Every year around this time, it’s important to look back at the past year, and look forward to the year ahead, and think about what you’ve done well, what you would like to change, and set milestones and outcomes so you can get a head start on what you would like to achieve in the the new year. I do this exercise with my clients, and with my networking partners and we always come away with realistic working goals and plans for the year ahead.
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.
The other day I came across one of my favorite newsletters from The Stanford Business Graduate School, and in particular the subject line “Do Funders Care More About Your Team, Your Idea, or Your Passion?” intrigued me to read on.
In a study co-authored by Stanford finance professor Ilya A. Strebulaev, “How Do Venture Capitalists Make Decisions?” The findings seem to indicate 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.
The survey included 885 Venture Capital professionals at 681 firms, and asked the VCs to identify the factors that drove their investment selection decisions and ranked them according to importance. The abilities of a founder and his/her management team are the most important factors driving investment decisions, and even more important than the product or technology itself.
The average investor evaluates 200 companies a year and invests in just four. Each deal takes an average of 83 days to put together, which includes 118 hours of due diligence and Strebulaev says that “Venture Capitalists gauge an entrepreneur’s passion level by their commitment of time, effort, and money to their idea. “
The study was structured in a way that enabled researchers to better understand how different types of venture capital investors approach their decisions. They found that information technology investors tend to be interested in an entrepreneur’s management team, while health sector investors are more interested in products and market forces.
If indeed you have the time, I strongly recommend downloading the complete study HERE.
As usual, please email me your thoughts and comments. I guarantee you a response!
I was perusing through the Sunday NY Times, Business section a few weeks ago and I was intrigued with the headline, “At Work, Focus on the Fun”.
Reading past the headline, I once again read the statistic from a recent Gallup poll that two of three working Americans do not feel engaged at work.
Actually, I can relate to that statistic as I experienced that for a considerable period of my early work experience. And then something happened – I started my own Company with a partner, and my life and my work was never the same again.
What was it that made the difference? I think it was that I found what I did was not only challenging, but also incredibly interesting, and inevitably fun.
So what is fun at work? In my opinion, it is believing that what you do does make a difference, and that being fully engaged in the process of whatever you do does matter, and seeing the impact of your efforts, despite everything that can and does get in the way, can indeed be the difference of having fun at work.
The article makes some interesting points on how to make work fun:
- Making friends and establishing comradery with coworkers
- Breaking the routine
- Shifting one’s mindset to focus on the positives of one’s jobs instead of the negatives
- Making one’s goal the process of doing the job and completing all the necessary tasks
Most importantly, I agree with the statement in this article, “…that people feel energized when the process of doing something becomes the goal of doing it”. For me, I found this very satisfying and inevitably have made work more fun for me.
Once again, Veronica Rao was helpful in my gathering my thoughts to write this piece. And, as always, I do appreciate your comments and feedback.
Check out my article “Growth Means Turning an Entrepreneur Into a CEO” alongside dozens of other expert contributors in Recalculating 97+ Experts on Driving Small Business Growth. We were each asked to write special 1000-word contributions for the book based on our expertise. Topics covered are: Leadership, Finance, Marketing and Sales, Human Capital, Operations and Technology.
You can purchase the book on Amazon in either Paperback or the Kindle edition HERE.
As I have often said in my talks, and as I conclude in my article, ” In my experience with hundreds of clients, I’ve found that whether one chooses or not to grow the business, the principles of systematizing, being deterministic, and increasing value for the business still hold true for any business, and becoming a CEO may not be a choice after all.”
I look forward to hearing your thoughts.
With advancements in technology, there have been many accusations that technology has made many jobs that were once vital to running a society disappear. From the production line to the accounting office, more and more jobs are being replaced by computers and software and it’s only going to continue to grow. In this era of cloud computing that the tech industry is moving into, companies will require smaller departments and less workers. Many companies will eventually have to adapt to cloud computing and that can be an issue. Here are some of the main points from the biggest cloud companies around:
- Ed Lazowska who holds a chair in computer science and engineering at the University of Washington said “Technology shapes styles of work. One critical advantage of the cloud is that sharing becomes dramatically easier.”
- David Campbell, who is the head of engineering at Microsoft Azure mentioned how they are able to make engineering changes by moving parts of its customers traffic into new software in real time which “takes hours, instead of months and years in the legacy”.
- At Amazon Web Services they have built the worlds biggest cloud computing business. Work is divided into teams of small size in order to determine what the customer is doing with an important product. This allows the team to quickly adapt the product to work better and look for new insight. For 2014, Amazon announced that it’s cloud division created 60% more new products that it did in 2013.
One can conclude that companies who adapt to cloud computing will be more collaborative, more specialized, and ultimately be better at delivering their services and products. What do you think?
Read the entire article here
UPS Connect conducted a 2014 report for the state of small businesses interviewing more than 300 founders, partners, presidents, and CEOs. With this report, they delivered a list of questions and answers. When asked what are the biggest challenges business owners are currently facing, companies replied with:
1) “Reducing cost of financing.”
2) “Government compliance and interference.”
3) “Funding and/or credit lines allowing my business to grow.”
4) “The cost of customer acquisition…declining volume per current customer.”
Although owners maintain an optimistic approach in the short term, they are still faced with obstacles from general concerns, costumer acquisition, financial problems, and increased competition.
When business owners were asked about their biggest pain points:
49% of respondents said they “aim for a healthy balance between [their] professional and personal life””; 31% said they prioritize professional over personal.
49% admit they “don’t have the time or expertise to figure everything out.”
37% feel as if they “manage [their] time efficiently”; 23% said they have difficulty managing all the moving parts of their business.
This is some fascinating data to consider within the context of your own small business.
HuffPostSmallBiz have some interesting ideas about “What Wealthy People Do Differently.”
Do you agree with these three? Click here to view the article.
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