and they thrive in that environment. There are always some who believe that you have nothing to teach them, and they throw up the walls of cynicism to keep your influence out. And then there are some like the young lady who wrote the email, who figure it out eventually. It’s not too late for her. If she’s smart she’ll find someone else to push her, and this time around she’ll understand what they’re doing and that it’s to her benefit. And if she’s really smart, she’ll get to the point in her career where she can push someone else to be more successful.

And she’ll do it, even if they don’t appreciate it.

Keep Your Mind On Your Goals

Short Summary: Learn how to keep your most important business goals front-and-center even as you tackle the daily details of your business. This method has a big pay-off.

I've been doing something for the past year that is really working for me. Like you, I run a business. And like you, I often get caught up in the details of that business. So I have to be very intentional about maintaining my focus on the bigger picture.

Of course, I have my big picture established. I have a strategic plan, a clearly defined brand, and the operating plans (marketing strategy, sales & marketing plan, operating plan, budgets & cash flow plans) for each of my business divisions. And I review each of those plans monthly to make sure we are staying on track, achieving our goals.

But still. It's that daily focus that makes or breaks you. Without even noticing it, several days can slip away without any strategic focus at all! I don't know about you, but that makes me crazy. I like ending each day feeling like I did the things that matter. Achieving goals motivates me.

So here’s what I did. During my monthly review of my strategic and operating plans, I started selecting the most important goals to achieve that month from each plan – I usually end up with between four and six significant monthly goals. Just doing this brought my long-term goals into clearer focus. Then, I memorized them. Why? So I could write them down each morning.

That’s right — every day, before I open a single email (but after retrieving my cup of coffee), I write down those goals. I happen to use a business journal for all my notes during the day, but it doesn’t really matter where you write them, as long as you write them. Every single day I take the time to write my business goals for the month, pen to paper, completely focused, fully intentional.

And something interesting has happened. The most important thing is that my achievement of goals has significantly improved. But you mostly see that in retrospect. What I’ve noticed in real time is that when I write my monthly goals each day, my thoughts are more likely to turn to the specific daily activities that I must accomplish to achieve those goals. Before I get sucked into customer questions, writing proposals, helping employees solve problems, or mindless administrative work, before I go off on a tangent doing something that feels rewarding but isn’t in alignment with my goals, before all of that — I visualize my day in terms of important accomplishments. And when I do that, the next 8-12 hours is infused with awareness of the big picture. Sure, I still fight some fires and do some administrative work. But I also get big picture things done. The number of days that slip away without strategic accomplishment has dwindled down to almost none.

I am sure this daily focus is what improved my business goals achievement. And now that I’ve been doing this for a year with good results, I am wholeheartedly recommending this approach to you. Start today! It’s never too soon to start a good thing.

Lead Like a Woman

Short Summary: When female leaders are tough they make the gossip sheet. When male leaders are tough they call it news. But women are better leaders and shouldn't emulate male leaders to fit in.

This month the New York Post’s Page Six gossip column took the female CEO of a major jewelry company to task for being abrasive, hurting employees’ feelings, and keeping employees in long meetings. The article was passed around in jewelry circles as an example of both bad bosses and female-leader-bashing, depending on the point of view. In my point of view, it was both.

Well, not necessarily. We’re talking about a gossip page in a newspaper for Pete’s sake. Whispers of irritation from inside sources don’t seem reliable to me, and I have no idea whether or not this person is a good boss. But there are two things that really should be addressed.

The first, and many have said this before me, is that if a man said the same things or acted in the same ways, he would be considered a bold and aggressive leader, action oriented, with high expectations. Men are leaders, women are bossy, right? When female leaders are tough they make the gossip sheet. When male leaders are tough they call it news. This will only change when we refuse to turn a blind eye to it. The news editors will stop writing it when people like us stop clicking on it and start writing letters to the editor about it.

The second is the thing that bothers me about my first statement. If it were a man . . . it would be perfectly acceptable to be a bad boss. As a corporate culture expert, I can’t let that stand without challenging it. The last thing corporate culture needs is another bad boss, and the last thing women should do to ascend corporate power structures is to become bad bosses.

I do believe there are some general differences between men and women as leaders; differences in the way we communicate, differences in the way we problem-solve, and differences in the way we lead. I say general differences, because plenty of individual men and women behave outside their gender norms. But there are differences. For women, these differences can be a source of tremendous leadership strength in a world where corporate behavior is increasingly challenged and employees expect more effective power structures, more respectful treatment and more inspiring leadership.

What are these leadership and management traits that women are typically better at, and how can we cultivate them to create healthier, more innovative, and more resilient companies?

Women are more efficient with time

In my observation, women are efficient with time and men are efficient with things. If you’ve ever waited 45 minutes for your husband to load the dishwasher, finally gave up and loaded it yourself, and then discovered he rearranged how you placed the dishes inside, you know what I mean.

Being efficient with time is a critical component of strong management. Getting the right things done first, letting the less-important things fall to a lower priority, entering a meeting with an agenda and clear expectations and moving efficiently to a set of meeting deliverables; these are things that women are (yes, generally) better at. Time efficiency not only saves the company money, it speeds innovation and it respects that employees are busy too.

Women are more collaborative

Collaboration, cross-discipline innovation, and information-sharing will be at the heart of the next era of business. Men tend to be more competitive with their peers and women tend to be more collaborative. Leaders who know how to participate as a member of the team and who are capable of inspiring team members to collaborate with each other are increasingly in demand.

