Awake at 2 o'clock?

Employees and Bosses: What’s in a Pronoun?

Posted on December 27, 2015 by John F. Dini

Credit for this post goes to Van Palmer, the owner of Palmer Technology Solutions. I’ll paraphrase and elaborate, of course. but that’s the power of the pen.

In a recent peer board meeting we were discussing our relationships with employees. I like Daniel Goleman’s description of the six leadership styles as described in his HBR article in 2000. They are:

Coercive: Do as I say.

Authoritative: I’ll lead, you follow using your own talents to reach the goal.

Affiliative: We all need to be happy with what we are doing

Democratic: We’ll decide together

Pacesetting: I’m going forward, you keep up.

Coaching: Let me help you be better

As business owners, we all use several styles, depending on the circumstances. I’ve developed an instrument for looking at these (contact me if you’d like a copy) and most owners score noticeably higher in two or three of the styles. It’s often influenced by industry and business model, but I’ll come back to that next week.

What I’ve seen for years is the owner or manager’s use of the Imperial Plural. “We” perform these tasks. “We” are on target. “We” have to get better. It usually indicates a leader who is concerned about getting buy-in from his or her followers, but not always.

(An aside: One of the things that has always bugged me about President Obama is his customary use of the first person singular. “I am going to see to it that my people produce the result I want.” It seldom sounds to me like the whole country is included in his thinking. I’ve attributed it to his lack of background in leading organizations.)

Coming back to Van, he said that when he runs his company, he defines his own and his employees’ internal relationships using four pronouns.

“I” means me. What I want, what I am going to do. What I expect.

“We” means me and my managers. We are going to accomplish something together, or otherwise lead “them.”

“Them” is all of the employees who aren’t part of “We.” Hopefully everyone could be included, but that’s not always the case. “Them” refers to those who are unproven, haven’t bought in, or otherwise need to be directed and tracked by “we.”

“Us” refers to everyone. From health care benefits to incentive plans, and from organizational values to bottom line results, there are many areas where we are all in this together, regardless of our roles.

Which pronouns do you use most often?

Do you enjoy “Awake at 2 o’clock?” Thanks for reading, and please share this post with other business owners.

Posted in Entrepreneurship, Leadership, Management | Tagged business, business ownership, business planning, employee performance, employees, entrepreneurs, entrepreneurship, health care costs, hiring, leadership, management, small business advice | 1 Comment

One Response to Employees and Bosses: What’s in a Pronoun?

David Basri says:

December 28, 2015 at 8:23 am

Don’t forget that BOSS spelled backwards is Double SOB.

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“Congratulations — You are the Low Bidder!”

Posted on December 20, 2015 by John F. Dini

The sentence that titles this post could be defined as the epitome of mixed emotions for a business owner. You won the business, but only because you are willing to work for less than everyone else.

Perhaps you deliberately cut margins because you really needed the work. If so, why is everyone else doing better than you are?

Maybe you put your normal margin on the work. Did you make a mistake? Did you miss something? Are your competitors laughing right now, certain that you are going to lose money on the project?

The situation is most obvious in a bidding environment, but it applies to any business where price is a consideration. If you can only win a customer by being cheaper than everyone else, you’re in trouble.

The exception is when you differentiate by being the low cost provider. Most people mistakenly think that means the low price provider. That isn’t differentiation. Any fool can sell Cadillacs for the price of Chevrolets, just not for very long.

According to Michael Porter, the guru of Competitive Strategy, anything that truly differentiates you from a competitor costs money. There’s no free lunch. “We give great service” only differentiates you from those competitors who claim to give lousy service. “We stand behind our work” only sets you apart from others who say “We take your money and run.”

Similarly, “We have the best prices in town” isn’t differentiation if you buy from the same sources, pay the same wages, and provide the same resources as everyone else. The only differentiation there is your willingness to be paid less for running your business.

Spending money to be the low cost provider may seem counter intuitive, but if price is a competitive issue, then cost is the key success factor that let’s you win the battle. Delivering at a low price while maximizing your return on investment requires (not surprisingly), investment.

An often-used example of a low cost provider is Southwest Airlines. They built a reputation on cheap fares, but if you talk to many of their millions of business traveler fans you’ll learn that they engender loyalty less from price than from their ability to deliver.

Look at where they spend their money. Southwest doesn’t participate in “find the best price” booking sites like Travelocity and Orbitz. Instead they only sell tickets through their own site, and don’t pay commissions. It also lists all flights priced in either dollars or reward points — something no consolidator can duplicate.

Their personnel selection process is legendary, including monthly rotation of employees from the field for a stint in hiring. The result is also legendary, flight and ground crews who “get it” and enjoy working in a culture where great customer service is an expectation.

You may queue up like cattle to board, but when you get a seat it will be leather (which just happens to look nicer and last longer than cloth seats.) While you wait in the boarding area, you are more likely to have access to electrical outlets and a computer workspace than with any other airline.

