At the Voice of Reason Consulting, Matt and I are always focused on growing our clients’ businesses. So last Sunday I was especially interested in reading Adam Bryant’s Corner Office article with the headline, “Why Fast Growth Can Lead to Trouble”.
I thought this would be especially interesting to the folks who know our work.
Having found his way in the world of start-ups, Matthew Prince, chief executive of Cloudflare, a cyber security firm, states that working at a start-up is almost like a drug. “There’s something very powerful about going from an idea on a piece of paper to enough money in a bank account to fund it, to building a team.”
However, in the process of growing, it became clear to him and his partners that with fast and significant growth, “a company’s culture can start to suffer because there’s nothing foundational to keep you stable.”
According to Mr. Prince, an organization should not grow faster than doubling in any 12-month period. He reasons that if one succumbs to the constant pressure to grow faster, there may not be any culture-keepers left in the organization. If this happens, I believe a company without a meaningful culture will not achieve its goals.
As always, I welcome your comments – do you believe it is a significant problem to grow a company too quickly?
Since the tag line for Voice of Reason Consulting is “We Turn Business Owners into CEOs”, I was absolutely drawn to an article about “The Science of Pep Talks” by Daniel McGinn in the July-August 2017 issue of the Harvard Business Review.
McGinn postulates that the ability to deliver an energizing pep talk that spurs employees to better performance is a prerequisite for any business leader, and I believe is also a key factor in judging a CEO’s performance as the leader of his/her company.
Motivating people is both a science and an art! According to the science (MLT- motivating language theory) most winning formulas include three key elements: direction giving, expressions of empathy, and meaning making.
The Mayfields, a husband/wife research team from Texas A&M University describe “direction giving” as providing information about precisely how to do the task, giving easily understandable instructions, providing good definitions of tasks, and letting people know how their performance will be evaluated. “Empathetic language” is showing concern for the person as a human being, and includes praise, encouragement, gratitude, and acknowledgment of a task’s difficulty. “Meaning-making language” explains why a task is important. This involves linking the organization’s purpose or mission to listeners’ goals.
Bottom line, a good pep talk—whether delivered to one person or many—should include all three elements. It’s the job of the CEO to know the context and the audience in order to determine the right mix of these three elements. Once leaders and CEOs understand these three elements, they can learn to use them more skillfully.
I urge you to read the entire article and let me know what you think.
I’m always interested in how companies price their products and services. A long time ago, Matt Plociak my partner and I at our systems integration company Netlan, used to throw spaghetti against the wall to come up with pricing for our products and services. Well not really, but it was indeed always a challenge to figure out what was the best price to sell, and sometimes when we got no resistance, we thought we were pricing our products and services too low!
So, when I saw this headline Our 6 Must Reads On Pricing a Product from First Round Review I was definitely intrigued to read further.
The article relates the story about Johnny Carson who interviewed the legendary salesperson Zig Ziglar.
“They say you’re the world’s greatest salesman,” said Carson. “How about you sell me something — say this ashtray?”
“Before I can do that,” replied Ziglar, looking at the ashtray. “I’d have to know why you want it.” “I guess it’s well-made, it looks pretty nice, and it’s a good ashtray,” replied the talk show host.
“Alright,” responded Ziglar, “but you’ll have to tell me what you think it’s worth to you.” “I don’t know,” thought Carson, “I guess $20 would be about right.”
“Sold!” Ziglar exclaimed, smiling.
As a long time student of sales, this exchange really goes to the heart of selling a product or service – what is it worth to the buyer, and what is it worth it to the seller to sell at that price!
The folks at the Review dove into their pool of great people resources and asked them to discuss the six most impactful actions a startup can take to get their pricing right.
Here they are:
- Nail price before product. Period.
- Weave in price sensitivity into your feature preference surveys.
- Map how your product’s price correlates to a marketing- or sales-intensive strategy.
- Know how your product’s price impacts how and what you ship.
- Be selective about incentives and discounts.
- Design A/B tests on price with international users in mind.
I encourage you to read the entire article as well as all the links they make references to. It is a great primer for learning how to appropriately price your products and services. I can assure you it’s better than throwing spaghetti against the wall!!