Women are better leaders across the board

In fact, Harvard Business Review conducted a study in 2012 that indicated women were definitively better leaders than men, excelling in the following areas:

Takes Initiative
Practices Self-Development
Displays High Integrity and Honesty
Drives for Results
Develops Others
Inspires and Motivates Others
Builds Relationships
Establishes Stretch Goals
Champions Change
Solves Problems and Analyzes Issues
Communicates Powerfully and Prolifically
Connects the Group to the Outside World
Innovates
Technical or Professional Expertise

Whew! The only point on which men scored higher than women was Develops Strategic Perspective (hey, if you're worried I can help you with that).

How do we change?

How do we cultivate more of these behaviors and make it safe for women – and men – to lead in ways that in the past may have been viewed as weak or less masculine?

The first is to break the barrier that places men in the majority of leadership positions (64% overall, 78% of top managers). Whether this is due to blatant discrimination or more insidious social conventions is irrelevant; the only way to change a pattern is to disrupt it. And men are not solely responsible for this imbalance. I cringe to think of every time I’ve heard a woman say, “I hate working for women bosses, they’re bitches.” We can hardly expect men to stop looking at leadership as a gender issue when women are also responsible for reinforcing negative perceptions. How do we disrupt the pattern? By actively supporting women we work with as they are offered promotions, by being less suspicious and more supportive of women bosses, and – for those of us in a position to do so – by addressing our own biases and hiring qualified women to management positions.

The second thing we can do is provide mentorship. Most companies – particularly outside the Fortune 500 (which is most companies) – do a terrible job of providing training and mentorship for new managers. Those of us with extensive leadership experience must provide mentorship to new female managers (though I wouldn't turn away a fella who wanted mentorship to be a more effective leader), helping them choose positive and productive management traits over the less desirable traits they may be more familiar with. This mentorship should extend to managers who have been in their roles for some time, but who sense they could be more effective if they learned a different approach.

Finally, we need to work on our own leadership skills. Every day, without fail. Our shared goal should be to create work places filled with mutual respect, excellent communication, joy in shared success, freedom to make mistakes and learn from them, trust for management, work/life balance, and concern for workers’ families.

So the next time you read an article that takes a woman to task for being a strong leader, speak out against treating women differently than men when it comes to strength. Then, take a moment to privately hope that the female leader in question hasn’t made the mistake of leading like a man.

Let Go of Control and Claim Your Potential

Short Summary: Many people fail to grow their businesses simply because they don't want to let go of the control they enjoy when they do everything themselves.

Clear Expectations Help You Release Control

One of the things I like to write about is how to get out of our own way, and how most people get in their own way by fearing change and trying new things. But what if you like change, you embrace learning new things, and you’re still stuck? Then it’s possible you’re suffering from one or both of the other two reasons we get in our own way: a need to control everything, or sacrificing good for the perfect.

I know a business owner who is quite the Renaissance Man. His ability to come up with w ideas, to imagine how things could be made, and to create innovative manufacturing techniques to make them is inspiring. Unfortunately, his need to control everything stands in his way of success. The business is too big to be run by one person, yet he won’t let the employees he has contribute in meaningful ways. He manages their activities to such a degree that the entire company is in a state of rigor mortis – unable to move until the owner puts his stamp of approval on the tiniest of details. Whatever creativity and intelligence the employees did or could bring to the table has been undermined, because the organization has been trained not to think or make decisions without the boss.

I can tell stories of dozens of business owners who are one-person shops long past the point when they should have expanded, simply because they don’t want to let go of the control they enjoy when they do everything themselves.

If you’re a small business and you’re making the amount of money you want to make and getting the amount of free time you need to be a balanced human, you’re just fine the way you are. But if you’re feeling stuck, needing to grow but afraid to trust anyone else with your details, here are a few tips for getting out of your own way.

Assess Yourself

Start by making a brutally honest list of your skills. This list must be based entirely on the here-and-now. No “If I took a day and really worked on it I could be great at it” thinking. Just hard, cold facts. Take a piece of paper, and make three columns. At the top of the columns write the headings “Fantastic Skills,” “Average Skills,” and “I stink at this.” It looks like this:

A genuine control freak will look at this list and immediately make plans for perfecting everything in the Average Skills and I Stink at This columns. But that’s not rational. Don’t get me wrong – self-improvement is one of the most exciting parts of living. But here’s a business fact that you must accept:

No business has unlimited resources. Your resources will always fall short of being sufficient to accomplish everything your business needs and wants to do.

This is true whether you are a one-person operation or General Electric. Attempts to become the master of every possible business skill will only steal time and attention from doing the things that are already your strengths. So what you must do is learn to set clear expectations - of yourself and others - and learn to delegate (which could include outsourcing).

Which Skills are Strategic?

Once you have completed your personal skills list, take out a red pen. Circle the elements that are the most important to your business strategic success. Everything on our example list is important for a business to do well, but which are the most strategic? The most tied with your special value to your customers, your secret-sauce of strategic differentiation? Imagine for a moment that the example business is a design firm that:

Offers jewelry with a very unique metal finish
Uses unique and difficult-to-set gemstones
Works closely with retailers to attract customers and sell through event-based marketing.

The essential strategic skills for that company might look like this:

Unless you happen to have a lot of free time on your hands, you could probably choose to perfect one of the three things you aren’t fantastic at. But what about the other two?

Here’s an interesting little paradox. Many times, the tasks and responsibilities we won’t let go of are the ones that we don’t do well ourselves. Why? I’m not sure it’s ever been studied, but I have my guesses based on decades of observation. I think the reason is that it’s hard to delegate – and even harder to manage – something that we are not good at ourselves. We’d rather muddle through in an attempt to control the mistakes. But by setting clear expectations, it's possible to eliminate the mistakes and hand off the things you're not good at and/or which are not strategic.

