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.

Unforgettable

My experience with Verizon last week was brought into even sharper relief by a forray later that same evening into the world of computer memory.

Buying a new computer quickly comes down to a question of how much memory for how much?

I like to work with a lot of windows open on my laptop. It mirrors the way my brain works. Overlapping possibilities. One idea feeding another. At this precise moment, I have 36 different windows open. A preference my two and a half year old Mac Book is having a hard time keeping up with. Though if I flipped it over, I’m sure I could fry an egg on the underside.

I came across a site that analyzed in extraordinary detail the pros and cons of the various configurations of laptops Apple sells today. One of the links was to a site sponsor. OWC.

I’m leery of buying third party memory for a brand new Mac. Partly for quality reasons. Partly because I once killed a hard drive adding new memory. Some things you only have to do once to leave an indelible scar. Like adding sulfuric acid to a go-cart battery. Another story. For another day.

I followed the link to the OWC website, and quickly realized here were two questions I needed answered if this was to be an option. Still feeling the after-effects of my Verizon customer service representative text chat, I hovered tentatively over the ‘Live Support? Request Help Now.’ button.

A couple of clients have asked me recently to explain our fees. Generally, I conclude with a variation of ‘We’ve paid, so you don’t have to.’

We’ve learned a lot in the last fifteen years about owning a business. And that knowledge took a significant amount of time and money to acquire. One of our skills is to extract from all of the pieces that are crucial to a specific situation.

When it comes to bad customer service, I was pretty convinced after my Verizon experience that I knew all I needed to know. Another bad tech chat was not how I wanted to end my evening.

In the end, curiosity, my insatiable friend, won again and I clicked the button. Firmly. If one can interact firmly with a piece of binary code.

What followed lasted ninety seconds. It will take you ten. And if you have another minute to spare after that, follow the link. As a lesson in customer service, it will take some beating.

But I hope you’ll try.

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Charles: I'm interested in buying RAM for a new MacBook Pro

You are now speaking with Morgan Gray of Technical Support 7AM-10PM CST.
Morgan Gray: Hi Charles
Charles: Hi Morgan. If I buy the MBP with 4GB Ram and buy the 8GB upgrade kit from you, do I invalidate my Apple warranty?
Morgan Gray: No, upgrading the ram with 3rd party memory that matches all of Apple's specifications does not void the AppleCare warranty
Charles: And yours does match their specs, right?
Charles: Is it hard to install?
Morgan Gray: It meets all of Apple's specs.
Morgan Gray: It's relatively easy
Morgan Gray: We have installation videos available here: http://eshop.macsales.com/installvideos/
Charles: Ok. Great. Thanks. One last question. If you were not using it for big media files, or rendering etc: but wanted a really fast computer, would you buy it with this 500GB Serial ATA Drive @ 7200 rpm or the SSD drive for $700 more?
Morgan Gray: I would buy it with the most basic hard drive Apple offers and then upgrade it to something larger myself
Morgan Gray: Also a relatively easy install
Charles: Ok. Thank you. You've been incredibly helpful. I'll buy the Mac and then come back to you and buy the memory.

Service Not Included

Among the extraordinary benefits of the technological age are the opportunities it gives business owners to provide exceptional customer service.

And exceptional customer service is the surest way to separate yourself from the competition. A subject I blogged about a few weeks ago.

Of course, any opportunity to excel also offers a company the chance to demonstrate, in ever-more spectacular ways, the scope of its customer service shortcomings.

Tonight, I wanted to activate call forwarding on my home phone. A service that my Fios package summary says is included.

After a 30 minute odyssey through the swamp that is Verizon’s web site (the more you struggle you more you find yourself in the same place) I finally hit the button that said, “Have a Question? A live representative will help you.”

What followed was a 40 minute descent into madness.

It was not that the representative did not want to help. It was that he had not been trained to help.

So, when you decide to offer your customers’ service, I have but one word of advice.

Do.

-----------------------------------------------------------------------------------------------------------

A Verizon Service Representative will be with you shortly. Thank you. (18:10:00)

Agent Dean has joined. (18:11:00)

Dean : Chat ID for this session is 07230911976. (18:11:00)

Dean(18:13:11): Hello. Thank you for visiting our Verizon chat service. How can I help you place your order?

You(18:13:55): I want {to activate} call forwarding.

Dean(18:14:16): I will be happy to help you with that.

You(18:14:20): My account summary says it is part of my package already

You(18:14:26): Verizon Freedom Essentials $49.99

Call Forwarding - Busy/Don't Answer

Included

You(18:14:48): Is that true?

Dean(18:15:14): Included means you are not required to pay additional charges for this features.

