Is Steve Jobs A Fool?

First, may I wish you all a Happy New Year. My goal is to make more change happen.

There is a story told by former Apple employees of Steve Jobs' instinct for self indulgence.

At 1 Infinite Loop - Apple’s Headquarters in Cupertino - there is a staff parking lot which is notable for two reasons. Its size. And the absence of pre-assigned parking spaces. The strategy being to encourage early arrivals by the simple expediency of offering a shorter walk to the office. 

Steve Jobs is not an early arriver by all accounts. But apparently overcame the penalties for this trait by parking in the spaces reserved for the handicapped. And when in a particular hurry, would park so as to occupy two of them.

This personal inelegance was finally confronted by one of his employees who posted a note on his windshield with a simple suggestion. 

‘Park Different.’

News yesterday that Steve Jobs has to take another medical leave of absence once again raises the issue of his ability to see himself contextually within the company he has built since his return in 1997. And whether Apple is anything like as well designed as the products which have made it such a vibrant business.

To date, the indications are that it is not.

I have long believed that on the day a new product is launched, Steve Jobs (with the money I’ve spent on Apple products I’m sure I’m entitled to a first name based relationship) has a clear vision of the tenth version of that device. What we are sold, is essentially a stripped down version of what Steve already has in his head for the distant future. Which makes both design and construction relatively more impactful, since the company focuses on solving macro level problems, not small iterative ones. 

Thinking on that level is extraordinarily rare since it requires combining the aspirational with the practical. A relationship that most business leaders fail to consummate. Either because they live too romantically or too functionally, and surround themselves with mirrors. Not lenses.

But while each successive Apple product introduction provides us with capabilities that are simultaneously inevitable and awe-inspiring, the management structure of the company has been infused with a particular brand of arrogance. Indestructibility.  As though days like today were not part of a future Steve has been willing to foresee.

The impact of which is that both rumors and realities of Steve’s health have a direct impact on consumer confidence and company valuation. In early trading yesterday on the New Zealand stock exchange - the only one open when news of this latest leave of absence was announced - Apple shares fell 7% in value on the news.

Because when what you’re selling is so clearly presented as one man’s vision, the risk of the man being removed is tantamount to removing the company’s entire operating strategy.

This makes Steve Jobs the equal of most owners of creative businesses who build the company around themselves. An approach which guarantees that the day they are done, so too is the company. A waste of most of that which they and those that work for them have invested.

But, Steve Jobs is a man capable of seeing the future. In ways that would make Nostradamus resentful.

That he is unwilling to incorporate his human limitations into his company’s organizational structure jeopardizes the future of his business.

That his departure, whenever it comes, will take with it the unrealized potential of possibilities the rest of us can only dream of, makes him selfish.

That he knows all this and does nothing to remedy the situation, makes him tragically human.

Unlocking Potential: 2 - Time

Reducing risk is a goal of almost every business owner. 

Almost. Because for some, the high-wire is their preferred state of being. A work-hard, play-hard, sleep-fast fueled journey of trial and error. 

As with all extremes, this one is counter-balanced. By an analytical, risk-averse approach that is instinctive to many business leaders. An approach that drives conversation and consternation. But not decisions.

But as management strategies, paralysis-by-analysis or jumping without a net both leave a business in the same state. 

Inert. 

The challenge is to find a management approach that creates economic return and emotional reassurance. For you and your clients. 

The key, in our experience, is how you use time.

In any service business there are two ways to charge your customers. By time or by value.

In the advertising industry, time has become the norm. A model that in most agencies works like this:

1. Hire someone. 


2. Give them an office. 


3. Technology. 


4. Benefits. 


5. Add a profit margin. 


6. Divide by 52 weeks


7. Divide by 40 hours.


8. Find a client willing to buy as many of those hours as possible.

A model that turns a company selling creativity into an employment agency.

And rewards it for working slowly. And for using a lot of people. To do anything.

Slow and big. A model for the Industrial Revolution.

But this is not a problem limited only to large enterprises. Smaller companies, particularly those selling specialized services, have developed their own version of this particular cognitive dissonance. Enthusiastically offering clients rate cards and line item estimates with promises of the time they will spend working on that project, while talking about their creative originality

A model which presents as unique creative inspiration. While turning the most valuable resource we own into a commodity. 

Because ideas are infinite. But time is finite. 

A reality we deny because measuring what is left is impossible. And undesirable. 

And so we exist with the conviction that though our time will come, it will not do so until we are ready. Until we have done what we set out to do. 

Even if we are not sure what that is.

But time is not free. For everything we do there is the opportunity cost of that which we chose not to do instead. 

In our youth, those choices are invisible. But as we mature, the choices we make become sharper, more consequential. A reality which affects our businesses even more severely. Size being an obstacle to flexibility.

Any business that sells creativity should have only one reference for how it measures time. 

What can I create from it?

