7,6#5$4@3*2f1 Reasons Why Your Systems Are Critical

Fred Wilson blogged yesterday about his recent problems with American Express.

Last I checked there were 133 comments on his post. Fred is apparently not alone in his experiences with AmEx’s declining customer service standards. Things have fallen a long way since the days of Karl Malden.

The issues at American Express can be attributed to many well discussed macro-economic factors, none of which, as entrepreneurs, we can do much about.

But one particular comment on Fred’s post stood out to me as indicative of a deeper issue at AmEx. It’s an issue that I see most business owners fail to address until the problems are so deep rooted that there’s no viable solution.

Their information management systems.

Most entrepreneurs are in a hurry to put some foundations in place and get into business. If they hire great lawyers and accountants they get great operating agreements and financial reporting. If they don’t, they don’t. The rest they learn as they go.

But when it comes to managing the information around which their company operates, they often focus only on their current business needs. And almost not at all on what they might need five years later. As though thinking about it will jinx it. This happens all the time. Even among people paid to think ahead.

Remember the Millennium bug when the world's computers were supposed to come to a halt because most of their operating code had been written with two digit calendar years? After all, who could envision the world reaching the year 2000 all the way back in the uh, 1950s.

A version of this has affected American Express. In their case the issue is the account number structure they used in the 1970s. I’ve reprinted the comment added to Fred’s post this morning:

“I'd had an AmEx Platinum card for nearly 30 years, never missed a payment. Last year I wanted to arrange for the card account to be paid automatically from a bank account. AmEx said sorry, the auto-payment feature wasn't available for my card, even though the feature was offered on their website. I escalated through SEVEN layers of managers, being stone-walled at every level, until the highest VP finally told me that AmEx cards with older numbers were handled on a different computer system which couldn't be upgraded. My only option was to cancel my Platinum AmEx and open a new account, which would have a new number and be hosted on a newer computer system where auto-payment was available. This was so incredibly incompetent that he convinced me that it must be true.”

The issue, of course, is not that American Express physically can’t transfer the data. It’s that they feel that the cost of translating and transferring it to the new systems is cost prohibitive to them.

Even if we forgive them the limitations of their early account numbering system as a result of unforeseeable technological evolution, they’ve compounded the mistake at least twice more - each time exponentially.

The first, by deciding not to perform a comprehensive system upgrade of all their customers when the new system was implemented. The second, by deciding to then highlight the inadequacy of their original planning by offering their new customers better service than the original card members.

Offering your oldest customers less service than your newest is a quick way to making sure your newest become your oldest really fast.

Ultimately, the random, volatile behavior of their customer service department is more indicative of the lack of trust they have in their own philosophy, their systems and ultimately themselves.

If you want your business to last you have to build it to last. If you design a spectacular house and then run the plumbing through cardboard tubes, eventually the Fed Ex guy is going to find water coming through the front door.

Companies work the same way. The outward face of a company is always a reflection of its inner workings. And no amount of customer service training can hide a badly built business.

So take a look at your information systems and think hard about whether they’re built to support your company’s best case scenario ten years from now.

If they’re not, you’re just planning for failure.

Guest Blog - Jon Collins

Over the last couple of years I've been fortunate to work with a number of people who have a unique point of view about business ownership.

From time to time I'm going to ask some of them to contribute to this blog.

The first of those is Jon Collins - President of Framestore, New York, one of the world's leading film and commercial special effects companies. Click their link. Their work is astounding.

Jon has worked for Framestore since 1996, starting in their London office before moving to New York in January 2004 to launch Framestore in the US.

The company has gone from strength to strength in the US under his leadership, and Jon's down to earth and sensitive approach has allowed this powerful UK brand to establish itself in its own right in the American market. Cultural transitions are the hardest for an established company to navigate. Jon has made Framestore's look effortless. I hope you enjoy his post.

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I know that I may not be entirely the same as many of Charles' readers: for a start, there are times when even I am amazed that I am running VFX/CGi company in NYC. And then there are other times when I think that - after being Everton's centre forward or one of the Beatles - this is what I was born to do. I have times of great clarity and times of navel gazing.

I never intended being a 'businessman' - I was always more interested in creating something. I think what I have now created is a team. And running the business then makes sense if I apply it to what I know about football (English football, but I guess most if not all team sports work for this metaphor). I have built a team of people looking for certain skills in certain areas and selecting them so that they will work well together. I motivate them and train them and finally I create an environment in which they can perform to their best ability.

You get the picture.