But controlling for mistakes is a zero-sum game. You can’t soar when you’re spending all your time trying not to fall. So here is a method you can use to get control – and then let go of it.

If you feel the need to move one of your strategic skills into your “fantastic” column, choose it and commit to it. You only get one, so choose wisely based on your innate capabilities and talents and your level of interest.
For each of the remaining strategic skills, make a list of the required outcomes, the things that absolutely must be accomplished to satisfy the business need from that element. Let’s use “Planning Production” for our example

What must be accomplished in the area of Planning Production?

All initial orders from retailers must be completed in 4 weeks
All reorders from retailers must be completed in 1 week
We must know the status of every order at all times
We must maintain a quality approval rate (final quality) of 99% or higher

This simple act of defining outcomes for an aspect of your business places the control where it should be – at the beginning, at the level of expectations. Once you have established these expectations, you will feel freer to trust someone else to do the work, whether it is an employee or an outsource partner.

In fact, this is the key to success in all business functions. If you take the time to define precisely what you want from each function in your business, you can manage to expectations rather than micromanaging the work itself.

This is ultimately the work of a business owner. To define what is important in every area of your business, make those expectations clear to all employees and service providers, then monitor the results. Doing this work will provide tremendous clarity. It will also free you to focus on the things you are really really good at, which are most likely also the things you love to do.

Looking for Success? Implement a Management Framework.

Short Summary: Without a management framework you can't fully monetize your brilliant strategy or idea. Learn and compare your options for establishing a goals objectives and measurement system.

So you've done the work of coming up with a business strategy, a minimum viable product or service, and a business plan. Now what? Well, for a company to achieve its strategy and operate effectively, it must have goals, measurable objectives, and a method of monitoring and managing results; in other words, a Management Framework.

What is a Management Framework?

Management Frameworks are the tools used by the most competitive companies to turbo-charge innovation, harness energy, and align people, teams, and divisions. Without a management framework, companies function at a tactical level at best. Think of them as systems that facilitate setting and managing measurable goals and objectives that are linked to an organization's strategy. The best frameworks make it possible for a large group of people to see the strategic vision of a company in a similar way, orient themselves and their work to achieve the strategic vision, remain in alignment with one another even when working independently, and consistently improve their performance and renew their focus relative to strategy.

There is no perfect management framework, but there are several excellent ones. It’s important to understand how each system works, and which framework to apply to specific companies, cultures, or situations. Some of these systems also work well in tandem, offsetting each other’s weaknesses with complementary strengths.

The two most frequently used systems for performance measurement are SMART goals and KPIs. Unfortunately, these are also the two weakest measurement approaches, best used as the tactical component of a more holistic strategic framework.

The two most used management frameworks are Balanced Scorecard (BSC) and Objectives & Key Results (OKR). Two other frameworks, 4DX and EFQM, also merit consideration when determining which management framework to adopt.

Let’s start with a comparison table, then look at the basics of each metric system and management framework.

Now let's do a high-level overview of each system.

KPI - A Measurement Approach

The most well-known metrics strategy, KPI is also the narrowest. KPI stands for Key Performance Indicator, which can be any performance metric for any business outcome or activity. A KPI can be a Lag indicator (an outcome measure — an indicator of past performance that measures the result), a Lead indicator (a performance driver — something you monitor or measure to determine if you are making progress toward a goal), or a Tactical measure (a short range, operational, or immediate metric, like a machine temperature or daily staffing level). It can measure success, output, quantity, quality, or time.

KPIs are most effective when used within a management framework, such as Balanced Scorecard, OKR, EFQM, or 4DX. On their own, KPIs can be useful, but they can also be suboptimizing and create conflicting focus between teams and departments.

SMART Goals - A Goal-Setting Method

Like KPIs, SMART Goals are a measurement type, not a management framework. Smart Goals are a popular goal-setting technique that focus on creating effective goals. There are no mechanisms within SMART Goals to drive alignment within an organization, and no guarantee that any particular goal will lead to innovation. SMART goals are a criteria, not a framework or system.

SMART Goals can be Lag or Lead indicators, and can be created at any level of an organization.

According to SMART criteria, there are five things that a goal must be:

Specific
Measurable
Achievable
Relevant
Time-bound

4DX - A Prioritization and Measurement Method

Created by Stephen Covey and Chris McChesney, this is system is a hybrid; part measurement method, part management framework. It is designed to create:

Focus
Leverage
Engagement
Accountability

This system proposes to help managers and employees cut through the constant flurry of tasks and shifting priorities, and focus on the key goals for each area. Key concepts of this system include:

The more goals a person has to achieve, the less likely they are to focus enough to achieve any of them effectively.
Competing priorities and goals suboptimize the organization.
Everyone should be working on two big goals (called WIGs, or Wildly Important Goals in 4DX) at any time.

Rules of this system include:

No team can focus on more than two WIGs at the same time.
The battles you choose must win the war (strategic alignment).
Senior leaders can veto, but not dictate, goals (bottom-up goal development).
All WIGs must have date gates, in the form of “X to Y by Date” to provide clear scope.

OKR - An Agile Management Framework

Now let's start looking at true management frameworks. The first is OKR, which stands for Objective & Key Results. The OKR and Balanced Scorecard systems share a lot of DNA, and the choice between them often comes down to pace and agility. These two systems can also be used together to gain the greatest benefits of both systems.

Objectives in OKR

According to the OKR definition, an OKR consists of 1–5 Objectives which, by their nature, are qualitative concepts (characterized by their quality and difficult to measure). They provide direction, typically posed in question form:

What do I want to accomplish?
Where do I want to go?