The better that answer, the less your clients will care how long you take. 

And the more they will reward you for the difference you make. 

Management By Fear

On Christmas Eve I wrote that I have no religion. My approach is to try and do the right thing for the right reason. Generally it has served me well.

It is an approach I take to my assessment of politics. Which causes me to have no political affiliation. I am neither Democrat or Republican. Labor or Conservative. Overall I try to keep it simple.

I believe in fiscal pragmatism. Investing in the future is critical. But eventually every loan comes due. And it’s your responsibility to make sure you have a way to pay it back.

I believe in social compassion. I have lived in a country with national health care. And for all its inadequacies, it has prevented and cured unfathomable amounts of pain and suffering. A reasonable standard by which to measure any system.

I would have voted for Thatcher. Twice. Reagan. At least once. And Kennedy. I did vote for Obama. And would do so again. Change takes time. And someone prepared to fight for it. Though a plan helps.

I was not a fan of either George Bush. The former was out of time with a rapidly changing world. The latter lacks intellectual curiosity. As someone said to me once, he had no interest in governing. And that made him susceptible to manipulation.

I believe that divisiveness eventually comes back to hurt the divider. I hold the Clintons responsible for creating the political divide that engulfs this country when Hilary started talking about ‘vast right wing conspiracies.’ I hold Karl Rove responsible for turning it into a governmental strategy in which the goal is 50+1 majorities.

I don’t think I would have voted for Clinton or Gore. I’m not sure what Bill Clinton believes in. I’m not sure he does either. And Al Gore is not a leader. I believe in leadership.

I believe in the power of positive thought and action. I would much rather create than destroy. I look first for what’s working rather than what’s not.

I believe always that there are two sides to every story. Every story. Even when the story is Tom Tancredo’s. I think his anger must come from somewhere very, very personal.

I believe that whatever your political leaning it’s important to watch Fox News and MSNBC. I believe the BBC still offers the most objective coverage of the news and I’m grateful to the web for giving me access to it.

I believe that Sarah Palin’s success is a direct reflection of the fear in this country. And the personal anguish of many people. I believe I would not recommend her to any of my clients as a receptionist given her limited memory.

I believe that most of us are motivated by fear more than we want to admit. Even to ourselves.

I believe that whether you are running a country, a business or a department, you will create more of everything that you define as important if you do whatever you can to minimize people’s fear.

I believe people that use fear as a foundation of their management strategy can win in the short term.

But never in the long run.

Getting The Most From Your People

I’m always interested in how business owners and department heads manage the people that work for them.

Over time, I’ve discovered one approach is very common.

1. Define the job

2. Find someone to fill it

3. Wait for something to happen

This approach is then put into practice in a number of ways that look like pro-active management, but aren’t.

The most significant of which is the concept of regularly scheduled raises.

A practice which encourages management to be passive in guiding the development of each employee until the next date comes along. Or something goes wrong.

And ensures that your emerging stars will regularly surprise you with better offers from your competitors who aren’t restricted by a calendar in your HR department.

A better management approach also incorporates three elements.

1. A willingness to look first for people’s strengths.

2. Regular development reviews with each employee that are separated from compensation increases.

3. An organizational structure capable of adapting to the potential of individuals by providing tools that take care of the day to day needs of the business - reliably and instinctively.

People want to be paid fairly. But more than that, they want to be given a chance to fulfill their potential.

Putting practices in place that encourage managers to focus on helping them do so costs much less than losing a talented and trained employee.

And ensures that you are building your business on ever expanding strengths.

How To Scale A Business

I probably learn more from Fred Wilson's blog than any other source that I read regularly. However, a couple of days ago he blogged about an interview given by Mark Pincus in the New York Times this week.

Mark has built a number of successful web businesses, and like all entrepreneurs who turn start-ups into success stories he has learned that his ability to personally manage every employee only works while the company remains small. His threshold is somewhere between 50 and 150 people. A range that matches our own experience.

As Mark points out, you have to find ways to scale the organization, “to find some way to keep everybody going in productive directions when you’re not in the room.”

With this perspective, I could not agree more.

Mark’s solution is “to have everyone be the CEO of something.” An experience he illustrates with a description of his receptionist buying the company’s new phone system.

A practice that I would strongly suggest you avoid at all costs.

In running my own companies I have erred both by creating too rigid a hierarchy, and then by providing too few parameters. The first limits imagination and innovation. The second guarantees that either the individual or the organization will eventually fail through an absence of perspective. And experience.

I have learned to avoid both extremes.

Organizations, in my experience, do not manage themselves towards collective success. No matter how well-intentioned, talented or selfless its employees may be.

Instead, I believe scaling a business requires a management approach that has eight elements:

1. The ability to articulate why what the business does is important. An evangelical mission that gives your staff both a reason to build the company and a way to measure their progress - both critical to our species.