Speaking of cattle calls, I recently boarded another airline. They started by calling first class passengers. Next came Super Elite Platinum travelers, then Elite Platinum, then Platinum, then Gold, then travelers needing assistance, then those with children, then active military, then retired military, then anyone with their frequent flier card. Then they started boarding by seating group, an opaque process that seems designed to put as many people in the aisle at once as possible.

I was in group five, which I counted as the fifteenth group invited to board. This is an airline that advertises “And you get a reserved seat” as part of their pitch. Price isn’t the primary issue when I fly. It’s certainly trumped by boarding fifteenth, and having to gate-check my bag when I have a tight connection.

Southwest gets my business not because they are always the lowest, but because I can depend on a consistent product. They spend their money where they should, on delivering what they promise.

We all compete on price, but the challenge is to make a lower price the cherry on the sundae, not the primary reason for doing business with you. You only have the resources to invest in low prices when you maintain strong margins.

Posted in Entrepreneurship, Marketing and Sales | Tagged business ownership, business planning, business strategy, employee performance, employees, entrepreneurs, entrepreneurship, hiring, leadership, management, promotion, public relations, sales, sales management, small business, small business advice | 1 Comment

One Response to “Congratulations — You are the Low Bidder!”

John Hyman says:

December 21, 2015 at 9:31 am

Price is seldom an issue when service, quality, and consistency are provided. But perspective and experience is huge. The airline industry has been taking advantage of their customers for years because we have little choice and have to travel.

On a Delta flight from Dallas to Seattle a few years ago, a packed Boeing 757, the woman sitting in the middle seat next to me raised her hand, to get the attention of the flight attendant doing her cabin pre-flight check. “Where is the olive oil” she asked loud enough for the majority of the other passengers to overhear. When the flight attendant approached our aisle, with a puzzled look, the woman commented “are sardines always packed in olive oil?” The cabin erupted with laughter and agreement.

Leaders with a vision like Herb Kelleher are very unique. And you are spot on in your observations about how well they deliver on their promise.

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Not Just Workers…Qualified Workers

Posted on December 13, 2015 by John F. Dini

A few weeks ago I attended one of Trinity University’s Policy Maker breakfasts. Although living in a large city has its drawbacks, it is great for access to events such as these. It takes substantial ticket sales to justify top-rank speakers, and Trinity’s series brings the best.

The speaker was Richard W. Fisher, immediate past President and CEO of the Federal Reserve Bank of Dallas, as well as almost 11 years on the Federal Open Market Committee, where he voted on monetary policy under Alan Greenspan, Ben Bernanke and Janet Yellen.

In Q&A time, I had the opportunity to ask how he could project robust growth over the next 20 years with the large number of Baby Boomers leaving the workforce and scaling back their consumerism.

Mr. Fisher had already warned the audience that he had no intention of making controversial or otherwise newsworthy statements, so his answer surprised me a bit.

He said that he remained confident that productivity gains through technology could offset much of the drop in workforce growth. The real problem, he said, was the failure of our educational system to prepare a generation of workers with the skills they need to succeed.

I’ve written previously about how small businesses are being saddled with the job of teaching young workers basic job skills. Just getting them to understand that cutting class doesn’t carry over into cutting work, that there are no unlimited extra credit assignments to make up for lack of effort, and that everyone doesn’t always get a passing grade, can be a real challenge.

Some years ago I employed a young Dutch woman who had come to the USA as a student in a top university. She also apparently had sufficient financial support that dropping out and taking a part-time job with me wasn’t a hardship. Eventually, more out of boredom than need, she enrolled again in the local state university.

She came to me one day to coordinate her class schedule with work for the semester. (I think it was her second half of sophomore year.) These were her courses:

Great Women in Architecture
Diversity in Art
The Sociology of Class Distinction
World Geography

I asked why she bothered going back to college if she wasn’t going to study anything that prepared her for a career. She laughed, and informed me that she was just catching up on the core courses required before she could declare any liberal arts major.

I’m sure each of those topics were interesting, and contributed to a well-rounded world view. What they contributed as far as preparation for the workplace, however, remains a mystery to me.

A recent survey of college students found 21% believe that the First Amendment to the Constitution should be modified to exclude free speech that is offensive.

A widely circulated essay on Vox.com expresses a liberal professor’s fear of violating the “safe place” of university learning by teaching offensive literature such as the writings of Mark Twain.

Universities now publish their 6-year graduation rates (fewer than half graduate a majority of students in 4 years.) Students with failing grades receive almost daily emails as final exams loom, reminding them that they can drop classes without penalty (except, of course to their parents’ wallets — refunds aren’t offered.)

It may be helicopter parents, politically correct coursework or just a general corruption in the education system driven by billions in student loans that require no accountability. Whatever the cause or causes, a college education no longer seems to carry with it an assumption of career-readiness.

There are certainly many good colleges, and an excellent education is still a great beginning for a successful career. As an employer, however, I’ve long since stopped assuming that a six-figure degree is, by itself, any sort of qualification for a job.