All this was making sense to me until quite recently. As a team we have been used to competing with the very best both nationally and internationally. We may not win everything but we are focussed and we don't dwell on victories or defeat but we assess what can be improved and we look to the next 'match'.

The only problem is that instead of competing in the Premier League, we now have combined all the leagues into one. One week we may be competing against Real Madrid but the next we are playing against Doncaster. Okay...we should be able to adapt to that. It's not always easy to play attractive football on a muddy pitch but, like I say, we have some very talented people and we should be able to adapt.

Yes, but what do you do when you are not getting the money from huge crowds every week and the gate receipts are non-existent every few weeks? Well, you can send out a few less players and get them to work a lot harder covering the vacant positions. They should be fit enough...we've trained them well.

But what happens when they take away the ball?

Well I guess it stops being football and we have to invent our own new sport. I have a sentimentality borne out of nostalgia for the old game….but the old game doesn’t work without the ball. What I am trying to focus on as the coach is coming up with new rules so that my team can play a new, exciting game competing against the best. A game full of challenges and clear goals.

I haven’t worked out the rules yet but when I do I hope that we meet on the new playing field.

10 - 10 - 10

I'm always looking for elegant ways to present big thoughts. Here's one that Suzy Welch has come up with in her new book that talks about something we do with a lot of our clients. Providing a context.

Building a business is part instinct, part passion, part plan. The better the plan, the more impact your passion and your instinct will have. Because you're giving them purpose.

But keeping the long-term plan in focus while life is coming at you is hard. And getting harder.

Suzy's elegant solution is 10 - 10 - 10 which suggests you put a frame around each decision. What impact will this have on me 10 minutes, 10 months and 10 years from now?

I wish I'd thought of it myself.

But if you try to apply it to every business decision, you run the risk of drowning in paralysis by analysis.

So use 10-10-10. But filter it.

10 Minutes: Judge your instinctive reaction to something twice. Now and ten minutes from now. If it passes the 10 minute test - act on it. As Frank Capra said,  "A hunch is creativity trying to tell you something."

10 Months: If you feel passionate about something, stop and ask yourself if you're prepared to invest a year of your life in making it happen. You'll be amazed at how many times the honest answer is no.

10 Years: If you're analyzing a decision that's taking more than a few minutes to think through, decide if the best outcome you can imagine gets you closer to where you want to be ten years from now. Then decide if the worst case scenario will prevent you from getting there at all. If the answer to part two is yes, don't do it - regardless of the best case scenario. You'll find another way.

10-10-10.

Instinct. Passion. Plan.

Less is More

A great article in this week’s New Yorker passed on by my good friend Jerry Solomon, talks about an issue that business advisors and consultants the world over (this one included) have been preaching for months.

The importance of using the recession as an opportunity to grow your business - not as a reason to freeze it in place.

The article highlights several powerful examples of brands and products that leap-frogged the competition because their owners were prepared to invest, when all around them were cutting back and hanging on.

But, as the writer points out, it’s easy to “miss the boat” when you’re worried that you might “sink the boat” in the process. And when push comes to shove, that fear outweighs the potential upside for most business owners.

So business owners talk about innovation but end up in fact doing less of the same thing. One of the reasons is because it’s much easier to do less of something than to do more of something.

Cut back. Reduce. Consolidate. When you start with 100 and go down, you have a built in scale by which to measure your progress. Going the other way is much less certain.

The answer? Make doing less of something a positive.

So today, worry less. About money, for instance.

No matter how much time you spend worrying about money, there are only so many things you can do every day to improve your company’s financial prospects. And worrying all day long clouds your judgement and restricts your ability for original thinking.

So schedule two dedicated times each day to focus all of your attention, energy and anxiety on finances. Then put the issue away in between. The freedom will liberate you and you’ll see more clearly which ideas are worth developing on their own merits, confident you’ll worry about their financial impact later.

Addition through subtraction indeed.


Credit Where Credit Is Due: I was taught this technique by Jennifer Hamady who understands why people do what they do better than anyone I know.

Four Changes A Business Shouldn’t Make

There are many things you should be doing as a business owner at the moment.

Here are four you should not.

1. Charging Less For The Same Service.

This is a one-way ticket. Once you give more for less you establish a new normal. There is no way back from that.

Instead, look at your business from your customer’s eyes. What’s valuable to them? Charge for that. And replace the things that aren’t valuable to them with things that are.

2. Trying To Be Something You’re Not

Understand what you do. Which is not always obvious when you're involved in the day to day.