You(18:15:43): Great. But it doesn't work.

Dean(18:15:48): You can add your calling features and then click on the next button to proceed and then on your Review order page click on the check out button to to proceed.

You(18:17:01): When I do that it adds $5.75 amonth to my bill.

Dean(18:18:37): Okay, it means this feature is not included.

You will see your calling features charge on your order page. On the Review order page click on the check out button to proceed and then fill all required information then click on the next button to proceed.

You(18:19:51): So 'included' means 'not included'. I see that's very clear.

Dean(18:20:16): No, you will see charges on your order page it means this feature is not included.

Dean(18:20:41): To add this feature you will need to complete your online process.

You(18:20:59): So the statement on my account summary page is not true?

Verizon Freedom Essentials $49.99

Call Forwarding - Busy/Don't Answer

Included

Dean(18:21:09): To proceed with your online process click on the check out button and follow the online prompts.

You(18:23:18): So, pay $5.75 a month for a service that is already included in my agreement because it's not included? Just so I'm clear. Is this a one-time deal or are all Verizon packages structured like this?

Dean(18:24:03): NO, for included features there is not additional charges, you may add other additional features along with your included one.

You(18:24:41): My included one is 'call forwarding.'

You(18:24:56): But you're telling me there is an additional charge for that.

You(18:25:02): Which is it?

You(18:25:13): If it's 'included' there's no additional charge.

You(18:25:26): If there's an additional charge it's not included.

You(18:25:39): In which case, why does it say it's 'included'?

Dean(18:27:20): Thank you for your patience, I was checking on your questions.

Usually call forwading option is chargable so it is not included.

You(18:27:50): But it says it is included on my account summary.

You(18:27:54): Verizon Freedom Essentials $49.99

Call Forwarding - Busy/Don't Answer

Included

Dean(18:29:19): Would you like to add call forwding feature with your service?

You(18:30:50): My account summary says that it is included.

You(18:31:13): Verizon Freedom Essentials $49.99

Call Forwarding - Busy/Don't Answer

Included

Dean(18:31:28): After selection of your features you will see your package /calling features charges on your Review order page before you check out.

You(18:32:06): Dean - you have spent 20 minutes not answering my question.

Dean(18:32:57): I apologize for any inconvenience, I am not intend to provide you any kind of hassle.

You(18:33:00): This is a waste of time.

You(18:33:16): My account summary says Call Forwarding is included

You(18:33:26): If it is included why do I need to add it?

You(18:33:43): And if I add it why should I apy more for it if it is included?

You(18:33:49): Can you answer that?

You(18:33:56): If not, I give up.

Dean(18:34:52): Let me inform you, Your current features reflect as Existing features ( not included features)on your order page.

You(18:35:49): What?

You(18:36:19): When is an Included feature not an Existing Feature?

Dean(18:37:39): Included means you can get however, it does not mean that you have selected those features and you already have those features. However, let me send you a separate link for calling features so you can get better idea.

Dean(18:38:19): http://www22.verizon.com/Residential/ServiceLocation/ServiceLocation.htm?

You(18:39:30): This takes me to the Verizon home page

Dean(18:39:50): Yes, select home phone option then select calling features options.

You(18:40:07): Do you have a link to the AT&T residential phone service website?

Dean(18:40:49): I can assist you for Verizon services at this time.

Then enter your Zip code and then click on the submit button to view all calling features.

You(18:40:49): There is no Home Phone option

You(18:41:46): I don't need to know whether Call Forwarding is available. I need to know why, if it is included in my account summary, it is not a feature I can access.

Dean(18:42:16): Are you able to see Red bar below the Verizon logo?

Dean(18:43:42): I understand your concern however, it might be an error since usually these feature is chanrgable.

You(18:44:21): There are no words to describe this experience.

You(18:44:25): I surrender.

You(18:44:29): Verizon wins.

Dean(18:46:31): Again I apologize for any inconvenience.

You(18:46:31): I'll just leave a note on the fridge and hope anyone who calls sees it.

Dean(18:48:46): Let me provide you a contact number if you want to call our local Verizon business office.

Dean(18:49:12): You can call us at our local verizon business office at 1 + your area code + 890-7100.

Dean(18:49:22): You can call on this number between 8 AM to 6 PM from Monday to Friday.

You(18:49:33): Thanks, but no. I've aged enough already.

You(18:49:38): Good night.

Heart and Soul

To many people owning your own business is a microcosm of life.

I think that’s true.

If you get it wrong.

Most people do.

In the early stages the analogy is exact. Romantic. Beguiling. You start with nothing. You create life. You nurture, teach, feed and protect. It grows. It becomes unruly. You rein it in. Teach it good from bad. Right from wrong. It continues to grow. It becomes self-sustaining.