2. A clear understanding of the essential structural elements of the business. Pick from sales, customer service, financial management, operations, technology, manufacturing, and the process by which you make or provide the thing you sell. Sometimes one may blend with another (for instance, sales and customer service overlap significantly in some businesses). Defining your operational model creates not only scalability but also a way to measure what’s working and what’s not.

3. An emotional willingness to hand responsibility for the success of each area to others.

4. An appreciation of the skills needed to be successful. Nothing is more destructive than letting an enthusiastic staff member jump in the deep end, only to discover they don't know how to swim.

5. A definition of success for each area. And for the company as a whole. Supported by the awareness to redefine both as required by evidence and evolution.

6. An atmosphere that encourages those responsible for each area to use their initiative. And makes them accountable for their decisions.

7. The instinct to recognize talent and to empower it quickly, regardless of seniority or process. Putting your best people where they can have most impact is critical to creating a vibrant, innovative and effective organization.

8. An information management system that creates an early warning of problems in any area by highlighting bad news as well as good.

To go back to Mark's example, the receptionist buying the phone system in an organization of 50+ people is making a decision that can cost $200,000 in the short-term. And well over $1,000,000 over ten years. Getting it right requires understanding: telco politics and regulations; bandwidth; firewalls; data requirements and pricing analysis; packet-loss; financing alternatives; the tax impact of each alternative; the communication needs of every department; of other offices; the company's customer service philosophy (which is frequently defined for the first time at moments like this); the financial robustness of every manufacturer, vendor, installer and service providor; the pros and cons of maintenance and training plans, and the time to do all that. And answer the phones.

Creating a model in which your best people have wide-ranging responsibility and the opportunity to grow quickly is essential.

Which includes challenging them in ways that they might not instinctively choose for themselves.

But asking them to be micro CEOs is unfair to them.

And to the organization.

And both will fail.

What Really Matters to Most People

The Harvard Business Review recently finished a piece of research in an attempt to understand what makes a day great.

An esoteric question that should defy any attempt to produce a specific answer. The definition of great being as unique to each of us as a snowflake.

The results, however, suggest otherwise. And resonated as soon as I read them.

Life is a journey in which we are born incomplete and die unfinished. A reality that is hard to accept in youth and increasingly obvious with age.

In the quest to make a difference, a goal in which we are all connected, we become obsessed by results and absolute measurements of success and failure. A focus which makes us less mindful of the opportunity of today. And reduces to the sporadic few the number of occasions on which we can feel the satisfaction of achievement.

Over ten years of owning our own business we expanded the number of offices from one to four. At the end of each year we made a point to attend each individual office party. In part to provide connectivity. But largely to offer three perspectives.

The state of the business.
The contribution made by each individual.
The goals for next year.

To do so we talked first about how far we had come as a company over the preceding year, and thanked each person individually for their role in that growth. Recognition that elicited the most heartfelt responses over the course of a decade and a sense of gratitude no raise or promotion ever brought forth.

The reason for which, as the Harvard Business Review research now quantifies, is that the attribute which people value most in their day is a belief that they have made one thing.

Progress.

That regardless of the final outcome, they have made a difference.

People do not need to define this for themselves. Indeed they are happy to operate within a set of expectations defined by others. A fact which emphasizes the impact of management on employee satisfaction.

Telling people what they are doing is important is evangelical.

Telling them what to do is managerial.

But making sure they know how they’re doing is not only good business.

It’s human.

Pragmatic Visionaries

I was in a meeting yesterday morning and the subject of embracing the new while protecting the old came up.

It’s a delicate balance for any business owner to strike. One that compares the potential of what might be against the cost of change.

Companies that navigate this transition successfully are led by Pragmatic Visionaries.

They are defined by two characteristics.

Their confidence in the value they provide their customers.

Their clarity of the business they want to build.

Going Horizontal

Adding new offices to an existing business is almost inevitable if you’ve been around long enough.

In part this is a practical result of looking for new ways to expand once local markets have been maximized.

In part it’s anthropological. A nod to the explorer that exists within every entrepreneur.

Adding new offices is rarely done well. And often in such a way that the potential benefits are reduced by more than fifty percent and the costs increased by a third. A quantifiable piece of analysis based on comparative studies.

Most businesses succumb to these results because they fail to identify the characteristics that made them successful locally.

1. They understood what they were selling


2. They understood why that was valuable to the local market


3. They were trusted by local customers


4. They learned from their mistakes and applied the knowledge to make themselves better


5. Their systems were designed to support their business and improve their customers’ experience


6. The employees believed in the owners’ vision and were motivated to help the entire business grow


7. Employees were rewarded for creating value


8. Investment decisions were made that benefitted the whole company

When you add a second or third location, each of these characteristics is immediately put under threat. And many are eliminated entirely.