The purpose of objectives is to provide the definition for the goal(s) you want to pursue. These are most often Lag, or Outcome measures.

The characteristics of OKRs should be:

Directed
Aligned
High in impact power
Easy to understand
A means of inspiration

Key Results in OKR

Each of the 1–5 Objectives should have from 3 to 5 Key Results (these need to be quantitative concepts and must be measurable). If it’s not measurable, it’s not a key result.

The purpose of Key Results is to define the measurements that will determine if the organization (team, individual) is progressing toward the objective. Key results are milestones, and answer the questions:

How will we know when we get there?
How will we accomplish that?

Key Results can be a combination of Lag (Outcome) and Lead (Performance Driver) metrics, and should be:

Easily measurable
Specific
Bound to a specific time frame

Initiatives in OKR

Each of the 3 to 5 Key Results may also be linked to specific initiatives meant to define the work needed to maintain progress on the Key Results. They are specific actions and activities. There is a minimum of 1 Initiative related to a specific OKR.

Initiatives answer the question:

What must we do in order to get there?

Initiatives are almost always Lead (Performance Driver) measurements, and should be:

Easily measurable
Specific
Controllable
Bound to a specific time frame

Want to learn more? Buy the definitive guide on OKR and support an independent bookseller! Order "Measure What Matters" here.

Balanced Scorecard - A Holistic Management Framework

The Balanced Scorecard is a management framework developed by Robert Kaplan and David Norton. It is a strategic method designed to align all areas of an organization with corporate strategy, and to drive awareness of what a business must do for customers, excel at internally, and invest and develop in order to achieve its strategic goals.

It is the strongest framework for eliminating competing goals, mitigating suboptimization between departments or functions, and ensuring holistic business goal-setting. It is also one of the best frameworks for driving innovation, due to the unique framework of the Four Perspectives.

Four Perspectives Framework

The framework of the Balanced Scorecard is built on four perspectives:

Financial Perspective: What must we do for our stakeholders in order to be successful? These are Lag measures.
Customer Perspective: What must we do for our customers, in order to achieve our financial goals? These are generally Lag measures, but can include Lead measures as well.
Internal Perspective: What must we excel at, internally, in order to achieve our customer goals? These are typically Lead measures.
Learning & Development Perspective: What must we learn, invest in, develop, or acquire in order to achieve our Internal goals? These are typically Lead measures.

Balanced Scorecard implementations are often complex, but it can be implemented in a very lean manner. If complexity is the one reason you’re concerned about using a Balanced Scorecard in your business, dig a little deeper. Small businesses can implement Balanced Scorecards successfully using a lean approach (I call it a “Skinny Scorecard”). One of the best ways to reduce the complexity of the Balanced Scorecard is to combine it with an OKR approach, which keeps the richness of the Balanced Scorecard perspectives while benefitting from the agility of the OKR method.

Learn all about the Balanced Scorecard and support an independent bookseller! Order The Balanced Scorecard here.

EFQM - The Broadest Management Framework

Of all the management frameworks, EFQM (European Foundation for Quality Management) is the broadest. EFQM was founded by a consortium of European business leaders with a goal of creating a formalized management framework to help organizations become more effective, which in turn would drive overall effectiveness of the European economy. As a result, this framework reaches beyond individual organization boundaries and has a strong social component. The idea is that using the EFQM Excellence Model helps organizations understand where they are on a “path to excellence,” while giving them tools and techniques to measure improvement over time.

In the EFQM model there are “enablers” and “results.” It is sometimes thought that Enablers are similar to Lead measures, and Results are similar to Lag measures, but the model is a bit more nuanced than that.

Here is how the model is most often illustrated:

EFQM Model

EFQM Concepts

Enablers include:

Leadership
People
Strategy
Partnerships and Resources
Processes, Products, and Services

The idea is that by changing what any of these enablers do, you can change the results of the organization.

Results are the goal, with specific principles in mind:

People Results
- Principle: Leading to inspiration and integrity.
- Principle: Succeeding through the talent of people.
Customer Results
- Principle: Adding value for customers.
Society Results
- Principle: Creating a sustainable future.
Business Results
- Principle: Developing organizational capability.
- Principle: Harnessing creativity and innovation.
- Principle: Managing with agility.
Overarching principle: Sustaining outstanding results.

Managing Results

EFQM’s RADAR function is similar to Balanced Scorecard and OKR in so far as it requires the planning and development of “approaches” to describe how each “result” will be achieved. Once you know what the approach will be for each goal, there is a “deployment” step that determines how, where, and when each approach will be implemented. The “Assess and Refine” element of RADAR ensures that progress is continuously monitored, learnings are captured, and the group comes to consensus on whether or not the “approach” to the “result” is working. If it is not, it is refined.

Summary

Like shoes and swimming suits, there's no such thing as a Management Framework that fits everyone perfectly. It's valuable to select the framework that fits your organizational culture, business proposition, and strategy. However, if you're choosing between spending a year to get to the right framework, or spending the year with a management framework that's not perfect, I'd definitely choose the latter. Your management framework is one of the building blocks of business success. No business is too small to have one, and no small business can become a larger, more profitable business without one.

Make Time to Plan

Short Summary: Making time to plan is the most important thing you can do. Do it now - before the busy holidays - so when January arrives you can hit the ground running!

The fourth quarter is nearly here, and your head is probably in go-go-go-for-the-holidays mode. That's good - you're supposed to make hay while the sun shines, right? But the risk is that you'll wake up one day soon, the holidays behind you, and immediately become stressed over everything you’ve failed to do for your business while you were focused on production and sales.