You keep your hand in by making sure the critical decisions go through you. After all, it was built from your DNA. Who else really understands it the way you do. But instinctively you start to sit back a little.

And ignore the ticking clock.

Businesses are like dogs. They get old in a hurry. One day they’re ten, bounding upstairs like a puppy. The next, they have a hard time getting down off the couch. When that happens you know the time they have left is less than the time they have had. And though you can ease the discomfort and slow the aging process, the end is inevitable. And coming like a freight train.

But businesses don’t have to get old. They should outlive us. After all, why build a business that can not, when it takes the same effort to build one that can?

What it requires is less. Less ego for one. Less hubris for two.

Most business owners define themselves by their companies. They describe themselves as its heart and soul. It radiates from them and through them. Which is fine for a while.

Business owners talk about heart and soul a lot. As though they were inextricably linked. Which, of course, they are not.

The soul is one of the great mysteries of existence. It is purported by some to weigh 21 grams. Maybe. But unquestionably, it is the essence that makes us who we are.

The heart is perhaps the most studied organ in medicine. No surprise given that it is the epicenter of our life force. The fulcrum around which every action is taken. But over time, we have learned that it is replaceable. That we can use someone else’s without losing the uniqueness of who we are.

Our heart is transplantable. Our soul is not.

If you want to create a business that lasts, it will require your heart and your soul.

But only to begin with.

Eventually, as your enthusiasm wanes (and it will), your business will need to get its energy from somewhere else. It will need a new life force. It will need a heart transplant.

If you see this as the natural progression of things, you will prepare for it and embrace it. It hurts. But only a little. And the rewards are extraordinary.

And if you get it right, your business retains your soul. Indelibly imprinted long after you have left the building.

As Chris and I walked out the door of the Whitehouse for the last time on that Friday night in 2005, two things were certain.

Part of who we are was forever infused into the soul of that company.

Someone else would turn on the lights on Monday morning.

Alfie Fyles

Tom Watson was a legendary golfer long before he arrived in Scotland last week. His life defined regardless of whether he played or not. One of the all-time greats.

But had he won at Turnberry on Sunday, he would have stood alone. Forever.

At the critical moment he relied on experience.

What he needed was Alfie Fyles.

In 1977, Tom Watson defeated Jack Nicklaus on the same golf course to win the British Open. It is arguably the greatest head to head battle in the history of Championship Golf. Hubert Green came third. He was ten shots back.

Standing in the middle of the 18th fairway that day, Watson led by one. The shot was 180 yards. He pulled a six iron from his bag.

Tom Watson has always understood the value of partnership on the golf course. For twenty seven years a man called Bruce Edwards was his caddie. Everywhere except in the U.K.

Links golf is a different art. It’s played as much along the ground as in the air. So when he played the British Open, Tom Watson hired a British caddie. Alfie Fyles.

As Tom pulled the six iron, Alfie shook his head and handed him a seven. “I can’t hit this that far,” Tom protested.

“The way your adrenaline’s pumping, you can,” Alfie grinned.

Watson hit the shot with Alfie’s seven. It finished two feet from the hole. Even when Nicklaus holed a forty foot miracle for birdie, Watson was left with a tap in-to win. I saw it on tape the other day. As a moment in history it’s utterly anti-climatic.

The inevitable result is what all business owners strive for. Success, reward, and legacy that comes down to a two-foot tap in.

Tom Watson’s partnerships with Bruce Edwards and Alfie Fyles won him eight major championships.

But the moment that would have set him apart forever he tried to meet alone.

He failed, not because he was afraid to try.

But because he was capable of more than he knew.

Alfie Fyles knew.

Who’s your Alfie Fyles?

Experience

Tom Watson came within one decision of writing the greatest sports story of all time yesterday.

That is not hyperbole. He is two months short of sixty. He has an artificial hip. And for four days he beat the best in the world. Walking.

Put it this way. The year he was born Harry Truman announced his Fair Deal program. One of his competitors was born during Bill Clinton’s Presidency.

He came within one foot of rewriting every sporting record book there is. He did so because he has extraordinary talent. Because he believed he could. Because he had a plan. Because he had done so before.

He did not, because in the heat of the moment the perspective that experience provides was not enough.

In the 18th fairway, a 4 needed to win the 'World’s Open' as Watson himself calls it, he selected an 8 iron.  The wind. The hardness of the ground. All of these are variables he could only sense. There were no absolute measurements. Just experience.

As history will forever show, it was a 9 iron.