The best way to make sure you really know is to ask your customers why they use you. If you refuse to accept platitudes and the easy answers, you'll gain incredible insight.

Once you really know what makes you great in the eyes of your customers, look for other ways to use that expertise.

This will do two things.

Grow your business against your fundamental strengths - always the strongest platform. 

And prevent you from getting involved in trendy areas that seem like a good idea, but which are almost always expensive distractions.

3. Cutting By Cost or By Experience or By Position.

Every company has its own view about how to cut overhead. In my experience, they almost always use the wrong one. Assuming you've reached the point where salary cuts just aren't enough then there's one simple method you should apply.

Cut by value. What someone costs is not the criteria. What each employee is worth, is. We've developed a Value Matrix™ to help our clients do this. You should have something similar.

 
4. Jumping Into Social Media Without A Strategy.

It’s time consuming to do it well. And not everyone should be doing it.

If you’re going to get into the white-water rapids of social media, you need to understand how you're going to benefit by doing so.

Then if you decide it's worth it to you, get in. With purpose.

And Then There Were Four

I love change.

I talk about it. Write about it. Preach it. And practice it.

I encourage it in our clients. Expect it of ourselves. And have learned that when change itself is not an obstacle, there are no limits to which the mind can go.

It took me longer than it should to realize that not everyone sees things this way. And that for many, the status quo is a safe and known place.

Today, I know that one of the reasons we get hired regularly is because we have learned to articulate our vision for a client’s future while remaining sensitive to and pragmatic of their present. We make change safe.

Intellectually, I have come to understand the difficulty so many people have with change. But while I could sympathize, I realized this week I couldn’t empathize.

Because I had never experienced the pain that change can bring.

Until now.

Those of you that read this blog know that our eldest dog, Harry, died on Thursday. 

I know that for some the death of a dog, while sad, is not a tragedy in the context of the world’s suffering. Particularly not a dog who lived a full and active life, and died peacefully in the arms of two people that loved him.

But I can only measure my pain by what I feel. And this is change that I would give anything to rewind.

I long for the stasis of a few days ago, when we didn’t know he was dying - so he wasn’t dying.

When we could look at every picture and smile.

I hate change and the pain it has brought. I hate change and how it has made me feel about the present. I hate change and how it has scared me about the future.

I hate change.

But even in the darkness and through the sorrow, there are glimmers of things that are better for Harry’s departure.

His sister Maya, who for twelve years has taken a back seat, now has our attention in full force. We seek her out when she wanders off. We take her with us on errands. We show her off in public. We love her in a way we haven’t before.

We have time back. The time of helping him onto his bed and off his bed. Of helping him stand and helping him sit. Of supporting him up the stairs, and supporting him down. Of medicating him, and feeding him by hand, and staying in a room to keep him company when everyone else was outside.

We have freedom to leave our four dogs for more than an hour. To go to meetings with new clients. Or for a drive. Or out to dinner.

Small things. But things that are better. And that we can make even better.

I wish Harry were still alive. With all my heart and soul.

But there is a release that has come - for him and for us - that is undeniably good.

This is a new kind of change for me. Unwanted and painful.

And I understand, now, why change is so hard for so many.

But there are possibilities that exist today that did not before. And that is something to embrace.

I love Harry.

And I love change.

And one does not deny the other.

Thank You, Harry.

Harry died today. He was 16.

We discovered ten days ago he had cancer.

As you can tell, he was quite a character.

He left us quietly and peacefully.

In stark contrast to the opinionated and vocal life he shared with us.

We don't know where his life began.

But we're glad it ended with us.

Thank you for everything, Harry.

Thank you for every thing.

First and Ten. Do It Again

Having big dreams for your business is powerful fuel. If you're going to work this hard, why not aspire to greatness?

But once you know where you want to get, the temptation is to do big things that make a big difference.

That's natural. Big things create big results. Big attention. Big possibilities. Sometimes, even big bank accounts.

But big things are not sustainable. No matter who you are.

If you want a successful and sustainable business, the first thing to ensure is that everything you do is designed to move you forward.

Then throw a big thing on top once in a while.

If they work, great. If not, you're still making progress everywhere else.

Then once a year, stop and deliberately look back.

You'll be amazed how far you've come.

Five Steps to a David

I’m a big believer in expansive thinking.

If you know me at all, either in person or through this blog, it’s as someone who likes to imagine the broadest possibilities. If you don’t start out there, I find you almost always end up very close to where you began.

But once you’ve defined the vision, then you’ve got to deliver it.