They need not be. But getting geographic expansion right requires the following:

• A clear strategy


• The ability to identify your company’s core DNA and to find someone who can plant it and nurture it in new locations


•  The elimination of the ‘not invented here’ pathology that most human beings instinctively bring to the table


• Systems and practices that don’t just connect each location, but inter-twine them


• A financial management and compensation philosophy that aligns everyone's interests


• A willingness to defend the whole while supporting the parts

These are not easy to come by. But they are critical to any successful expansion.

And to making sure that ‘going horizontal’ is a growth strategy.

Not an analysis of your P&L.

Baby It’s Cold Outside

I just came back from a long walk with the dogs. A welcome return to the land of the living after four days with New Year flu.

It was beautiful. The snow which fell on Sunday lies anywhere between eight inches and a couple of feet deep. It looks like we’ll get more tonight. I hope so.

It’s 22 degrees.

The Midwest has it worse. Feet of snow. Lows in the teens. In Cincinnati this Saturday, it will get down to 12. If you’ve got tickets to the Jets game, bundle up.

Which is precisely what they will do. They’ll pull out their thermals, dust off their fur hats, buy some double A’s for their electric sock warmers and head off to the game. As coldest NFL games go, it will be a non event.

I went to one of the coldest games in NFL history. In January 1986, during the Chicago Bears’ indefatigable march to the Super Bowl - back when they had a Head Coach with a heart and a football brain - I sat in the stands when it was -20 degrees. The windchill was - 50. And the thing I remember from that day is the moment when it started to snow as the Bears scored the touchdown that took them to the Super Bowl. Cold? I was warm from head to toe.

I was one of 61,000 in the stands that day. We weren’t special. Or crazy. Or unusual.

We were doing what we expected.

In Manchester, England tonight, a large football stadium called Eastlands sits empty. It is the home of Manchester City who were scheduled to play their most important game in the last 28 years. The game was called off yesterday morning. 36 hours before kick-off.

Great Britain is suffering one of its harshest winters in many years. With snow and freezing temperatures. However, the pitch, traditionally a problem in bad British winters, was found to be completely playable and entirely free of snow or ice - the result of the state of the art underground heating system.

Instead, the reason for the postponement was the concern by the local authorities that, “would not like to speculate on what type of journey home fans may face at 10.00pm tonight when temperatures will be sub-zero."

The low in Manchester tonight is 22 degrees.

The difference between my view of 22 degrees and that of the Manchester police is not one of ethnicity. We are both British.

It is not one of technology. Eastlands is a state of the art facility that provided a playable surface under conditions that would have defeated many American stadia.

It is not one of interest. Manchester City versus Manchester United beats any American sporting rivalry in any sport for passion.

It is not one of courage. The history of World War II was not casually written.

It is simply one of perspective.

In England, 22 degrees is dangerous.

In the Midwest and Northeastern parts of America, it is a moderate winter day.

If we see a challenge as impossible to overcome, it is.

If we see it as business as usual, we’ll show up and figure it out.

A lot of things go into informing those perspectives. The great thing about owning your own business is that you get to define most of them yourself.

Philosophical Friday: Loyalty

Most business owners value loyalty.

In themselves and their staff.

Which makes it hard for them to fire anyone.

And rarely before things become untenable.

Which is loyal to the employee in question.

But disloyal to everyone else.

Philosophical Friday: Trust

It takes time to earn trust.

Consistency and transparency accelerate the process. But as employees or customers, we withhold wholehearted emotional investment until a company proves it deserves that from us.

I heard this week of a company which is dominant in its industry that has cut its staff salaries by ten percent this year. Across the board. Including its receptionist.

When asked why he had taken this step, the owner is reported to have said, “because I can.”

How you define success is entirely personal.

Which doesn’t mean it affects only you. 

66% = Two Out Of Three

One of the issues we hear from clients most frequently is the difficulty of getting their people to work together.

And until you solve that problem, any hope of making substantive change to your business is on long-term hold.

Long-term as in forever.

The solution lies in two basic instincts we share as a species.

1. We change our behavior when we believe the result makes the effort worthwhile.


2. We want to express ourselves. To have a voice. Sometimes literally.

I can offer you no better proof than this video two friends posted on Facebook yesterday.

I don’t speak Swedish. I suspect you don’t either. It doesn’t matter.

66% is a universal language.

5 Steps To An Information System

You can’t build a better business without better information.

With rare exception, the information management systems of most companies do little to contribute to their success.

At best they are not getting in the way. Most of the time, they are considerably more destructive than that.

A better business is one that knows where it’s going. And is built to get there.

In that outlook it is not surprised by its success. A trait that becomes self fulfilling.

Here are five foundations to creating durable information systems that will outlive their founders:

1. Strategy. Well designed systems are built to fulfill their company’s purpose. Only when you have defined that can you establish the architecture that will support the journey.


2. Scalability. Start with a numbering protocol that supports enough digits. Re-engineering platforms in response to success is expensive, distracting and sometimes impossible. Companies as sophisticated as American Express have made this mistake.