The perfectly struck 8 carried on the wind further then he intended, bounced hard and rolled over the back of the green. For a moment it looked as though the ball would stop on the fringe, but with one last agonizing roll it slipped down the slope and came to rest.

There were two shots left to be played, but a sense of the inevitable suddenly descended.

Looking back, it was easy to see the mistake. Adrenaline is a powerful chemical. And golfers the world over have seen its effect at critical moments when it suddenly provides super-human strength.

In the middle of the most demanding moment in his life, the most experienced golfer in the tournament failed to see it.

He will never forget its consequence.

Many businesses are faced with life changing situations at the moment. All or nothing decisions.

But no matter how much of it you have, experience alone will not be enough.

You must combine it with context. And perspective.

So that when everything says hit the 8, you know that what you need is a 9. The difference might be only a foot. But as Tom Watson will tell you, a foot can be a very long way.

Change. The End.

We sold our house on Tuesday. An end to a lot of timelines. Twenty five years in Chicago. Fifteen years in our home. Eighteen months on the market. Two months of negotiation.

I’ve done a lot of deals in the last few years. There weren’t any harder than this. We walked away a number of times. Initially on price - until our broker told us it was this or wait a year. And then increasingly on dignity.

Change is one thing. Capitulation on someone else’s terms is another.

If you are in a situation that you have decided must be changed, creating the conditions in which you can overcome your own fears is critical.

You have to burn your ships. But you also have to make sure you’re not relying on third party, fourth-hand information to make decisions. Humility is a scarce and valuable resource in a negotiation and it evaporates quickly as we sense we are losing control. Add not being heard to the equation and it disappears entirely.

For a while on this occasion we let brokers and lawyers do all the talking. Then our broker did a very smart thing. She humanized us. She asked me to send her an email outlining our view of the deal. Then she passed that on to their broker. Who of course passed it on to the buyer. We got a response, and suddenly each of us was dealing with a human being.

In every future deal I do, I’m insisting on talking directly to the other side. No exceptions. I blogged about this a few weeks ago.

In the heat of an emotional battle, mostly with oneself, it's hard to take even the best advice. But one of the benefits of writing this blog is that it puts what I think down in black on white. It’s hard to ignore that.

Seventeen days ago, we received an email from the buyer's lawyer via ours. It accused us of being liars. I may be a lot of things but telling lies comes very, very hard. I can remember every untruth I’ve ever told. And they haunt me. Needless to say, the accusation went down very badly.

As far as I was concerned, that was it. They weren’t getting my house. My home. My lifeboat. Not those people. Not dead.

Lawyers don’t do deals. You do.

I went back and re-read my blog. Then I re-read the buyer’s email. Its tone did not match his lawyer’s. I see that a lot. Lawyers with big egos thrashing about to make an impression. Often it has the inverse effect to the one their client is hoping for. At best it’s boorish. At worst it’s deal ending. Most of them get paid regardless. I’d rather pay for results than bombastic letters.

Chris and I decided to heed my own advice. We invited the buyer and his family to come to the house so that we could show them round in person, take them through its eccentricities and explain the work we were doing to ensure we handed it over in the best possible condition.

This strategy was not universally supported. In fact we couldn’t find anyone who agreed with it. But we were convinced of two things. Transparency is a powerful lubricant. And the only behavior you can control is your own. If we acted honorably at least we had one foundation we could lean on.

It was a turning point. The instant we met we knew we had sold to the right people. They love our house as we do. And when I handed over the keys for the final time, the fear I felt was not for the future of our former home.

The last few days have been extraordinary emotional. Much more so than I had imagined. And the sense of loss is profound. Twenty-five years is more than half my life. And 650 West Hutchinson Street was the first home in which love was more than just a word to me.

Those are hard things to give up consciously in the belief that the future is better met elsewhere. And on one level, by leaving Chicago and my home behind, I feel I have betrayed places that have given me so much.

But the fact is life had become too easy. Too rhythmic. Too settled. And that is not a foundation for growth and exploration.

And so I step out into the storm and face the unknown. Grateful beyond words for the past I have lived. And hopeful for the possibilities that tomorrow will bring.

Change. Part 4.

When Cortés reached the new world he burned his ships to ensure his men harbored no second thoughts about their new life.

Apparently in 1504 fire was easier to find than a buyer in the real estate market 0f 2009.

Having failed to sell our Chicago home in each of the previous two years, we entered 2009 with twice as much real estate as we wanted and a shrinking economy. From an emotional standpoint, we also had a boat back to our old life. More than once we were tempted by familiarity and fear to jump in and start paddling back to the midwest.

Familiarity and fear are frauds. Say it three times. Pin it on every door you pass through. Tattoo it somewhere prominent. Less serious measures will leave you vulnerable to their siren call.