In an interesting post yesterday, Fred Wilson - the venture capitalist - wrote about managing expectations to those you report to as a business owner. Investors, a board, your partners. He stressed the need for consistency and delivering what you promise, even if that means significantly reducing your forecasts to make sure you can hit them.

Fred’s a brilliant guy and a hugely successful investor. But I think there's a better answer than. Because if you set low projections someone’s going to expect you to reduce your overhead to match. In a lot of businesses that usually means people, and the good ones take a long time to replace.

I think there are five things you should do instead of going straight to forecasting the worst case scenario:

1. Have systems in place that are reliable and consistent. Make sure you know what you’re getting in the way of reporting and when you’re going to get it. As the CEO of a company I drove the managers of each of our offices crazy with my constant scrutiny of our monthly billings. I made a lot of decisions based on those billing projections which impacted people’s lives, and if you said you were going to bill that invoice this month, there needed to be a really good reason if you later decided you couldn’t.


2. Hire smart people. Then let them help you be smarter about what the numbers say. It took longer than I wanted to instill the monthly invoicing discipline in some of those local managers. That was my fault. Until I stopped to explain the broader context of how we used those billing projections, they didn’t see that it really made that much difference. Individually, a single invoice rarely did. Cumulatively it was enormous. But I was the only who could see that. Once they understood, they gave me powerful insight each month into trends they were seeing locally. Those early warning signs let me adjust in other places.


3. Have someone you trust search out the bad news in the monthly numbers and highlight them. Good news is easy to deliver. Bad news takes research. But once you can give bad news a proper context, you can provide better alternatives. Have someone who’s not afraid to give you the bad information.


4. Always, always keep one eye fixed firmly on where you’re trying to take the business. You need to know whether you’re moving closer or further away with every set of financial reports. If things are going south you need to know before not after the fact and act accordingly. Once you do decide to act, it will be based on the broadest and deepest view.


5. Partner with your partners, investors or board members each step of the way. If you’re working with the right people, they’ll help you preserve the core of the business as long as possible.

The trick to carving a statue, Michelangelo once said, “is to remove everything that isn’t the statue.”

The skill is making sure what you're left with is not just a piece of rock.

Rebirth is Good. Not Dying in The First Place is Better

If business didn’t exist, we’d have to invent it.

Because, social and economic impact aside, it satisfies some very raw human needs to strive and overcome. And the greater the obstacle the more compelling we find the story.

David and Goliath. Jack and the Beanstalk. Rocky. Good versus bad. Black versus white.

But in the real world, defining the challenge in such sharp relief is frustratingly rare. And subject to the vagaries of media coverage. If David versus Goliath was being staged next week, I for one would be paying more attention to the line in Vegas. And regardless of who wins, Goliath +10 takes some of the underdog romance out of it.

Owning a business gives us the chance to be our own hero. To do the right thing. To be brave and noble. To prove nice guys don’t have to finish last. And to find out whether we’ve got what it takes to withstand the tough times.

After all, the stories we admire most are those of the hero who - overwhelmed by adversity - rises again, phoenix-like, from the ashes. To fail, strive and ultimately succeed puts you among the pantheon of the greats.

Apple, Inc. for instance. Changed the world. Died. Reborn. Iconic. All in less than a quarter of a century. But while we celebrate their genius, we angst about what happens when their heroic figure is no longer with us. As a business model it’s worryingly biblical.

It seems to me that companies that are able to reinvent themselves following their apparent demise usually exhibit similar qualities. Innovation. Absolutely. Determination. Unquestionably. Self-preservation. Evidently. But a study of their original DNA finds little evidence of self-awareness.

I like to tell the story of Kodak. Since 1888 they have been a film company. That’s what they sold. That’s what we bought. Everyone knew, so no one asked, but if any one did they said, ‘we’re a film company.’

Except they weren’t.

Kodak was an image capture company. As it turned out, we didn’t care which medium they used to capture the image - we just cared about the image. And once someone showed us we didn’t have to drop it off to get it processed and could have the results immediately, we all decided we preferred that approach. And since Kodak didn’t do that we went and found people that could. Like Canon. And Nikon. And Fuji. And Sony.

Kodak - who had defined ‘pictures’ for all of us - were left wondering what happened.

To give Kodak credit, they’ve worked really, really hard at reinventing themselves. And ultimately perhaps they’ll succeed. Today, they define themselves as an ‘imaging innovator’. They’ve invested heavily in developing and acquiring printing and scanning technology. They manage digital workflows. They sell ink and software, and they’ve developed revolutionary anti-counterfeiting technology which embeds invisible markers into ink and glue which can be used on any packaging, and seen only through Kodak scanners. They also still sell 35mm film to movie and commercial producers. A boutique business in a digital world.