3. Sensitivity. Particularly to the daily needs of the staff that use it. Systems that demand consistent data input but provide no immediate return to the people responsible for its entry, fail prior to installation. Any system must benefit every user.


4. Flexibility. We absorb information individually. Systems that treat us as two dimensional limit the long-term growth of a business by minimizing the involvement of those who see the business on three planes.


5. Clarity. Users have little time for and less interest in training. A system built on consistent interface protocols shortens adoption timelines and increases exploration and ultimately use.

Information is the compass that guides a company. Without it your final destination is a guess.

Which makes the journey more exciting.

But more prone to icebergs.
 

Self-Belief

One of the traits we talk about with every company we work with is the value of transparency. With your customers and your staff.

This is often greeted by resistance. Strong resistance. As though pulling back the curtain will reveal the Wizard of Oz.

A lack of self-belief that we work hard to correct.

A better business is not defined by what you do. But how you do it. And in a service business, value is a subjective equation whose point of differentiation is often the confidence with which the service is provided.

Telling you what I'm going to do and then doing it is confidence built on capability. The best kind of business model. And one that spreads reputations quickly.

I was going to describe this using a story that my friend Jerry Solomon told me the other day. He beat me to it this morning. Since it was his story I can't complain about that.

So instead, I'll save the time of writing it myself and suggest you go to his blog to read it.

Ah, delegation.

The Top One Characteristic Of A Great Company

Fred Wilson, the renowned venture capitalist, wrote a blog last week about the top ten characteristics of a great company.

It’s a provocative list, written by a man who as he said himself has, “24 years and over 100 startups watched from the front row” as research to support his views.

Fred’s a great blogger because he writes to promote dialogue and then engages in the debate. When last I checked his list had elicited 179 comments.

As he freely admits himself, there were a couple of key areas that he left out. In part, I suspect, because he wrote the list in 15 minutes on his Black berry.

And in part because sitting in the front row is not the same as being on the stage.

Not worse. Not better. Not the same. Either vantage point is incomplete.

Where Fred and I agree completely on the Defining Characteristic of a Great Company I found buried deep in the comments section on his post. In response to one suggestion he wrote this:
 
“If you build to last you don't have to sell and that's how you build great companies.”

There are nearly six million companies in the U.S. alone.

Each of them took a lot of time, effort and money to create.

But most are not built to last. So, most of them don’t.

Which makes the decision about when to sell moot.

Unless you build your company to be great.

Which perversely costs a lot less.

And makes it worth a lot more.

So. Build for today?

Or build to last?

Tough decision.

Are You Hiring Wristwatches or iPhones?

If wristwatches didn’t exist would someone still invent them?

Their introduction was simplicity itself. A Frenchman by the name of Blaise Pascal took his pocket watch and in or around 1650, tied it to his wrist with a piece of string.

The precise date is unknown. An early case of irony.

At eighteen, Pascal had invented the first calculator. He then developed the science by which atmospheric pressure is measured. And along the way, invented the first roulette wheel.

He was 39 when he died. Had he lived another ten years it’s possible we would have had the iPhone very much earlier.

The wristwatch is a testament to reliability. It performs a precisely defined function immaculately. It is also an indicator of personal taste. And age.

Because with rare exception, as Sir Ken Robinson points out, people under thirty don’t wear watches. They don’t see the point of single function devices.

People under thirty get the time from their iPhone or iPod, or computer. Devices that are central to their understanding of what it means to be alive.

They do so because because phones and ipods have become multi-function platforms that can do limitless other things besides their original purpose.

Slowly, around the world there are signs the economy is turning the corner. The trailing indicator is employment. Once that begins to change (and this morning saw the first indications that it might be), the recovery will be well under way.

In the United States, companies with 99 or fewer staff, employ as many people as businesses with more than 2500 employees.

Which means that re-employment will be driven as much by small business as big.

Given that the talent pool has never been as deep in our lifetime, hiring the right people is crucial to fueling your company’s rebirth.

When we help clients during the hiring process, we typically try to find iPhones.

Specifically, that means focusing on two areas. The candidate’s ability to articulate why this is such an important opportunity for them. And their adaptability.

Anyone can write a good looking resume these days. Descriptions of past experiences, and glowing references are not sufficient discriminators between the bad, the good and the great.

Chemistry and commitment will get both candidate and company much further.

If a candidate can explain why a job is important to them, it mattered enough for them to have already thought about it. Surprisingly rare in many people looking for a job.

And adaptability is often seen as a weakness by employers. Too many experiences as an inability to commit. Sometimes that’s the case. But you can also uncover jewels.

There is one other aspect to an interview that is often overlooked. It is one that I advise all of our clients to apply. Brutal honesty.

Too many employers try to sell the job. And unquestionably it’s important to present the opportunity as a significant one. If it’s not, why does the position exist?