For as hard as we try to use our brains, we are animals. Ninety percent of our DNA we share with chimpanzees. And the remaining ten can’t do all the thinking all the time. So, much as we might wish to be smart, pragmatic, strategic and wise, chemistry 101 will often prevent it. Particularly when stress is added to the equation. Like that brought about by a once in a lifetime economic melt-down.

The fact is Cortés was way ahead of his time. He still is. Because he knew that when options are removed, we make the best of a situation. And the best is often great.

But given choices, we reflect, cogitate, rationalize, justify, and then often head back the way we came. It’s called human nature. And it has happened this way since before we stood and walked.

A lot of company owners acknowledge the emotional side of change with words. But then act as though someone else had said them.

Better business is built on a foundation of sensitivity to the emotions of everyone involved. Including your own. Sometimes you need to take physical steps to create the environment for progress. Like burning your ships.

We bought 650 West Hutchinson Street on December 1, 1994. Put another way, George W Bush had barely taken the oath of office as the Governor of Texas. No one had heard of Monica Lewinsky. And Barack Obama - in his second year teaching law at the University of Chicago - was three years away from holding his first elected office. The day we moved into the house, we weren’t married, didn’t own a single dog, and had never hired a single person.

Through all that our home had been our ship.

But as Winter turned to Spring this year still we couldn’t cut it lose. And our broker - a sales genius - told us that it might be another year before we’d see an offer. The alternative - and on many days the temptation - was to head back. Familiarity and fear might be frauds. But their short term narcotic effect is powerful.

It was with relief and some surprise that we received a call in mid May. With it came the chance to begin to focus fully on the way forward. Someone had fallen in love with our house.

We started to negotiate. The match was lit. The fat lady was about to sing.

There’s a reason fat ladies with loud voices don’t hold lit matches.

Change. Part 3.

Negotiations are living beings. They change shape in ways that are imperceptible when you live with them every day. Step back and see them as a stranger would and the loss of perspective is obvious.

When, in the spring of 2008, we got a second offer to buy our house, we were focused on three things. What they wanted to do with it. What they wanted to pay for it. How long we could stay. The third factor became so important to us that the deal looked as though it would fall apart because the buyer wanted to move more quickly than we did.

As we learned, worrying about irrelevant truths is very expensive.

In our ideal world, we wanted to spend one last summer in Chicago with our dogs and then move East. There was a trip to Italy to celebrate my in-law’s 50th Anniversary. Twenty four years of living in Chicago to say goodbye to. And an unknown future we wanted to delay.

At some threshold change scares all of us. And the known is a powerful magnet that distorts the blinding obvious even further. As we entered the crucial stage of the negotiation, we could no longer see the true shape of the deal or where it was likely to lead us.

Find a buyer who loves the house. Done. Get a great price. Done. Move East. Hold on, could we talk about that please? You see, we’ve got this trip to Italy, and we need to say goodbye to our friends. And summer is so great in Chicago.

You already know it’s going to end badly. It’s so obvious.

As it turned out, the bill for structuring the deal so that we could spend those extra ten weeks in Chicago was $450,000. I hope we enjoyed those ten weeks. I hope they gave us a lot of comfort about the change we were about to confront. Truthfully, they’re a bit hazy. Surprising, since they cost us $45,000 each.

If I tell you we spent three of them in Europe, and that for all of them we were also paying rent on a house on the east coast, and you’ll wonder how we dare sell our advice to anyone else.

The best lessons are the ones we learn ourselves. And in this case, we paid the price so you don’t have to.

By focusing on the least important issue and making it the most important, we lost sight of our priorities. Sell the house. We didn’t see the changing economy and crashing real estate market ahead. But we didn’t need to. We just needed to be committed to a decision we had already made. To move.

Once we lost sight of that we lost. The buyer wanted to get in quickly. Instead of using that to negotiate a clean contract, we substituted a delayed closing for a sale contingency on his place. Instead of riding his excitement about living in our home during the summer, we dissipated that energy and gave him time to think about his own sale price.

Ultimately, we all lost. After being told by everyone he could sell in a week, he refused to lower his asking price to get a sale. And six months later, neither of us had sold anything. We eventually all agreed in November that this wasn’t going to happen and we cancelled the contract.

Last I heard, he’s still waiting. And despite the fact he did finally lower the price, he’s now one of a dozen apartments up for sale in his building. On a monthly basis, his apartment probably costs him triple the carrying costs of our house. Lose lose.

We finally moved east in late August. It was a quicker adjustment than we had thought possible, and Chicago seemed a long way away. Except for the house we owned.