But they’re not a film company. They never were. And it took the death of an industry to make them realize it. And 100 years of industry dominance to pay for it.

As an example of rebirth, Kodak’s story is one to admire.

As a reminder that you need to know why you’re in business to begin with, it’s even better.

The Wisdom of Dave Allen

When we started our first company and hired our first members of staff, we worried about whether they would like us. Eventually, we learned that earning their respect was more important.

We also learned, painfully at times, that a company that was a reflection only of our values and beliefs would be limited in what it could become.

Over time, we got better at broadening the debate while still holding on to our standards, and we moved the business in directions that we would never have found alone.

It’s not easy to be open to another perspective. Starting your own business is a daunting proposition. And the will to do it often comes from a deep seated conviction that yours is the ‘right’ way. Through experience, I’ve come to realize that I can maintain the integrity of my convictions while accepting the wisdom of another point of view.

Dave Allen was an Irish comedian who had a show on the BBC in the 70s and 80s. Sitting languidly in a single chair, he would smoke and drink his way through story after story. He was an Irish Catholic and the church provided him with a lot of his material.

Even as a teenager I found him compelling. Not just for his humor and irreverence but because he was provocative. In the best sense of the word.

His signature was his sign-off and I woke up this morning with his voice in my head. On a day when religion is to the fore, even for those of us who are not, his sign-off still provokes me to pause and remember that mine is not the only point of view.

“Goodnight. And may your God go with you.”

Change Your Business? Listen To The Birds.

I was with a group of clients last week who have fully embraced the fact that their business will never be the same. Change is in the air, like never before.

It’s been a long time coming. And there have, so far, been many more words than deeds. As a species we try very hard to intellectualize our environment. Fight or flight? Neither, actually. Can we talk about it instead?

Our ability to analyze complex scenarios and evaluate possibilities is one of the attributes that separates us from other species. The other is imagination. The fuel on which the future is formed.

Where are we going? And how are we going to get there? If you’re not asking those questions it’s probably time to think about doing something else.

But analysis and imagination are not enough. The ability to act is the crucial link between the two. And in this regard, other species leave us in the proverbial dust.

Birds fly south for the winter. There is no meeting to debate the pros and cons. No assumption that they should go north again because that’s what they did last time. It is enough that they know they must go and that south is where they want to end up.

As a business owner you need to know where you are going. And you need to know why. And if the best answers you come up with are ‘south’ and to ‘survive’, then that’s good enough to start moving.

The alternative is to talk about it some more or continue in the same direction.

And when an economic winter like this one arrives, all that will be left are a few frozen feathers.

There Are Two Sides to Every Harry

We have five dogs. Which I realize make us crazy dog people. We’re fine with that. In fact I can’t think of a description that would mean more.

Yesterday afternoon we found out that soon we’ll only have four. Our eldest dog, Harry, is 16 and has bone cancer. Depending on how fast it spreads he has somewhere between a couple of weeks and a few months.

We adopted Harry from a rescue organization in Chicago one year after we got together as a couple, and one day after we moved into our house. Now we can’t remember what it was like when he wasn't around.

He came to work with us every day and took us through all the highs and lows of owning our own business. He calmed us when we were anxious, and barked a lot when we we got loud, which always brought us back to earth - a good place to run a business from we realized.

He saved us from a guy who broke into our house one morning while we were asleep, literally chasing him down the stairs and out the door. We made some changes to the locks at home, and then changed all of our network passwords at work. Neither made us feel as safe as Harry’s bark.

He isn’t a perfect dog. The day we brought him home he bit me. Two days later he bit Chris. We found out that he’d been picked up on the South Side of Chicago as an eight month old stray. Someone had tried to turn him into a guard dog and then dumped him on the street when they realized he didn’t have the heart for it.

But their work left an indelible scar on his psyche, and to this day, he fights with his fear that no one is to be trusted - even after fifteen years. Early scars run deep. But the remorse in his eyes whenever that fear gets the better of him is that of a soul who wants only to love and be loved.

I have loved Harry, night and day. Even when he has snapped at me and I’ve been infuriated by his apparent ingratitude for having saved his life.

But I have come to realize that the greatest lesson he has taught me is that how he acts is not always who he wants to be.

I’ve tried to remember that in business and in life. That sometimes fear makes us say and do things that are the exact opposite of what we feel in our heart.

It’s a thought worth remembering the next time something infuriates you.