But the candidate needs to understand there is a consequence to mis-representing their own enthusiasm and commitment. We tell them it’s a Three Job Bluff. The one they gave up to take this one. The one you will remove them from if you discover they’re not what they claim to be. And the one they’ll need if you fire them.

Hiring the right person is perhaps the hardest aspect of running a business.

And occasionally you’ll need to employ a wrist watch.

But unless you’re certain that need will never change - and today never is somewhat fragile - you will grow a better business if you hire iPhones.

Making sure you use them wisely is a subject for another day.

Value. The End.

If being liked is important to you, don’t manage a business.

Management is part art. And part science. A complicated equation with subtle shifts and eddies.

In our early days at the Whitehouse we focused first on being liked. We’d never managed a staff of any size before and we worried in case we were doing it wrong.

So we tried to make sure our staff saw us as one of them. Then we tried to make sure clients saw us as their peers as well.

Doing it wrong squared.

Like follows trust and respect. In that order. The first test applied by staff and customers alike is do they trust you ‘get it’. ‘It’ comes in many forms, but your customers and staff are there for a reason. And they want to know if you’re there for the same one.

After nine years at Loch Lomond we knew why we were there. And when we arrived for our stay in the Fall of 2007, we wanted to know whether the new management team was there for the same reasons.

Eight days later we were pretty sure they weren’t.

The Club’s new President was a man called Niall Flanagan. We were fans of his predecessor, Keith Williams. And after nine years, we knew Keith had the same views of value as we did.

I don’t believe any one person is indispensable to a well designed organization. But after nine years, the transition from one management team to another needs to be sensitively and pro-actively handled.

This one was butchered.

The announcement of Keith’s departure was a two line by-line in the Club newsletter. Which set the phone and email lines buzzing. Human nature, I’m afraid. In the absence of your story, your staff and customers will come up with their own, fueled by any kernel of information. Needless to say, by the time we arrived the stories were rampant and our antenna were up. We were watching for changes. And we found them in abundance.

Most glaring to me was that in eight days, I met Niall once. Chris has never met him. I ran into him by accident in reception. He said hello. Referenced the fact that they had agreed to match a room rate I had requested. And hurried off. He was, I thought, uncomfortable. Or disinterested. Or irritated. Or all of the above.

I decided that he definitely wasn’t there for the same reasons I was.

Taking care of your customers is an art form. A year earlier I had asked whether, on our eight day trip in early October, the Club would honor their discounted October room rates for the first two nights that fell in September. It was confirmed within twenty minutes. This year the same request had also been honored. It had taken three days and several follow up inquiries on my part.

It’s hard to quantify frustration. But when your customers start trying to, you’re already losing.

The fact that Niall’s only point of personal connection with me was to mention what I saw as a begrudging concession earned neither my trust or my respect. When I saw him in the bar over the next few days, it was always sitting in the corner with a group of members, having a drink. We weren’t invited, introduced or acknowledged.

Perception is fact. And my perception had been framed to look for change. I had a bias. I had a narrative. And Niall gave me a lot of evidence to support it.

For twenty-one months I carried that bias with me. This was not my Loch Lomond. And Niall Flanagan was not my President.

The value of providing your customers with visceral as well as practical experiences is that they take visceral with them. And as summer draws to a close each year, my thoughts turn to Loch Lomond.

It’s been two years since we were last there but we continue to receive regular newsletters. Last month’s contained a Fall Package. A lesson in staying in contact with even disaffected customers. People and circumstances change.

Visceral met economic value met Tim’s 50th birthday and our 11th Anniversary.

Expecting nothing I contacted the Club to see whether rooms were available. They were. Only one problem. Our membership is ‘in suspension’. The result of our refusal to pay dues to a Club that had changed so dramatically on our last trip.

Perception is reality. And my perception about Loch Lomond is based on three pillars. None of the staff I know is there any more. The Club’s economic situation is massively uncertain. And Niall’s management philosophy does not deliver an experience I value for the cost of remaining a member.

The first perception is not, I discovered, entirely true. My reservation request was replied to by Alison Rodgers whom we have known since our second visit. And Willie still works in the Locker Room, and Bert is the new head golf pro. We have known all of them for a number of years.

The Club’s economic condition is unquestionably in transition. But it isn’t likely to improve unless the Members get behind it. A point Niall made to me in an exchange of emails last week.

That exchange started after Alison passed on my approach to the Club’s management. Based on my previous experience with Niall, I expected nothing.

When the contact I received came from the Club’s Finance Manager, I knew that in expecting nothing I had actually set the bar too high.

A Club offering an exclusive, service-oriented experience does not serve its strategy well by having its Finance Manager correspond with ten year members about their disaffection with the Club.

Acquiring new customers is essential to every business in the world. The cost of doing so is one of its most significant expenses. But when you’re losing ten year customers out the back door at the same time, you’re writing an equation that returns ‘False’ as its conclusion.

