Goals are More than Just Resolutions

Posted on December 28, 2014 by John F. Dini

Most of us (at least those who don’t own retail businesses) are in low-power mode at this time of year. Double midweek days off and decompression following the holiday rush allows us time to think. For many, that thinking naturally turns to what we hope to accomplish in the coming year.

For a small business owner, company goals frequently occupy a higher priority then personal goals. Losing ten pounds would be nice, but growing by 10% would be nicer. Reading more is a great goal, but reading stronger finblackboard 2015 goalsancial statements every month can ease the pain of not having opened a book.

Some of us develop extensive and detailed business plans. Others go through the year with a series of short term objectives. Both methods can succeed, if you have the people who work for you tuned in to what the goals are, and how they can help you to reach them.

Follow the SMART methodology (Specific, Measurable, Attainable, Resourced and Time-sensitive). Note that I substitute “Resourced” for the more widely-used “Reasonable.” I think specifying how something is both attainable and reasonable is redundant. On the other hand, a well stated goal should include the tools, time and talent available to make it happen.

Your leadership role begins with clearly communicating the goals to your employees and showing them how each one can contribute to successful execution. A few simple steps can make this much easier.

  1. Start with “Why.” Simon Sinek’s question on TED has generated over 20,000,000 views for a reason — it makes sense. Explain to your employees how accomplishing these goals will fit with your core values, make the company a better place to work, or improve your offering to customers. Take them out of the “more money is just better” mindset with a bigger perspective of the benefits.
  2. Define each of the SMART factors clearly and in detail, with complete narratives. Putting them in a conversational form makes them more real than theoretical.
  3. Sit with employees individually or in small groups and ask them to discuss how their contributions can support the overall goal. In many cases, you’ll discover that they have no idea of how to approach any objective beyond merely “working harder.”
  4. Develop clear graphic representations of accomplishments and progress towards the objective, and put it where employees can check it regularly. If this involves collecting data, delegate the responsibility to someone who will be diligent in maintaining it.
  5. Celebrate milestones and on-target performance. Don’t let regular wins or regular shortfalls become routine. “Why we fell short” is less important than “How can we do better?”

If things are quiet around your business, it’s a perfect time to be communicating with your staff. Business goals are more involved than New Year’s resolutions.. If you want your company to reach its objectives, it will require an all-hands effort.

Posted in Entrepreneurship, Leadership, Management | Tagged , , , , , , , , , , , | 2 Comments

2 Responses to Goals are More than Just Resolutions

  1. Frank Benzoni P.E. Retired says:
    December 28, 2014 at 3:58 pm

    Once again a great adaptation of what to do and why – Excellent writing John !!

    Frank

    Merry Christmas and a Happy 2015

    Reply
  2. Claud Gilmer says:
    January 2, 2015 at 9:44 am

    Hi John!
    Good info & timely reminder!
    Here’s to a successful 2015!
    Thanks, Claud

    Reply

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What a Customer Needs May Not Be What He Wants

Posted on December 21, 2014 by John F. Dini

The owner of an IT services company recently presented his new reporting system to his peer board. They had provided substantial input as to what they, as customers, would want to see from their technology provider. Per their advice, he provided two monthly reports. The first was a one-page, high level, graphics-laden overview of system performance and threats in the prior month. The second was a longer (30 or 40 pages) printout of the details.

Computer securityThe overview showed a dashboard with all green lights, indicating that the critical areas were at 90% or better of ideal performance. Employee usage of the system, for example, clocked 98% appropriate. On further questioning, the 2% shortfall was due to a couple of employees who were using the Internet inappropriately (one viewing pornography, the other visiting gambling sites.)

The board, acting as his focus group, was thoroughly critical of what they felt was a misleading statistic. Two employees using company time and equipment for illegitimate purposes was not a “detail.” It was a problem that should be escalated to the attention of upper management immediately.

There is a difference between what a technician identifies as a problem and what the customer thinks is wrong. The technician sees scores of businesses, and the issue of two employees’ Internet misbehavior may seem minor compared to one who is watching perfectly innocent streaming videos but dramatically slowing server response time for an entire company. How is the tech supposed to decide what is most important to the customer?

The high level summary coupled with the detailed report was supposed to address this issue. What the group realized is that importance lies entirely in the eye of the beholder.

Does your customer prefer fast delivery of an order that is 90% filled, or a 98% fill rate with a week’s delay? Is it better to provide a product that fails 1% of the time, or one that fails 5% of the time but is half the price? Does your customer want a service that he or she can delegate and forget, or the details of everything you’ve done?

The answer, of course, is that it depends on the customer, not on the product or service you provide. If you know your market, you are likely to be successful when filling most of the needs of most of your prospects. Real success come when you shift from delivering what you think your customers need to knowing what each customer wants.

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Is Uber Really Disruptive Technology?