Because, as I've been shown, there are always two sides to every story.

Earn It.

In the late 1980s, Smith Barney ran a series of commercials with the actor John Houseman, star of the television series about a law school - the Paper Chase.

He had a distinctive and very deliberate speaking style (the agency creative director calculated that any 30 second script for John could not exceed 45 words) and he finished each ad by drawing out, even more emphatically, “Smith Barney. We make money the old fashion way. We earn it.”

John Houseman died in 1992, right about the time the financial industry stopped trying to earn customers’ trust, and started buying it instead.

Today, Smith Barney is Citi Smith Barney, and in January they announced the formation of a joint venture with Morgan Stanley to create an industry leading wealth management business.

As an example of a business model in transition - and without purpose except survival - it’s hard to beat. It’s also hard to trust.

By contrast, Fred Wilson - a New York based venture capitalist who focuses on technology driven companies - blogged yesterday about the idea of 'earned media' - media that you don’t buy but earn through customer experience and word of mouth. The concept, initially crafted by Jerry Solomon, has recently become much more potent thanks to the advent of social networking and the evolution of the cell phone and sms which creates viral word of mouth in real time.

The issue is a fascinating one. But I think the foundation is slightly different than the one they postulate. From a business owner’s perspective, the focus is not on whether you earn the media. But on whether you earn the audience.

Do they believe you, trust you, value you? Are you empathetic? Are you understanding?

If the answer is yes - regardless of the medium you choose or can afford to use - you gain their attention. And their loyalty.

The old fashioned way.

Imitation Is The Sincerest Form of Imitation

Change is tough for a lot of people. And when you’ve built an entire company around one way of doing things, it’s hard to find another way - even if suddenly you really want to.

When someone has the insight, the clarity and the courage to invoke fundamental change into an industry or a company it’s amazing how quickly the initial nay-sayers jump on board once the results come rolling in.

I’ve blogged about Hyundai’s innovation of protecting car buyers from losing their jobs by offering a guarantee that they can return any new Hyundai they buy this year.

While the Big Three were pre-occupied by heading to Congress with hands outstretched, Hyundai got about the business of change. And it worked.

Now that the evidence is in, both Ford and Saturn have offered similar approaches. Typically, they are trying to hedge their bets by limiting the amount of the guarantee.

The good news is they’re trying something.

The bad news is that by putting limiters on the program, they also limit their own learning.

In this case it’s particularly short-sighted because they already had a case study to follow. If they achieve less than Hyundai’s results, will that be because (a) consumers wanted a cast-iron guarantee (b) liked Hyundai better (c) wouldn’t buy an American car at any price or (d) none of the above? Answers on a postcard.

If you’re going to try something. Try something. Even if that means you start by following someone else’s success. The process will teach you something about your business you didn’t know.

And that is the definition of growth.

To A Frog, Feeling Fine Is Not Necessarily A Good Sign

I have a friend who, back in the mid 90s, started his own business. He got some angel investment, found space, built it out, hired a small staff, took out an ad and opened the doors.

He got a customer, then another, and by the end of the second month things were going better than he could have dreamed. So well, that his young office manager couldn’t keep up with all the paperwork. He found her late one night, overwhelmed, and realized he needed to offer some advice. “Don’t do any invoicing for a couple of weeks,” he suggested. “So you can catch up on the other stuff.”

So she didn’t. For a month. And sixty days later, busier than they had ever been, she came to him with the news that they had $174.95 in their bank account and payroll was due.

The problem, of course, was that he had never run a business before. And while he understood profit and loss, he didn’t know about cash flow, or AR, or 90 days past due, or uncollectables.

Worse. He didn’t know that he didn’t know.

I got a call from a company owner last September who thought he needed to re-brand his business. We had a meeting, the economy crashed, and he decided to wait until things got easier.

They closed last week. Not, I hasten to add, because he didn’t hire us. But because he was looking at a symptom - not a cause. He didn’t know what he didn’t know. (As an aside, I find re-branding about as effective as treating a heart attack with a capful of Tums. It’s not where it hurts. It’s why.)

Back when there was an economy, not knowing what you didn’t know was part of the journey of discovery that came with owning your own business. Over time you figured it out, and learned from your mistakes.

Today, that cushion is gone. If you’re going to make a mistake - and we all do - it can not be one of ignorance.

In that respect, running a business is a lot like being a frog. If you don’t know you’re in a pot of hot water, by the time the water’s boiling it’s too late.

By the way, the invoicing story turned out alright in the end. I never But he never made that mistake again.