Posted in Exit Planning, Management | Tagged Baby Boomers, Boomer Bust, business ownership, business planning, business strategy, economy, employee performance, employees, entrepreneurs, entrepreneurship, hiring, leadership, management, small business, small business advice | 2 Comments

2 Responses to Not Just Workers…Qualified Workers

Ray Walker says:

December 13, 2015 at 1:29 pm

Just the same in the UK. Worthless degrees lack of preparation for work, no motivation to work, the millenia of Chinese domination is upon us.

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Martin Frey says:

December 13, 2015 at 3:26 pm

I find the information you shared today accurate and frightening from a sociological and economic standpoint. This is clearly seen in the current news where college students seem to have no idea of reality beyond the campus. I see myself as very blessed that my adult children are the opposite of their generation in this regard. They are 28 and 30 years old and earn between $120K and $250K per year and save and invest most of it. When I grow up I want to be more like my children.

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The Quest for Recurring Revenue

Posted on December 6, 2015 by John F. Dini

Recurring revenue is the current Holy Grail of business. Barriers to Entry, a traditional way of assessing your differentiation against competition, have been replaced by Barriers to Exit, how to make it at least inconvenient or at most excruciatingly painful for your customer to leave you.

In John Warrillow’s new book The Automatic Customer, he describes nine methods for converting almost any business to a subscription model. His logic (and it is very sound) is that recurring revenue is more attractive to any business buyer, and garners higher valuations for the company.

Some of these have been around for a long time. His Consumables Model example is Dollar Shave Club. That’s clearly an Internet updating of the strategy Proctor and Gamble’s Gillette has employed for over 100 years. Sell a customer a razor at low margin, and make it up on the long-term blade purchases. (In fact, you can now join the Gillette Shave Club.)

We probably were most awakened to the possibilities of web subscription by the conversion to Software As A Service (SAAS). When was the last time you went to Best Buy or Office Depot to buy a box of software?

Also, Millennials (now about half the workforce) and GenXers have been raised on the concept of “buy now, pay as you use it.” Their college educations, cars, furnishings, electronics, vacations and clothing are bought on credit and paid for in installments. There is a certain logic in applying the concept almost universally. A pay check today is valued by the number of payments it can cover.

John’s other models all lean, in part or entirely, on using the World Wide Web to collect and serve customers. Some of his models are “pure” web plays, and some use web-based subscription to improve service, offer a special deal, or move a customer into a select group. Amazon Prime is probably the best-know example of a retailer who has successfully implemented subscription selling.

What if you are a business owner who doesn’t see a web-based subscription opportunity? Commercial contractors, restaurants and grocery stores all come to mind. Each could probably devise some recurring revenue model (follow up inspection of buildings, dinner reservation priority, milk/bread/eggs delivered regularly) but there is a real question as to whether the cost of implementation would produce a return.

Every business should consider a strategy for creating recurring customers. If one doesn’t occur to you, however, repeat customers are the next best thing. Doing the job right, charging fairly and standing behind your product still counts. That’s true whether they buy via subscription or not.

Posted in Entrepreneurship, Marketing and Sales | Tagged business, business ownership, business planning, business strategy, economy, employee performance, employees, entrepreneurs, entrepreneurship, leadership, management, marketing, new business, promotion, sales, sales management, small business, small business advice, startups, trade | 1 Comment

One Response to The Quest for Recurring Revenue

Martin Lindeskog says:

December 9, 2015 at 1:04 pm

I am striving to achieve different recurring revenue streams over time, so I will check out the book, The Automatic Customer by John Warrillow.

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When a Customer Outgrows You

Posted on November 29, 2015 by John F. Dini

There is nothing that quite matches the excitement of landing your first really big customer. It often brings with it the confidence that comes with knowing, really knowing, that you can compete in the big leagues. There could be the added security of a baseline of business that permits longer-term planning. Even if you had to squeeze your normal margins a bit, the additional cash flow is worth it.

When you land a customer who is many times larger than you are, the disparity in size can be a trap. If the customer is ten times your size, a 5% growth in their business might mean a 50% growth in yours.

Every owner says that his or her company will grow in other areas to avoid being overly dependent on one account. In reality, just keeping up may be as much as their business can handle. Even if the customer is understanding of the small suppliers’ issues (not, for instance, demanding extended payment terms or exclusivity,) there are other challenges.

Larger customers may require more documentation, quality certifications, or compliant computer systems. They expect sufficient inventory to meet short-term surges in demand, and could ask for more visibility into financial statements than you would normally be comfortable with.

Does that mean small vendors should avoid chasing giant customers? Not at all. Most of the small start ups that I know who achieved mid-market levels (over $50 million in revenue) got there by riding one really large customer for some period. Eventually they grew up enough to attract a few more big players. There was risk, but the owners never lost sight of the long term benefits.

Eventually, they learned enough about how big organizations purchase and manage vendors to make themselves attractive to others. It was a wild ride, and not everyone comes out well in every such relationship, but the risk can be more than worth it.

If you like “Awake at 2 o’clock,” please share it with another business owner.