I explained our background. Our lousy experience in 2007. And our unwillingness to pay dues until we could experience Loch Lomond 2.0 for ourselves. I was immediately offered a concession in light of our history. We could pay our 2008 dues and they would confirm our October reservation. I declined.

In response, I was told this was as big a concession as could be made because this was what other members had been offered.

If you’re going to offer a customer a concession, do so. But don’t offer a policy dressed up as a concession. It just alienates your customers further.

I thanked him for his time, told him I thought there were some valuable lessons for my blog in all this. And moved on.

The next day I got an email from Niall. He restated his position, assured me that the Club was better than ever, and hoped I would reconsider.

I explained that my one stay under his management had been closer to a Marriott by the Loch experience, detailed my issues, and told him I’d raised his management approach with the Club’s owners in 2007. In my view, his determination to extract £3,500 in dues before allowing me to return to see the evidence for myself was short-sighted. But it was his policy and he was entitled to apply it as he wished.

He replied with a long and thoughtful email which included a letter from a member describing his visit to Loch Lomond this summer. It was filled with specific examples of very high levels of service and fulsome praise for individual members of staff. It also included a series of quotes from some of the world’s leading golfers about the state of the course.

I told him I could have written both the letter and the golf course endorsement myself until 2007. But that based on what he’d provided us last time, I wasn’t taking the bet again. Fool me once....

If he was so confident in the experience we would now have, why, I suggested, didn’t he pay our 2008 dues himself. If our stay was as advertised, I would reimburse him and pay the 2009 dues as well. If not, he’d have made his own investment in Loch Lomond.

‘It can’t be more important to me than it is to you,’ is a favorite reference point of mine. And paying a business for the opportunity to give them a second chance falls firmly into that camp.

I hit send. And waited.

Speed of response has value. Sometimes as much as the response. Niall’s took 12 minutes.

He accepted. And raised me by offering to also reimburse us for any specific service we were dissatisfied with during our stay.

I would have bet the £3,500 dues he would have declined.

A lesson that there is no such thing as a sure thing. And that most of the time, articulating a win-win scenario is the first step to creating one.

We shall see if that’s the case here. We confirmed our reservations for October yesterday. And I’m looking forward to going back to Loch Lomond more than I can say.

I’m also looking forward to giving Niall a second chance. With an open mind.

A win win. Who would have thought it possible?

Talk about value.

Value. Part 4

Love has value.

Young. Romantic. Self. Unrequited. True. Exaggerated. Passing.

In all its forms, love wakes us in the morning and sends us to bed at night. And in between we spend our time trying to find more of it. In the work we do. The places we go. The people we seek approval from. Even when they are ourselves.

Like everything else, love’s value changes based on circumstances.

When things are going well, we become confident and need it less. Confidence means we see ourselves differently. The first step to being seen differently.

Troubled times increase our demand for love. The result is a palpable shift from I love this to I love you. In this economy, interpersonal beats inanimate.

Which matters a lot when you run a business.

A couple of weeks ago I was struck by a Facebook status update on my wall. As the person left for vacation, the update read, ‘Free at last. Free at last.’

What struck me most about this visceral post was that the person owns their own business. Has built it over a number of years into a significant enterprise. Has a lot of people working for them. And wanted desperately to escape for a while. Desperately.

Understandable. This year above all others.

But if this person had asked, I might have suggested that expressing their relief at being set free from their own company in such impassioned terms would probably cause every one of their employees to re-evaluate their own feelings about coming to work.

We determine value in part based on the value systems of others. And if the person who owns the company can’t wait to get out the door, the rest of us will stop and wonder for a moment if maybe they know something we don’t.

As a leader, I can’t define your values. I can only shape the presentation of what is important to me and hope you adopt them yourself. Once I’ve described separation from the company as freedom, it’s hard to reframe long days and short nights as anything other than imprisonment.

It’s a long way from there to loving where you work.

There was a lot about owning and running my own business that I loved, even if the traits that I found lovable ebbed and flowed with the company’s evolution.

Loch Lomond, however, was utterly consistent in the feelings it invoked in me every time we returned. And if you can have an affair with a place, I was openly and willingly unfaithful with that corner of Scotland.

Like all great affairs, it couldn’t last.

In the spring of 2007 we got word that the Club’s owners had changed management. There was no official announcement. Just the rumor mill.

Organizations of all sizes are staggeringly inept at managing announcements of change they think will be unpopular. There is extraordinary value in getting ahead of a story openly and transparently. Your customers and staff are smart people. If you don’t tell them the truth, they’ll get it from somewhere. And if they don’t, they don’t care very much about your organizations. Both are bad scenarios.

We arrived at Loch Lomond in the Fall of 2007 for our twentieth visit, hoping for the best but expecting less. In fact we got substantially worse than that.