Don’t go there! Life is a series of recommitments, and those times of recommitment are critical to our continued growth. September is an excellent time to review your business progress and recommit to your strategic goals. Pull out your calendar right now and look for one day in the month of September to focus entirely on business planning, goals for next year, and projects you're ready to take on. Making time to plan is one of the most important things you can do as a business owner.

It’s Scheduled . . . Now What?

To begin, decide if your planning day will be a day for just you or if you want key members of your team or important advisors to join you. In most cases it is useful to include others for at least part of your planning. It’s easy to get stuck in our own assumptions or perspectives. Inviting others to participate can present new ideas and challenge old ones.

Assemble key information about your previous year. At a minimum you need:

Sales Revenue by Month
Cost of Goods by Month
A report showing customer performance, including how much business each customer did with you the past year, which customers you lost (did not purchase in the past 12 months) and which customers you gained.
Detailed expense report
Summary expense report showing total expenses for labor (salaries and benefits), sales and marketing (including non-employee commissions, trade shows, photography, promotions, advertising, etc.) and facilities (rent, security, etc.).
If you had goals for 2013, list all goals and your accomplishments for each.

Prior to your planning day, decide where you will work. If you can’t work in your office without constant distractions, plan to work somewhere else. Your planning is too important to sacrifice it to perforated attention.

The Planning Day

Spend your first two hours examining the reports you assembled. Ask, and answer, the following questions:

How has my revenue been in 2016 compared to 2015?
What have I done differently (if anything) to change my revenue in 2016 (positively or negatively)?
Did my Cost of Goods go up, stay the same, or go down? Why?
Did I gain more customers than I lost?
Why did I lose the customers I lost? Were the losses intentional or unintentional?
Am I spending my money on the right things?
Did I spend enough money on marketing and promotion (including Trade Shows) to generate the amount of business I planned to do?

Now set your financial goals for 2017. These goals include:

Revenue goals for 2017
Cost of Goods goals for 2017
Net profit goals for 2017

Spend your next hour or two contemplating your customers. Your customer mix determines your success, so it is essential that you consider whether or not you are serving the right customers. How do you know if you have the right customers? The right customers want more of what you are comfortable giving. The wrong customers constantly ask for things that feel off-track to you. For example, if you are Neiman Marcus, customers that hound you for lower prices aren’t a good fit. But if you are Wal-Mart, you expect (and feel comfortable with) customers demanding lower prices. All customers want more of something from you; the question is, are the things they want the things that are right for your business?

Create a visual model that will help you cultivate more of the right customers and less of the wrong ones in the year to come. Draw a vertical line down the center of a piece of paper. On the left side, write the names of your very best customers. On the right side, write the names of troublesome customers who are expensive to serve or just aren’t a good fit. Once you have listed the customer names, draw a horizontal line under them. In the space below, write the common attributes of your “good” customers and your “bad” customers. Look for patterns and similarities within the two groups. Now create your Customer goals for 2017. These goals include:

Total number of customers (existing and new) by end of year in 2017
Total number of new customers in 2014, and the specific attributes you will seek in those customers
A specific list of the customers that you want to (gently) let go in 2017

Once you know the types of customers you want to add in the coming year, consider where to look for them. What media (magazines, internet, social media, events, etc.) do your “good” customers respond to best? Chances are, the customers you seek pay attention to those channels as well. Create a list of all the marketing promotions, advertising, and events you did in 2016. Circle the ones that did not perform as you expected. For each marketing activity you circled, consider why it wasn’t successful. Was it the wrong venue with the wrong type of customers? Did you fail to prepare properly for it? Did you learn something from it that will make you more successful if you try it again?

Do a similar activity with your successful marketing promotions. Why were they successful, and what can you do to increase the success in the following year and find more opportunities like them? Once you have analyzed your past marketing efforts, it is time to review your sales and marketing goals for 2017. I say review, because you have likely already committed to some trade shows and advertisements already. Your review and goals should include:

Total dollars you intend to spend on marketing in 2017. Revise if, after analyzing your customer and marketing plans, you think the number should be changed.
A list of the marketing activities you plan to participate in. Be prepared to cut plans you have made for marketing activities that you no longer believe will be successful, or to add marketing activities you hadn’t previously considered.

After setting your customer goals, it’s time to move on to operations. Review the goals you have already set and the thought processes that got you there. Then answer this question: What operations must I excel at in 2014 in order to achieve my marketing, sales, customer, and financial goals? Your final goals will include a list of each operational improvement you must invest in in 2017.

If you take the time to plan for 2017 in this way, you will start your year focused and recommitted to business success. You will also reclaim the excitement and energy that come with feeling prepared.

Molecular Transformation Begins at Home

Short Summary: Many people become so overwhelmed at the notion of transforming their entire organization that they never get past thinking about it. Think much smaller.

If you’ve ever eaten lemon meringue pie (it helps if you enjoyed it, but it’s not essential), the following thought should make some sense to you. It’s even better if you’ve made lemon meringue pie, but I think I can get the non-pie-bakers past the lack of experience.

Over the years, colleagues and I have discussed at great length what is necessary, in terms of critical mass, to effect genuine cultural buy-in. Sometimes the person who initiates the conversation is somebody who wants to make a difference in their company, but suspects their individual commitment is insufficient. Sometimes a new executive wants to create greater cohesion, and is daunted by the task of bringing his or her staff around. I have known the particular joy of working with an entire management team who was committed to one another and to cultural buy-in. But even with an entire management team on board, cultural buy-in is tough to gain.