By the time we reached Christmas, the housing market had fallen twenty percent. That, our broker thought, was not yet the bottom.

As it turned out, she was right.

Change. Part 2.

Chicago is an incredible city. Calm and stunningly beautiful. A rare combination.

In summer, Lake Michigan stretches as far as the eye can see, a cooling influence on hot, hazy days. In winter, I have seen steam rise from its frozen surface, the ice warmer than the ambient air that surrounds it. A reminder of the power of context.

I’ve lived here for more than half my life. I love London. It’s where I grew up. But Chicago defined me in a different way. I was once described as a Midwestern boy with an English accent. There’s some truth to that.

When, in the summer of 2007 we decided to take our house off the market and stay in Chicago, we did so because the present was much clearer to us than the future.

When it came time to make that decision, leaving looked like loss. Of the known, the comfortable, the easy. Without an anchor against which to pull yourself forward, it’s easy to hold the future at arm’s length. Some people add a long pole to that equation, pushing hard against the unknown.

The truth, of course, is that the future is coming regardless. And the decisions we make today for ease and lowered stress charge high interest rates. There’s no thirty year fixed option on the price of reality. It’s a balloon note which always come due when you’re least able to pay.

We passed a long, lazy summer, relieved that we could stop worrying about what came next. Faced with a difficult decision, I have come to realize this is how many people operate. The pot gets stirred, the debate engaged, the alternatives analyzed and then, with careful justification, the status quo maintained.

If it walks like a decision and talks like a decision, it must be a decision. Except of course, it isn’t. It’s rationalized fear and the support of inertia. And neither business nor life are well served by their influence.

Seven months later, we realized our original instinct to shake things up had been right, and in January of 2008 we re-listed the house. I started to commute to Manhattan each week, a practice that got old by the second trip.

We were thrilled and fully engaged in self congratulation when we received an offer on the house in late March. For more than we had turned down a year earlier.

The buyer by all accounts had money, taste and style. He shared values that are important to us. He owned a dog, was a supporter of PAWS Chicago and, importantly, was in love with our house.

We did the deal quickly. There was only one issue. He wanted to close sooner than we had a place to move to. And though he had a condo to sell, we were told by everyone involved he could do so at any time. His building was prestigious. His apartment stunning. His views of Lake Michigan mesmerizing. It was our need to delay the closing by sixty days that was the problem.

As good negotiators, we found a compromise, the contract was signed, and we went about preparing for our move.

The trick to a negotiation is keeping your eye on all the possibilities. Not just the outcomes you want.

Sometimes, as we were to soon to be reminded, the best lessons are the most expensive.

Change - Part 1

We’re in Chicago this week, packing up our home so we can complete our move East.

It’s been a two year process. In May of 2005 we listed our house with a vague idea that we would move to the New York area once it sold. We thought we’d have a last lazy summer in Chicago while we got used to the idea of leaving our adopted city and a house that we love.

We were in London the day the house was added to the real estate listings. At the Chelsea Flower Show. I know because that’s where I was standing when our real estate broker called. We had an offer. It had taken 47 minutes.

Two hours later they called back and offered us our asking price.

Panic set in. We came up with all the reasons why we weren’t ready. All the practical things that Chicago had for us. Doctors. Dentists. Vets. Dog day-care. All the friends we’d be leaving. The work we were doing at PAWS Chicago. All of this loss danced before our eyes.

We said no and took the house off the market.

My heart rejoiced.

Somewhere in the darker corners of my being, an instinct was hammering on the door of my fear trying to get out.

The Pause That Refreshes

When you own a company, one of the hardest things to do is to measure your own progress. And yet, it is a critical aspect of managing a business staffed by human beings.

As a species, we evolve instinctively. It’s why we’re still here. And part of our DNA is the need to build and create.

364 days a year, we should occupy ourselves with what we’re doing and where we’re going. On the 365th day, however, we should pause and reflect on how far we have come.

Profit and loss statements and balance sheets tell only part of the story. And frankly, the longer I study businesses, the more I believe that the preparation of financial reports is every bit as much art as science. And that’s when you manage your company by the letter of the law.

You can get numbers to say anything. So use reports wisely, but don’t draw whole cloth conclusions from them.

Establishing a 365th day as a constant point of reference is essential.

At our old company we used to mark our progress during the annual Christmas party in each of our offices. At the end of dinner, we would talk specifically about how the company had changed over the preceding twelve months, and then we would do the same for every person seated around the table.

Because as a group or as an individual, you can only see progress in context. Looking ahead is aspirational, but subject to change. So the only fixed reference point you have is to measure how far you have come.

Until now, we had not applied this principle to our own Consultancy - physician heal thyself.