As a long time student of sales I am especially interested in developing compensation plans to motivate and inspire salespeople to become high producers. That being said, I was delighted to receive my weekly Business Insights newsletter from the Stanford Graduate School of Business that summarized a new study, coauthored by Kathryn Shaw of Stanford Graduate School of Business, and Ann Bartel of Columbia Business School and Brianna Cardiff-Hicks of Cornerstone Research that sheds light on encouraging high producers to become good leaders.
This particular study looked at a high-powered law firm founded in the 1990s, and grew rapidly for over fifteen years relying almost entirely on an eat-what-you-kill system.
In its purest from, eat-what-you-kill means basing the size of a person’s paycheck almost entirely on how much business that person brings in. Shaw and her colleagues wanted to see what happened when this law firm switched from an almost pure eat-what-you-kill approach to one that rewards work that benefits the firm as a whole.
My partner Matt Plociak is a firm believer that money, and that being on full commission should motivate salespeople or in this case, even lawyers should be compensated an eat-what-you-kill basis.
So the question in this study of the law firm is whether the shift from eat-what-you-kill improved the long-run strength of the firm by having the senior attorneys invest more effort on the organization as a whole. The belief by some of our colleagues is that at some point, even fast-growing companies need more than big producers. They need leaders who will invest time and effort on the big picture. They need people who can bring out the best in employees, communicate a vision, or build the firm’s public reputation. And this necessarily, begs the question as to how to structure incentives that focus on the big picture, and still generate increasing revenues.
The data collected in this study may not be totally conclusive enough to offer a definitive judgment, but it does indicate that the law firm did make better use of their junior associates who had been underutilized under the old system, which ultimately resulted in a win-win for all the attorneys in the firm.
To be sure, Shaw says, companies of all types still want ambitious go-getters who dream of big paychecks, but encouraging people to work for the good of the whole organization can be a winning strategy for everyone. I’m curious as to what you think. I look forward to your comments.
A few weeks ago, my partner Matt Plociak and I got together with two of our former Netlan employees, Rick Freedman and Charles Bernard who respectively for many years are very successful business owners and consultants in technology and sales.
Of course, it was great to see them, and since we share so many similar beliefs about marketing, sales, consulting, entrepreneurship, and business, we started to talk about the books that have inspired us, and lo and behold, we each had a reading list and assignments for our next get together.
First on my list was “Never Split the Difference: Negotiating As If Your Life Depended On It” by Chris Voss. Chris is a former FBI lead international kidnapping negotiator and is the CEO and Founder of the Black Swan Group, a consultancy that brings the lessons learned in hostage negotiation to business people who need to negotiate, persuade, or influence, which sounds like just about everyone.
I’m finding the book a fascinating and very informative read, and most recently I read A Black Swan Group blog entry by Derek Gaunt, on “Why It’s Important to Embrace No’”.
As a Sandler Sales disciple, I am very familiar with “Going for the No”, and I use it as a technique quite often in my approach to sales. I was very impressed to learn that “Going for the No” is actually used in hostage negotiation as well.
Derek’s point is that although No in any difficult conversation may be interpreted as an insurmountable obstacle, it is in fact the first step towards, collaboration, compliance or acceptance.
The folks at the Black Swan group believe that No is used for protection, or rejection, and it usually represents confusion and fear on some level. “Another interesting psychological aspect of accepting the No, is that it triggers reciprocity. Once people feel that they have protected themselves, they are often more willing to listen. They are not worried about what they have exposed themselves to by making an unintended commitment in saying Yes.”
So if hostage negotiators have no fear of No, and actually embrace it as a means to get to Yes, one can only wonder how effective it might be in the worlds of sales and business. I know it works, do you?
With all the talk about jobs swirling about, I was very interested in this article, How to Prepare for an Automated Future by Claire Cain Miller which appeared in the NY Times, The Upshot, May 4, 2017.
Given the considerable concern for jobs in the future, Claire Cain Miller postulates that the logical response might include educating people differently so they would work actually alongside machines and robots.
In a recent survey of 1048 technology and education workers who were asked if they thought new schooling will emerge in the next decade to successfully train workers for the future, two-thirds said yes and the rest said no.