This article isn’t about the countless issues that get in the way of cultural buy-in, though the list is long: mavericks who eschew committing to the group, senior management who will talk the talk but can’t walk it, dysfunctional players who get satisfaction from disrupting emerging cohesion, and an assemblage of individuals who for a variety of reasons related to intellect, interest, or initiative simply don’t get it. That list will always exist, and focus on eradication of the barriers to cultural buy-in will not lead to success.

No, the only successful approach is to focus on core change, similar to the molecular change that occurs in baking. When you make the filling for a lemon meringue pie, you start with sugar, flour, lemon juice, water, and egg yolks. When you mix these ingredients together they start out pasty, but then they become watery. The first time you make lemon meringue you wonder how you’ll ever achieve that tart filling the consistency of thick jam. As you stand over the stove, stirring assiduously, the heat becomes annoying and you become convinced that you have forgotten an important ingredient – the “gelling” one, whatever that is. Then it happens. Molecular transformation. The hot thin liquid changes – and rapidly – into the translucent gel you have been despairing of achieving.

If you don’t stir it with enough enthusiasm, it burns before it transforms. If you don’t take it off the heat at precisely the right moment, it won’t have that velvety mouth feel. And if you let it cool in the pan instead of putting it into the crust and topping it immediately with meringue, the meringue (yet another molecular transformation waiting to happen) will become watery and weak. All these possible catastrophes without a single substitution of ingredient.

Cultural buy-in is sort of like that. Ingredients are important – if you don’t have the right ingredients you can’t achieve the desired chemical interaction (in baking, that is). Quantities are important too. There is magic in finding the right mix of personalities and talents. Quantity is important for another reason as well. If you have a business with 20 people, nearly all 20 need to be bought in, because one or two people represent such a significant percentage of the whole – very different mathematics from the business with 500 people, or 1,000, or 45,000.

But what really matters is how the ingredients come together. Whether you are a member of a team, the head of a team, a manager of a department, or the leader of a division, what you try to do is create molecular transformation with a core group. The more willing participants you have, the merrier. But even if you just start with a few people, if you can achieve cohesion, visible purpose and enthusiasm among them, others will be drawn to that energy.

What each organization needs is a nucleus of committed folks. Committed to the company vision, company culture, and one another. That nucleus will attract others to it over time. Not everyone will buy in, but if the center holds, not everyone has to. Is the right percentage 10%? 15%? 35%? It depends on the company and on the dynamism of the group of people who embrace the culture.

Too many people become so overwhelmed at the notion of creating cultural cohesion throughout an entire organization that they never get past thinking about it. Think much smaller. Think much closer to yourself. Molecular transformation begins at home.

No Poo Throwing

Short Summary: Better decision making starts with accepting requests gracefully and responding to them logically. Read on too see if you are guilty of a deflection strategy that gets in the way of good communication and results!

Better Decision Making Starts with Better Reactions to Requests

When I was growing up, one of the next-door-neighbor moms was, well, sort of rough. Whenever the kids would ask if they could do something (go outside and play, go to the pool, etc.), she would respond with a series of rapid-fire questions:

"Did you clean your room yet? Did you pick up the family room like I asked you to? Are there dishes in the sink? Are your dirty shoes still on the back porch?"

A saner mom (like my own, or the one on the other side of us) would say, "Well, if you've done everything you're supposed to do then of course you can go." The difference is profound. The rapid-fire question-asking was intended to induce anxiety over asking for something. The calmer statement of fact was intended to get something done.

Later on in business I encountered bosses who did this sort of thing. When you approached them to ask if you could do something (perhaps something special for a customer, or spend some money on an advertising opportunity, or buy a new tool), they would respond with a series of questions designed to instill anxiety: "Do you know how much you've spent already this month? Do you know what it would cost to do that for every customer? Did you shop all the competitors to make sure you have the best price? How are you doing on your performance metrics?" At those times I would feel the anxiety-bile rising in my throat, just as it did every time the neighbor mom did it to my childhood friends.

One day when I was at the zoo with my daughter I heard a mom using the rapid-fire question strategy on her son who had just asked for a hot dog. We happened to be in the Ape House, enjoying the much-anticipated poo throwing ritual. I put the two together forever and always.

It occurred to me that people do this type of poo-throwing when they are being asked for something. Many people don't like the feeling of being asked for something - it feels like pressure or an imposition. They are even more inclined to throw poo when asked to make a decision that they don't feel prepared to make; the send-them-scrambling-poo-throw delays the time when they must make a commitment.

So here's your challenge for today. Examine how you respond to being asked for things, or asked to make decisions. If your reaction apes anything like the situations I have described here (yeah, OK, pardon the pun), take a look at why you do it, and how you might respond more effectively.

Note to you "let me think about it's" (like me): that can be a delaying tactic too! Not quite as messy, but ultimately just as frustrating for those who need you to make a decision.

On DNA, Ruts, and Getting Out of Your Comfort Zone

Short Summary: Why business diversity? Because when a business embraces many different perspectives thought processes and world views it fires up the collective brain.

When it comes to survival, innovation, and evolutionary improvement, no business theorist has anything on Mother Nature. Her success record running the business of Earth is quite undeniable. Even as her most destructive creatures grow increasingly effective at polluting and fracking and discarding, she continues to evolve and survive.

Business owners and leaders can learn a lot from Mother Nature. And the lesson that supports all the other lessons exists in all of us, in our DNA. She figured out a long time ago that the more you mix up the DNA of things, the stronger those things would be. Oh, no doubt she developed some beings destined for dead ends (Neanderthals, perhaps Aardvarks), but those relatively few false starts didn’t turn her off on evolution. No, she kept going, full steam ahead, committed to the idea that DNA could be strengthened, could survive, if it kept seeking and accepting new elements.