A couple of months ago, two very smart digital strategists that we work with at Double Shot Consulting suggested we add some client testimonials to our website. But rather than the usual written pieces, they suggested we film some of our clients and use the power of the immediacy of their own words.

That shoot happened yesterday. It was one of the more profound days of our lives. Emotional. Humbling. Inspirational. To hear people talk about how you have helped them is an extraordinary experience.

It’s also a benchmark. And so July 1st is now the day that we will pause each year and look back at our progress.

That clock is already ticking. Time to get back to work.

Knowledge IS Power

I’ve mentioned in previous posts a series of classes I took a couple of years ago at the University of Chicago GSB.

Last week I came across my notes for a series of lectures on the art of negotiation by Professor George Wu.  Those classes changed my entire view of negotiation, and I’ve been spreading his gospel ever since.

His is a deep and highly analytical approach. But the foundation of it rests on a simple philosophy.

We think we know more than we know.

A powerful statement he backed up with facts.

Take a group of 100 people. 50 are risk-takers and 50 are risk averse. If you ask them individually to predict what percentage of the group would accept a 50-50 bet, the answers typically will be:

• Risk-takers 73%


• Risk-averse 37%

The real answer of course is 50%. But each group over-values the only piece of evidence they have at their disposal - their own pre-disposition.

If we take this to an empirical situation, the pattern continues.

Which causes more deaths in the U.S. each year?

• Stomach cancer


• Motor vehicles

In six different groups, the answer was always motor vehicle. The average differential was 80:20. People think death is 4 times more likely to occur in a motor vehicle than from stomach cancer.

The actual answer, of course, is stomach cancer. By more than 2:1.

But the reason the vast majority of people are so badly wrong in their analysis is because they over-value the information they have readily available. In this case media coverage. On average in any given year. there is typically 139 times more media coverage of motor vehicle deaths than stomach cancer deaths.

In other words we believe what we hear, and then ascribe huge weight to that information.

In any negotiation, the key is to find out the true range of possible outcomes. That means putting aside or minimizing information that is readily available to us or that fits what we want to believe - a mistake that almost every business owner makes. Telling ourselves a story that fits our version of the facts is comforting and easier. It’s also a lie. To ourselves.

Instead, try this:

• Put yourself fully in the other person’s situation and understanding the facts as they experience them. Not as you want them to.


• Challenge your own view of the ‘facts’ with more skepticism than the other participant will bring to the table.


• Negotiate based on the full range of outcomes that is available. 70 percent of participants leaving a negotiation believe they got the better outcome. A mathematical impossibility. And proof that at least one side believed there was less to gain than was actually available.


• Negotiate towards an outcome, not a position. Positions are intractable, fixed points. Successful negotiations require flexibility and possibility, underpinned by a strong understanding of the value of your next best alternative.

All of this requires objectivity.

Hard to come by in the day to day maelstrom. But worth it’s weight in gold in a negotiation.

Talk Is Expensive

The public humiliation of yet another ‘do as I say, not as I do’ leader, is a timely reminder of what happens when power meets self importance.

Business owners face this challenge daily. And many mistake authority for the ability to speak first and think about the consequences later.

For employees, however, the equation is exactly reversed and every word they utter in front of their employer is measured and weighed.

The net result is that the very act of speaking becomes currency in a work environment. And how you spend it has enormous impact on the health of the business.

As a business owner there are some simple guidelines to follow that will maximize the weight of what you say:

• Never make a promise you aren’t certain you will be able to keep. One un-delivered commitment turns inspiration into hyperbole forever after.


• Listen first, second and third. Employees want to be heard. And will work with more commitment for a company that respects them enough to provide them that courtesy.


• Have ideals and standards. But only those that you can live by yourself. Hypocrisy has a stench that is unmistakable.


• If you over-reach, admit it, and learn from the mistake. Restoring trust will take time. But the clock only starts once you accept responsibility.

Revolution

I’ve never been killed.

I’ve never been shot at.

I’ve never had a gun pointed at me.

I’ve never demonstrated publicly in the face of armed militia.

As an agent of change, I am nothing.

When the greatest obstacle we ever have to overcome is ourselves, we should be capable of more than words don’t you think?

"Send Three and Sixpence. We're Going To A Dance."

“My apologies for writing you a long letter. I did not have time to make it shorter.” Variations thereof, have been attributed to writers as diverse as Mark Twain, Pascal and Cicero.

Whoever said it understood the speed of inaccuracy. The sluggishness of clarity.

Being clear takes longer. If it didn’t, eloquence would be less revered.