The Club had been established on the premise that an international membership would be allowed to stay a limited number of days each year. As the economics of the Club had become more difficult, those restrictions were released and the rapidly expanding group of local members were now treating the place as their local club. The place was jammed, and facilities designed for a limited number of people in an intimate setting were overrun.

The staff tried to keep up, and were embarrassed that they could not. Availability issues meant we had to change rooms four times in five nights. Our guests three. On two evenings we couldn’t get a table for dinner until ten pm. On two others we were chased out by the noise and the crowd at the bar. And as a final straw, Chris’s mother was pushed aside as she tried to walk into the ladies room by a very drunk Scandinavian man wearing a kilt. His justification that he was, “wearing a skirt,” did not help. Nor did the staff's explanation that there was a big wedding upstairs. We were awake til past 2am with the sounds of the celebrations. It seemed a long way from the 15 people that has attended ours.

When we got the flyer under the door about the end of season sale in the Pro Shop, it was clear that the new driving value at Loch Lomond was cash.

In four short days, a nine year long affair had turned into a tawdry fling with a floozy who wanted the money left on the dresser. We fell out of love. And left.

I wrote to the owners. They responded. And we had a series of conversations in which they said the changes were a work in progress. They would report back.

Six months of silence ensued followed by the announcement that the bank had stepped in and taken over the club’s finances. All those years of wondering how the club could make the numbers work had met the credit crunch. A significant operating loss and a debt-ridden balance sheet, meant things would have to change.

We looked at the money we had invested. Looked at our history at the Club. And looked at our most recent experience. Suddenly the picture looked entirely different. And spending more money on annual dues seemed folly.

Regardless of what happened at the Club, we made a decision. We wouldn’t put more money into Loch Lomond under this management team or the bank’s financial stewardship,

It just wasn’t worth it.

We spent eighteen months sitting on the sidelines as the lines were politely but firmly drawn. Member’s Association versus the Bank. We sat on the sidelines, resigned to the fact that our money was lost, our Club was gone, and we would never go back to the bonnie banks of Loch Lomond.

Until a month ago.

Outside Help

Entrepreneurs, by nature, are independent spirits. And figuring it out ourselves has often been part of the joy of the journey.

But in the last year, almost every small business has lost its margin for error. And most business owners that I’ve met recently have told me that they’re worried their next mistake will be their last.

It has always struck me as odd that so few small businesses take advantage of outside help. Since outside help is my business, it’s a statement that reeks of self-servitude.

But, while I obviously believe there is no substitute for specific and specialized help at certain points in your company’s evolution, not enough small businesses take advantage of that inexpensive yet powerful development tool called The Board.

The Board is typically comprised of a small group of experienced, diverse professionals with expertise in specific areas that are relevant to your business. The best Boards are objective, transparent, skeptically supportive ( a rare and healthy combination ), and dedicated.

It takes time and commitment to put a great Board together. There are some costs. Typically travel reimbursement and a fee for attending Board meetings. But the best ones pay for themselves a hundred fold. And sometimes several thousand times more than that.

I have yet to find a small business that would not be significantly improved by having a formal group of advisors.

And yet, though I’ve seen no figures, my experience tells me that the vast majority do not. My guess would be only one in four.

Business today is harder than at any time since 1929. Combine that with the fact that we’re living through an epoch, and it becomes clear that, by ourselves, none of us have the experience to navigate every situation we face today.

In my own business, we’re currently working with no fewer than four different companies or individuals who help us make better decisions about building The Lookinglass Consultancy. They have effectively become an informal Board of Directors.

As a society, and as a species we’re living through history.

As small business owners, the choice before us is whether to shape it or become it.

A no brainer, right?

5 Ways To Count Your Money

Imagine going into your bank - the bricks and mortar or online version - and asking for your current balance

‘At the end of the 1st quarter your balance was $5,238.93. We expect to close the current quarter within the next couple of weeks. Though one of our bookkeepers is on holiday so it might be a bit longer. By Labor Day we’ll have a pretty good idea what your balance was on June 30th.

If this sounds in any way familiar, you need to change how your business is tracking its financial performance.

Here are five things every business needs regardless of its size. It takes between 3 hours and 2 days to put this package together the first time, depending on the size of your company and the skill of your financial staff. Thereafter, it takes a few minutes a week. It's due on the 10th of every month.

1. A revenue and cost projection for the current fiscal year. Updated to the end of the previous month with a comparison of forecast versus actual numbers.

2. A profit and loss statement accurate to the end of the previous month.

3. A list of receivables more than 90 days old. Doing business with people who aren’t paying should generate a conversation, at least internally.

4. A list of your 5 largest creditors and the amounts you owe. In this economy, loyalty and quantity is a platform for better terms.

5. A cash flow projection for the next 90 days. Knowing where you're planning to spend money, makes sure that's where you should spend it.

Managing a business is about getting ahead of the curve. And seeing it coming.

Otherwise, you’re just Wile E. Coyote.