Of course, organisms do reject certain DNA modifications, and some DNA modifications can lead to disease and death. The process of evolution can be messy. But the one constant is change, the structural variations that lead to human and plant genetic variation. The other constant is that the less the DNA changes, the more likely it is to suffer disease and undesirable mutation – which is the scientific reason why close family members are discouraged from procreating (that and the blech factor).

I read yesterday that Starbucks employee demographics include over 40% minorities, which is within striking distance of the actual ratio of white to non-white people in the United States. But Starbucks doesn’t just tolerate the diversity. They honor and embrace business diversity as an important part of their company culture, whether through their constant and high-quality focus on professional development for their employees (75% of store and district managers are internal promotions), or by creating forums for employees to openly discuss the issue of race in America. They’re not perfect (see above: evolution can be messy), but Starbucks is working hard to keep their DNA as diverse as possible.

As a strategy consultant to small business owners, I spend an extraordinary amount of time in workplaces that are homogeneous at best. Some of this is natural. If the business only employs three people, and those three people are mom, dad, and junior, then the gene pool is pretty slim. But this lack of diversity extends way beyond small family companies, and it exists in companies owned by people of all cultures. Even when there is ‘visual’ diversity, with a token someone-or-other as a nod to social compliance, I often observe that the token person is sidelined, either through genuine bigotry in the back office or passive discrimination in the form of un-inspected biases present in the other members of the group.

This isn’t just about race either. Businesses that won’t hire millennials, senior citizens, people with tattoos, gays, trans-gendered, people of different religions, the differently abled, people who dress funny; those businesses are crimping their DNA just as surely as a business that won’t hire someone of a different race or culture.

Why do we need these people, these different people, to work with us? Sure, it’s the right thing to do, but I’ve noticed that this doesn’t motivate a lot of people. No, it all goes back to Mother Nature, or at least, that fatty organ that sits in the center of your skull. That organ, your brain, may be the consistency of warm butter, but think of it like a muscle (really it’s not, it’s mostly fats). But still, think of it like a muscle. If you don’t use a muscle for a long, long time, it atrophies. When you go to use it again, it fails you. If you only use a muscle one way – for instance, if the only time you use your lats (upper back) is to put away the dishes – then your muscles will fail you if you must throw a punch to protect yourself or push something heavy.

Your brain has similar characteristics. It builds itself around the things you do all the time in all the same ways. If you find yourself in a rut, there is an actual rut in your brain, a tiny groove that reflects that you are doing things the way you always do them. The brain can be a lazy little guy if we don’t stimulate it. And businesses can become very, very lazy entities. Businesses readily fall into the rut of doing things the way they always did them. They look at all potential customers as a mirror-image of themselves. When they consider their competitors, they start from assumptions that are borne of their own thinking patterns. They fail to evolve. Neanderthals. Aardvarks.

When a business embraces many different perspectives, thought processes, world views, and communication styles, it fires up the collective brain, which – when stimulated – is more than willing to create new grooves. They improve the way they do things, they envision more multifaceted consumers, and they outthink their competitors. They evolve. It’s sort of a chicken-and-egg thing; Did the business that welcomed diversity make the people within it more diverse, or was it people that were willing to be diverse in the first place that welcomed and created a diverse workplace?

The business case for diversity continues to build, and business owners who ignore it do so at their own peril. Learning to embrace and fully incorporate people with different backgrounds and experiences, even if the differences sometimes confuse you or even make you uncomfortable, will improve your business bottom line.

Outstanding Customer Service is a Culture Thing

Short Summary: The question of how to deliver the outstanding customer service consumers expect is easy to answer but harder to implement.

I am fixated lately on the topic of outstanding customer service. As a road-warrior and constant consumer of restaurant, hotel, car rental, coffee shop, salon, apparel, and convenience store services domestically and abroad, in community sizes ranging from tiny Iowa towns to London, I suspect I encounter a reasonable approximation of what customer service means today. What I have encountered is a strange dichotomy.

Customer Service Out, Customer Service Culture In

On the one hand, excellent customer service is no longer treated as a differentiator by consumers. Twenty years ago, a business could set itself apart by touting its fantastic service. Advertising one’s customer service prowess or awards for customer service meant something to consumers, and it was often excellent service that businesses chose to feature in taglines. Today, excellent service is a minimum standard necessary to compete. Boasting about or branding with excellent customer service is like advertising an automobile and saying, "It runs! It goes up to 75 mph!"

On the other hand, excellent customer service can be very difficult to find, even in the luxury sector. At a time when consumer expectations regarding service are higher than ever, why aren’t businesses stepping up and delivering?

Because excellent – no, outstanding – customer service is one of the hardest things to do. You can’t automate it. You can’t script it or cookie-cutter it. You can’t ensure it with policy or rules. Excellent customer service is about people, and people run on motivation.

When I refer to customer service, I’m not just talking about direct personal interactions. Think of all the people in non-customer facing roles that have significant influence over how the customer feels about the company:

The web developer that cares about customer experience creates shopping interfaces that are simple, fast, and efficient and filter or search functions that quickly provide the right answers.
The systems person that creates strong data warehouse tools helps customer-facing team-members quickly find and deliver information to interested customers.
The purchasing staffer who does such thoughtful forecasting and planning that the right products are in the right places at the right times – so customers can find them.
The CFO who supports the creation of simple, easy return policies to ensure customer satisfaction.
The marketing team member who thoughtfully manages customer lists to ensure that the most relevant email campaigns go to each list subscriber.
The production worker who looks for the tiniest errors to ensure a customer never finds one.
The shipping clerk who packs every box as if the contents are fragile and going to his own mother.