And because time is money, most people substitute expedience for the opportunity to be precise. After all, why do one thing well if in the same amount of time we can get three items off our To Do list.

Except, clarity provides focus that expedience never worries about. And focus is the key to being in business. And not.

When margins are razor thin, cash flow is week-to-week and credit is non-existent, you must be certain that everything you’re doing is leading you somewhere better. Because in this economy, the cost of not doing so will probably be fatal.

So stop.

Then find a way to get clear about where you’re headed.

Doing so will take much longer than feels comfortable.

The alternative will feel very much worse.
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Today’s title, incidentally, was the urgent message delivered to the commander of a British relief column during Word War I.

Said quickly, it does sound very much like, ‘Send reinforcements. We’re going to advance.”

Stupid? In hindsight, of course.

The trick is to swap hindsight for foresight.

It's much less expensive.

Bullys Beware

Self interest is everywhere.

Actually, it always has been. But in recent weeks it’s become markedly more obvious. And more destructive.

Which is what happens when bullys have control.

Power is a transient, temporary phenomenon. What you do with it while you have it has a disproportionately large effect on two things: your future and your legacy.

So, nothing big.

In the last twelve months two things have happened to massively shift balances of power. The global economy collapsed. And social networking exploded. Those who had money now have much less. And those who were silent, now have a voice.

The first has been manifested in the advertising industry where agencies, thrashing blindly in the death throes of an archaic business model, try to suck the life out of everyone beneath them in the food chain.

Not satisfied with ‘Sequential Liability’, some agency holding companies are now trying to impose contracts that give them the right to decide not to pay their suppliers. At any point in the production process. For any reason.

Talk about faith based relationships.

Since most agencies rarely make the first contractually obligated payment before the vendor is expected to start working, the billion dollar agency now has the vendor funding virtually every project. With no guarantee of payment. Ever.

In Vegas it’s called gambling. But at least there the house posts the odds. And the rules.

In other places it’s called abuse. But as long as the victim keeps coming back for more, nothing much changes.

What’s happening in Iran makes for an interesting contrast.

There, a thirty year-long, one-sided relationship is shifting as we watch, thanks to the power of social networking. Suddenly, those who suffer have a means to give voice and encouragement to like-minded others. And the didactic instructions of a ‘supreme ruler’ are no longer so menacing. Nor so supreme.

Fiction is littered with bullies who were toppled by the apparently inferior oppressed. David and Goliath. Jack and the Beanstalk. The War of the Worlds. The outcome of each a reflection of the underlying sense of balance on which the world operates. And those who smirk at the lessons of fiction ignore the reality on which they are based.

History is being written as we speak. On a global stage in Iran. And in the small, and self-important world of advertising.

But in each case the outcome will ultimately be the same.

And it will not be the bully who wins.

People. People Who Need People.

We have an apartment in Manhattan. Great location. Great views. But the best part. The doormen.

We had a chance to move a few months ago. Better location. Same amenities. A bit cheaper.

I stayed because Jose, Chris, Nelson, Dufresne and Euder make me feel I’m coming home every time I walk in.

Doing so is a simple formula. They remember my name. They remember Chris’s name. And they seem genuinely pleased to see me. Every time.

That cost the building something. Hiring people with the right personality. Training them. Managing them. Giving them technology that identifies residents easily. Staffing properly so that they have the time to be welcoming. Serious thought went into this. Great service is not an accident.

But great service is the difference maker because it appeals to a basic human need to belong.

Even when we know money is the motivator, we choose the places that make us feel we’re part of the fabric over their better but disinterested competitor.

In an era when change is the currency of the moment, change anything that prevents you from being happy to see your customers.

Or they’ll find someone who is.

Lead, Follow Or Get Out Of The Way

Once a business owner has decided that the time for talking is done, the act of acting requires group participation.

But because change scares so many people, many companies end up with a few people pushing a boulder up a hill made rockier by bodies lying across the path.

Often they’re not lying there to be deliberately obstructive. But neither are they clearing the way. Or pushing from below.

If you’re serious about taking your business into a better future you should give your employees three choices.

Show me a better way.

Help me.

Stand aside.

And if the stand aside group stand aside for more than a few minutes, have them stand outside.

Permanently.

There are a lot of people waiting to get in.

What Did You Expect?

The first sign of madness, I’m reliably informed, is the expectation that repeating the same behavior will eventually create different results.

Today, far too many business owners are talking about change but acting the same.

They focus on two things. Cutting costs. And having conversations. With anyone about anything.

If you want a different outcome, you have to act differently.

Not talk. Act.

Otherwise you already know what’s next.

A smaller version of what you had before.

And as a growing number of business owners can attest, there is nothing smaller than nothing.