Welcome to the Design Democracy

This is the age of design. With a lowercase d.

And whether you realize it or not, you and your business are judged every day by how well you take advantage of that fact.

Design comes in many forms. Aesthetically, we officially moved into the design age in 2004 when the US State Department announced in an internal memo that it was changing the font it had been using for as long as anyone could remember - Courier New 12 - for another because it took up less space on the page and appeared cleaner and more contemporary. The choice was Times New Roman 14.

This piece of history - taken from Dan Pink’s compelling book A Whole New Mind - is remarkable not because the change happened. But because, as he points out, everyone understood what the memo was talking about. Access to technology and software had suddenly given us control over design decisions that used to be exclusively the purview of professionals.

Five years on, the digital age has exponentially increased our capacity to design our worlds so they reflect us as individuals.

This blog is our design. Good or bad. And now you get to judge us not only by the words, but the way we present them. We’re no longer restricted to a designer’s interpretation of us, so what you see now is how we see ourselves. The risk is you won't like it. The reward is that if you do, we’ll be more directly connected. You probably didn’t think all that through when you came to this site today. But it was happening, nonetheless. And if you read this blog before Saturday, you probably also passed some kind of judgement on the fact we changed the aesthetic over the weekend. That, by the way took us 30 minutes. Design with a lowercase d.

The flip side of this equation is that we get to hold you to a higher standard too. As Seth Godin pointed out in his blog this morning, there’s just no excuse any more for bad design. And as a culture we’re increasingly less willing to accept one. Excuse or bad design.

Like it or not your business is being held to that standard as well. Not just in the way it presents itself aesthetically, but in how it works. Which is the other aspect of design that’s now in the public domain.

Nike ID gives us the ability to design our own running shoes. And in the instant that we do, we become Nike designers. To do this, Nike has to open up their IP to the possibility - probability - that I will design something that they would prefer never be seen attached to their swoosh. Risk. But because they trusted me with their brand, I feel responsible for it and loyal in a way that no marketing initiative ever could create. Reward.

TJMaxx changes its clothing every two weeks based on customer feedback. The best websites let me decide which information is important and where I want it to appear. I can design my own computer , phone  and house. I decide what I watch - and when. And I feel pretty certain that I was involved in designing our new government. In fact, I just got an email from Barack last week.

Based on all that, do you think I’m likely to settle for being told that I get no say in how I use your business?

The challenge is to design a model that lets every customer contribute part of themselves to the experience of working with your company.

Unless customer loyalty and innovation isn’t important to you. In which case cut your prices and carry on.

Head in the Cloud. Feet on the Ground.

Whether you’re a single-owner, home-based business or a multi-office, multi-national, you don’t need me to tell you that you need technology.

An email address and a website for sure. And if you have a web 2.0 perspective, you’re on Facebook, Twitter, Digg, StumbleUpon, LinkedIn, Disqus and possibly Valium.

Today, technology is evolving in real time. We’re literally watching it happen. Last November, the UK press included 40 articles that referenced Twitter. In the month ending today, there will be more than 700. And to coin Winston Churchill, we’re not even at the end of the beginning.

But while all this has been going on right under our very noses, an even more important technological revolution has been taking place in the back-rooms of some of our largest technology corporations.

It’s called the cloud. And in this exact moment, you’re in it.

The desktop revolution that Apple launched in 1984 has powered the PC revolution for a quarter of a century, putting a computer into the hands of virtually everyone we know. Indeed, the growth of the internet has been made possible by the advent of the desktop which gave us all web access - on our terms.

But in the last two years a subtle, and now increasingly significant shift towards a ‘cloud’ of massive, web-based, centralized servers is creating an entirely new set of possibilities.

This blog, like virtually every other blog, was created on a piece of software that exists only in this ‘cloud’ of central servers. The only point of access to it is through the internet.

No longer do I need a state-of-the-art laptop. Or three or four separate applications to create and manage the site. All I now need is a device with internet access. And nothing else. (This particular post was written and added to the site on my iPhone.) Software updates are a thing of the past, because they’re done automatically at the other end of the connection. And no more downloading, rebooting, reinstalling either. Just sign in, and you’re working on the latest version - though as Facebook users recently discovered, this-all-for-one, one-for-all approach can have its drawbacks. (Isn’t it time Facebook provided customized interfaces. Haven’t they heard we’ve individuated?)