To deliver outstanding customer service, a company must motivate every single employee in every single role to think about how his or her work will affect the customer.

Outstanding Customer Service Starts with the Right Ingredients

I do not believe in the adage you can’t teach an old dog new tricks. But I do believe that our essential ingredients – personality, character, and self-discipline – are fairly set by the time we reach adulthood. The truth is, some people are wired to deliver an outstanding customer experience because they are empathetic, interested in others, and motivated to serve. If the people you hire don’t start with those essential characteristics, no amount of training, cajoling, or threatening will induce them to become passionate service people.

But it’s more complicated than that, isn’t it? Because those aren’t the only ingredients you need. When you hire a sales person who must deliver outstanding customer service, they must combine empathy and service-orientation with self-confidence and the ability to influence someone to part with their cash. On the other hand, if you are hiring a nurse, you need a person who combines empathy and service orientation with the ability to handle tremendous pressure, mete out pain, and deliver difficult news with pragmatic calm, all while keeping the patients from becoming frightened. An airline attendant must combine empathy and service orientation with vigilance. These are three very different recipes.

The Human Resource function has evolved to do a much better job of finding the best ingredients and matching them with roles and teams, and many new business tools and practices are available to support best practices in hiring, onboarding, and training. But are most businesses using these tools? Unscientific research (i.e., observation) would suggest that they are not. If you invest in one area of improvement for your service-dependent business this year, do a better job of matching the right people with the right teams and jobs.

Pre-Employment Assessments that Help You Build a Customer Service Culture

First You Solve the Processes . . .

The full saying goes, first you solve the process, then you solve the people. The source of most people-problems at work is process problems. If your processes are unnecessarily complex, cumbersome, inconsistent or – worse! – nonexistent, your people cannot give consistent – let alone outstanding – service. Make sure that your business processes are simple, effective, complete (which means no opportunities to drop the ball), documented, and trained. In that order. Let’s do that again:

Simple
Effective
Complete (this means that each process design is complete, from beginning to completion and monitoring)
Documented
Trained

Walk into any company that delivers consistently outstanding customer service, and you’ll find excellent process management. Why? Because the end result – outstanding customer service – is dependent on each company defining what service means according to its own brand and standards, defining the services that deliver the required level of care, and being able to train all employees involved in each service area to deliver the same services in the same ways.

Outstanding Service Comes from Effective Management

Good management is essential to business success. Too many businesses approach management as a personality trait, or the thing we do when we’re creating schedules, granting time off, or creating reports. In fact, great management comes from two terms that are not terribly in vogue these days, concepts that seem related to old, hierarchical models of business: command and control. But when you break these concepts down and examine the details, you see how important they are.

Command

I use the term command because it’s still the term that is taught in business schools and recognized as one of the pillars of management. Other effective terms would be influence, motivate, and inspire. In fact, “lead” is the concept we’re going after, but in management theory terms, leadership is more than just this element. So, what is a manager supposed to be doing in this regard? Command is about having a clear vision, communicating it to the team, and ensuring that the team achieves its objectives. Communication skill is critical, because constant, effective communication helps a group of people embrace and share a common set of goals. A manager with a grasp on command creates an environment where people understand what is expected, have enough information to buy into the goals and objectives, are excited about the pursuit of excellence, and are clear that failure to deliver on the team’s goals will result in consequences.

Control

Control is not about controlling people – it’s about controlling the way in which the work is done and whether or not the work is done correctly. Processes, procedures, efficiency, and structure are the domain of control. Good managers not only communicate expectations and motivate people to do as required (command), they also create project plans, delegate activities, evaluate, monitor, measure, and share progress with their teams.

If you’re not being successful in the management areas of command and control, then it is unlikely that your team is capable of delivering outstanding customer service.

Culture is the Binding Agent

A company’s culture is the glue that binds all the important elements of the company together. A strong, positive business culture reinforces the brand, and in the best examples, defines it. The culture of a workplace determines and reflects employee commitment. To create a company culture that will nurture and serve customers, you must have a culture that nurtures and serves employees. Please don’t confuse nurturing with coddling – they are not the same. Employees want to be treated as professionals, with dignity and respect. Study after study demonstrates that employees who are trusted and expected to perform admirably will rise to the occasion.

A strong, positive business culture is created by thoughtful leadership, the right people in the right roles, good processes, strong management, and positive, goal-oriented behavior.

Every business culture is different, but all should include these ingredients. Without a strong culture, you cannot achieve outstanding customer service.

I’ve heard people blame today’s lack of customer service on the continued automation of service, reduced congeniality in society, or on an angrier, more demanding workforce. There may be particles of truth in all that, but I don't think those are the core reasons. Rather, what I observe in both the businesses I patronize and those I consult, is that the frantic pace of business combined with frequent economic and social uncertainty causes business owners and executives to work in a very tactical manner. This leaves little time for thinking about and managing the basics, and does not lend itself to long-term thinking and planning. Which, among other problems, erodes the company’s ability to deliver outstanding customer service.

Delivering outstanding customer service is one of the most critical things a business must do, particularly at a time when consumers expect nothing less. The good news is that dedication to known management fundamentals is half the battle. What will be harder for many companies is the creation of a strong, positive business culture. In fact, strong, positive business culture may be the differentiator of the future. A worthy, rewarding goal to shoot for.

Ready to hire outstanding customer service people? Use Andrea Hill's highly informative, immediately useful handbook, "The How-to-Hire-Handbook for Small Business Owners," and make better hiring decisions today!

Business Insights from Andrea Hill