Here are some of the highlights of their responses to the survey:
- People still need to learn skills, but they will do that continuously over their careers. In school, the most important thing they can learn is how to learn.
- Schools will also need to teach traits that machines can’t yet easily replicate, like creativity, critical thinking, emotional intelligence, adaptability and collaboration.
- About two-thirds of the respondents thought changing education fast enough to outpace machines could be done in the next decade; while the rest thought that education reform takes too much time, money and political will, and that automation is moving too quickly.
- Many survey respondents said a degree was not enough — or not always the best choice, especially given its price tag. Many of them expect more emphasis on certificates or badges, earned from online courses or workshops, even for college graduates.
- Employers will also place more value on on-the-job learning, such as apprenticeships or on-demand trainings at workplaces.
So, what do you think? How can we prepare for jobs in the future? I welcome your responses.
Since Voice of Reason Consulting’s tag line is, “We Turn Business Owners into CEO’s”, you can easily imagine that I was quite intrigued with this video and article by James Stephenson listing the “25 Common Characteristics of Successful Entrepreneurs”.
Stephenson maintains that there are certain musts that business owners have to develop and implement for their business to succeed. I’ve taken the liberty to reorder the list in what I think are the most important traits to have.
I’m curious what you think. Must a successful entrepreneur have all of these traits at once? Which ones are most important? I look forward to hearing your comments.
- Do what you enjoy.
- Take what you do seriously.
- Invest in yourself.
- Take time off.
- Get involved.
- Manage money wisely.
- Master the art of negotiations.
- Get and stay organized.
- Plan everything.
- Follow-up constantly.
- Be accessible.
- Become known as an expert.
- Build a rock-solid reputation.
- Limit the number of hats you wear.
- Build a top-notch business team.
- Grab attention.
- Project a positive business image.
- Create a competitive advantage.
- Level the playing field with technology.
- Design your workspace for success.
- Remember it’s all about the customer.
- Get to know your customers.
- Become a shameless self-promoter (without becoming obnoxious).
- Sell benefits.
- Ask for the sale.
A current theme that continues to occupy my interest is how private equity/venture and angel investors view businesses and judge CEO’s. In a recent post, I discussed a Stanford Business Graduate School study “How Do Venture Capitalists Make Decisions?” that showed that venture capitalists who are considering investing in entrepreneurial ventures, are most interested in entrepreneurs who are passionate, capable, experienced, and part of a strong team.
In this particular article in the Sales Benchmark Index Blog earlier this month, Matt Sharrers discusses the growth indicators a private equity firm expects. He points out that the end of first quarter is an ideal time for private equity firms to check each of their portfolio company’s growth rates, including sales and marketing performance.
According to Sharrers, private equity firms are most interested in implementing an agile sales and marketing strategy focused on results. Q1 is a decision making time to validate prior assumptions as well as the actual results, and most importantly make new decisions as necessary.
Leading indicators include whether sales and marketing are working in lock step and whether sales and marketing are enabled to hit their growth milestones.
Of course, private equity firms are very wary of red flags that exclude win/loss analyses, provide inaccurate market feedback, and show a lack of confidence in Q2 forecasts.
In particular, the CEO must demonstrate that sales and marketing are always in alignment, and there is always a clear plan to execute strategy and do it quickly. As I have often said, the CEO’s job is to provide value for the business, and you can rest assured that the job of the private equity firm is to ensure that value is being achieved.
One of my favorite “sales” blogs that I read as often as possible is by Jill Konrath who is a widely read business-to-business sales expert.
I like Jill’s blogs and newsletters because she focuses on driving more sales in less time, which is also a philosophy I practice as I help my clients successfully close business.
One of the things I admire most about Jill is her transparency. Her most recent blog entry is about the loss of her husband and the life lessons he taught her.
I found these ten life lessons truly inspiring and I was moved to want to make sure I practice them, and to share them with all of you.
- Winning is always possible.
- Be a cheerleader.
- Always have fun.
- Learn new things.
- Create memorable experiences.
- Choose your attitude.
- Your job is not your life.
- Do what’s right.
- Treat others the way you want to be treated.
- Be the best you can be.
As simple as these life lessons may appear, they do present a challenge that I can assure you I am ready for. I hope you are too.
As always, I look forward to your hearing what you think.