Posted on December 14, 2014 by John F. Dini

I attended a technology awards event a few nights ago. The speaker extolled technology as the engine of change and economic development, while attendees posted pictures of each other for the Pinterest feed on the screens to either side of the stage . He referred several times to Uber, saying that it was disrupting a business that had remained unchanged for a hundred years.

Is it really? Is the ability to book a ride on your cell phone all that different from when taxi companies installed telephone lines, or from advertising on the doors of cabs that they were “radio dispatched?” Both represented the implementation of technology to increase productivity and convenience to the customer.

NY TaxisTech advocates, however, defend Uber’s right to operate outside of the common carrier regulatory structure as the moral equivalent of Internet neutrality. Its opponents (admittedly led by the traditional taxi industry) characterize it as merely a way to allow unlicensed gypsy drivers to operate illegally.

I’m not a fan of increased government regulation by any stretch of the imagination, but citizens have a reasonable expectation that their elected officials will oversee public safety. When they hail a cab on the street, or call for pick-up, they do so with the understanding that there are certain regulatory standards that apply to the driver and vehicle they will use.

Uber says that they assume that oversight role for those who utilize their service. Many industries, including airlines and trucking, are largely self-policing, but they don’t make up their own standards for regulation. I doubt that I would be comfortable booking on an airline that advertised “We will decide just how safe our planes need to be.”

Amazon was disruptive, as was Wal-mart, by using technology to revamp logistics. Ebay and social media created new marketplaces, but that was no guarantee of success (e.g. MySpace). Uber is simply the use of a technology in the interests of efficiency. Touching a screen isn’t all that different from dialing a seven-digit number.

Uber is shaking up an industry. It increases competition, provides opportunities for part-time income, and (at least theoretically) makes more efficient use of resources. All those things are desirable, and should be encouraged. That doesn’t mean Uber should be exempted from the same public safety oversight as its competitors. It’s a traditional taxi service utilizing current technology.

Many business owners make a similar mistake when implementing new technology. A business website has clearly replaced the telephone book for prospective customers. Facebook, Twitter and Pinterest are effective marketing tools for certain products to specific demographics. Merely spreading your company name around the Internet, however, is neither disruptive nor differentiating.

 

Posted in Thoughts and Opinions | Tagged , , , , , | 2 Comments

2 Responses to Is Uber Really Disruptive Technology?

  1. David Basri says:
    December 15, 2014 at 7:28 am

    I am generally in agreement with Awake at 2 O’clock articles, but respectfully disagree with this one. What Uber has done is clearly disruptive to the traditional taxi industry. Previously the only phone number that would connect someone who wants a ride with someone who could provide one, was to a taxi company. Taxi company are a silo or vertical business model. Uber, and the other ride-share companies, have made it much more horizontal. The barrier to becoming part of a ride-share fleet is very low.

    John correctly identifies that as a serious issue that will need to be dealt with. The barrier is very low and government is largely out of the dynamic (which is both good news and bad news). Of course one could argue that it is a classic case of a consumer accepting increased risk in return for decreased cost. The industry will have to evolve to deal with the issues, but it has pretty clearly been a disruptive shift in a long’standing business model.

    Reply
    • John F. Dini says:
      December 15, 2014 at 7:41 am

      Thanks David, but I still don’t see how Uber inherently does more than a taxi company (match people wanting a ride with affiliated drivers who are willing to do so for pay.) Some folks read my article as an argument against Uber. Not at all. I’ve used the service, will again, and think it is terrific. The artificial market constraints of medallions that cost hundreds of thousands of dollars in return for a middle-class wage should be removed. Uber is shaking up the industry, and I applaud them. Like you, I worry about the impact of claiming a right to work outside the public safety system. Working outside other regulations that exists merely to stifle competition? Go for it!

      Reply

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Holiday Terminations: It’s Not “Just Business.”

Posted on December 7, 2014 by John F. Dini

Yesterday, I received a comment from a woman on my column from 2012, “Holiday Terminations: Scrooge or Chicken?”. She had been unexpectedly terminated from her position, and said in part “Employee termination during the holidays is an act of spiritual robbery that has a devastating impact which is farther reaching and longer lasting than termination at any other time of year.”

My response included the following caveat: “If the termination is because an employee didn’t respond to progressive discipline or a performance improvement plan, then I don’t see an obligation to carry someone in the “spirit of the season.” You say that you didn’t see it coming, so I assume either it was due to overall business performance, or your former employer didn’t follow fair and equitable HR practices.”

If you read the original post, I strongly recommended that termination due to business conditions be accompanied by severance that will carry the employee through until the hiring doldrums subside in January. On the other hand, I don’t think an employee who has earned termination by documented poor performance has any vested right to the extra paid holidays and bonuses that typically come with the season.