The intensity with which some of the major technology companies are expanding the computing cloud, http://bit.ly/QoSGg means we’re going to see a lot more examples of services like Google Docs, SalesForce.com and WordPress. We’re also going to see stuff we haven’t yet imagined. How about multi-player, real-time video games that don’t need a $400 console or a $24.95 disc.

Of course, the cloud has enormous implications for every business owner. Big and small. A one-person company on a distant mountain top will now be able to have the same technological support as a Fortune 500 behemoth. Not close. Not like. The same.

When size no longer creates automatic marketplace domination that’s good for everyone because then innovative solutions to problems can come from anywhere, not just the giants. For anyone grounded in their business, that’s an incredible asset because now you can leverage the thing that sets you apart from your competition like never before.

Imagine if this concept could be applied to manufacturing. If the cloud could build and distribute cars - meaning anyone’s ideas about fuel, safety and aesthetic could be realized - does anyone believe we’d be sixty days away from the Big Three becoming the Big One?

That’s because the things that allow economies of scale to take hold - standardization, homogeneity, conformity - kill innovation. By definition. Instead, the cloud takes economies of scale and gives them to the individual, releasing the capacity for originality in all of us.

Now, overnight, we can all became Microsoft or Warner Brothers or Penguin. That’s a lot of responsibility. Let’s make sure we use it.

Pay? Who, Me?

Any industry that sells creativity on demand dances a tightrope between art and expediency. In this economy, that rope is not only frayed but one-sided. Expediency 1. Art nil. Except, of course, we’ve never been in greater need of the creative spirit if we’re really to innovate our way out of this mess.

My friend Jerry Solomon runs a film production company and blogged about an issue this morning that exemplifies why we’re shooting ourselves in the foot when it comes to fueling innovation in this country. 

Innovation requires creativity. Every year the advertising industry - one of the economy's creative drivers - meets in Cannes and offers an award for ‘the most innovative idea of the year’ - the Titanium Lion.

Which makes me wonder why so many advertisers and their agencies are now advocating a policy that would put out anyone’s creative fire.

Meet Sequential Liability - the art of commissioning work while shunning responsibility for its cost.

As advertisers and agencies race for the safety of the ‘hire now - pay much later or maybe never’ high ground, those left behind - the suppliers - are being asked to play today’s game by yesterday’s rules. ‘Hold the film negative’ is the new old cry.

But, as anyone who’s run their own business will tell you, that’s not a payment policy. It’s a time bomb from which the pin has already been pulled. Because in a world without credit, the cost of one uncollectible, one million dollar receivable can put a ten year old service company under - no matter how much film negative is in their vault.

If as a society we are going to create and innovate our way out of this, we need a model that encourages creativity and innovation.

And in this economy, expecting the smallest companies to do the work, provide the credit and take the risk is not that model.

In terms of the advertising industry, I like Jerry's first solution best. Have the advertiser put the money in escrow, draw it down as the job progresses and hold five percent until everyone signs off. Simple. Cheap. Effective.

And if an advertiser can’t afford to do that. Well, isn’t that how we all got here in the first place?

Between Fear and the Glass Ceiling

The last few months have burst a lot of bubbles. Some are beyond our control. Some, if we’re honest, are beyond our comprehension.

But some bubbles were created by the owners of companies for whom years of doing the same thing increasingly well, convinced them that they were in control of their own destiny. In the end they had slowly floated above the reality of their business.

I call it semi-conscious ownership. And it always ends badly.

The truth is they were living a reality they wanted to believe and filtering the evidence to support that view. It’s tempting when you really want something to be true. But it comes at the expense of asking critical questions. And when the bubble bursts, the drop is terrifying.

The inevitable outcome is fear-based over-reaction. And that’s a very hard place from which to live. Or run a business.

The other side of the coin is the person who has built a consistently successful business which never quite goes to that next level. You can’t argue with their achievements per se, or their ambition. Their talent is obvious. And occasionally you’ll see glimpses of their brilliance. It’s just that the business itself never quite delivers on all that potential.

There will be one other trait that also becomes obvious over time. They are always busy. Every hour of every day. Their lives are crazy.

I’ve come to understand that this too is about fear. Their fear that they don't deserve to live their dreams. So they place a glass ceiling above their own heads that defines the success they think they do deserve. As they get close they start coming up with new ideas that are really just designed to keep them right where they are.

Since all businesses are reflections of their owners, this runs through the DNA of the company. Neither the company or its people ever discover what they might have been. Which is tragic on every level.

Between fear and the glass ceiling lies the place in which you are present. In which you are in the moment.

It’s not an easy place to be. But recognizing where you’re not, is the first step to getting there.