IOU SantaPre-holiday termination can save an employee from incurring excess credit card debt. It puts them in job-search mode at a time when they have the most social connections and support from their family and friends. These factors certainly seem insignificant to someone who is newly unemployed, but they are in fact substantial.

I’ve often said in this space that downsizing due to business conditions is always tough, but an owner’s obligation to the remaining employees and other stakeholders (the owner’s family, customers and vendors) trumps the discomfort of an unpopular decision. Waiting an extra six weeks will never cause an employee to say “Gee, I’m glad he didn’t fire me during the holidays. What a swell guy!”

On the other hand, being unemployed during the holiday season carries a special burden, and obviously puts a damper on customary celebration. It’s not  “just business.” If it is necessitated by financial problems, it should come with compassion and consideration. If it was earned by poor performance, it should never be a surprise. The spiritual robbery referred to by the reader comes from the lack of warning and preparation time as much as the act of termination itself.

We run our businesses all fifty-two weeks of the year. Making the Thanksgiving to New Year’s period (about 12% of the entire working year) an automatic moratorium on necessary personnel changes isn’t “just business.” It’s bad business.

Posted in Management | Tagged , , , , , | 1 Comment

One Response to Holiday Terminations: It’s Not “Just Business.”

  1. Curtis Price says:
    December 9, 2014 at 2:42 pm

    If the termination was a documented performance termination, the Holiday can be looked upon as a bad time, but then when is a good time, there is holidays in January, February. What this means is there is no good time for the employee. What if the termination was for thief, sexual harassment, do you wait until after the holidays.

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The Secret to Growing a $1 million company by 5X

Posted on November 30, 2014 by John F. Dini

In my work with hundreds of small business owners, I’ve noticed that there are two “danger zones” where an owner may, consciously or unconsciously, prevent his or her company from growing any further.

The first zone lies at about $1 million a year in sales. Many owners reach a level of satisfaction with their personal income. The work is hard, but a single owner can do most of the skill-based tasks and still closely oversee what’s done by employees. Income and benefits reach a level that permits a reasonably secure lifestyle. The work week may be long, but the owner has sufficient discretionary funds to spend his or her time off on activities that feel successful (recreational vehicles, a second home, exotic vacations.) After struggling to build a business with meager resources, there is enough cash flow to cover operating expenses and leave a bit for “extras.”

The second zone is between $5 million and $10 million annually, depending on the industry. At that level the owner has at least a few trusted employees who can execute much of the day-to-day functions of the business. Personal income is comfortable. The time requirements of the business have usually fallen to a sustainable number of hours. The company develops a reputation of its own, and the owner begins to be recognized in business and community associations.

Growth PlantsI’ve studied the owners of $5+ million companies to see what was different from those who run businesses a fifth that size. I’ve seen both with creative, big-picture owners and both with micromanager technicians. They represented companies in product and service-based  industries. Some owners have a laissez-faire approach to managing people, and others insist on strong systems and processes that are followed diligently. For almost every industry, I can point to a company that has stayed at $1 million for a long time, and another with strikingly similar offerings, management style and markets that has grown much larger.

I’m convinced that the difference is an owner’s ability to set and achieve goals. In a word, it is implementation. The owner of a continually smaller company has many goals, but they are seldom achieved, or at least achieved on schedule. Everyone is too busy. The daily firefighting of customer and vendor problems pushes other objectives aside. Goals are redirected, excused, or ignored when they interfere with an employee’s “regular” tasks.

The more successful owner approaches goal-accomplishment as a normal part of daily operations. Achieving objectives on a timetable is an expected part of ongoing activity. Small crises and unexpected events are inevitable, but they aren’t allowed to create ever-extending deadlines for the important-but-not-urgent things that move the company forward.

Growing a business beyond the second zone requires a shift from an owner-centric culture to one built around management and systems. It isn’t for everybody, and many owners really don’t want to go there. Taking a business from a million dollars to several times that much, however, really doesn’t demand a complete change in culture. It just requires an owner who makes implementation of growth and improvement goals a core activity of the business, not merely a lucky outcome of its regular activities.

 

 

Posted in Entrepreneurship, Leadership, Management | Tagged , , , , , , , , , , | 3 Comments

3 Responses to The Secret to Growing a $1 million company by 5X

  1. Larry Amon says:
    December 1, 2014 at 2:17 pm

    John, Very true. Setting and achieving growth goals as part of every day business is what it takes to grow from a $1 Million a year company to one 5 times larger. This was a practice that we used to grow my company from $100K to $5 Million in less than 5 years and be on the INC 500 list as one of the fastest growing privately held companies in the U.S.
    Larry Amon

    Reply
  2. John H. says:
    December 8, 2014 at 7:56 am

    Although occasionally I have run into a business owner with a personal bias with regard to anything perceived as “corporate”. So implementing processes, or giving up tight control, is avoided. But for many SMB’s the observations shared in your post should are exactly what is needed.

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