Useless Businesses and the Damage Done

Umair Haque, Director of Havas Media Lab, and one of my favorite troublemakers.  His recent article, titled Is Your Business Useless?, provides a great framework for thinking about the value of organizations and enterprises of all sizes. Good reading for people considering new ventures. As Guy Kawasaki says, “Tell me how you make meaning in the world?” It takes about as much effort, capital, life force, and other resources to start a business that has no social value as it does to start one that has piles of it. The ones that are imbued with real social benefit can operate on much less capital and return far more “value” to all concerned – investors, workers, and customers.  Too often, when we make economic calculations, we fail to recognize forms of value other than cash, but these other value measures tend to have a far greater impact on decisions than purely economic decisions.

Capitalism is a completely sustainable and efficient system if certain orders and rules are maintained. Specifically:

  1. The information to make informed economic decisions must be available to all decision makers. That means you and I can easily determine whether some transaction makes sense for us.
  2. Treasure must follow value. That means that the more value you create, the more resources you have.

Regulations have tried to safeguard these principles, but, as the banking crisis has illustrated, a global, complex economy makes policing much more difficult. But regulation shouldn’t be about puritanical right and wrong, but about applying the constraints that keep the economic engine growing at a sustainable rate – maintaining the bonds between value and money.

My family comes from Quakers, so I tend to seek out the simple truths. In the long run, nothing that anyone can do creates value at the rate that we saw the economy rise over the last decade.  If you look at the economic cycle from this perspective, all of the crashes were predictable. Regulation policy should really constantly be looking at the top ten places where money is being made and slow it down – not to punish success but to maintain an environment where success is sustainable and where there is some economic justice – where value and treasure move together. Ultimately, windfall profits always suggest an inefficiency in the economic feedback system and pure arbitrage should be minimized as it puts real value creation at risk.

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Who Suffers Most?

There are many versions of the old adage, “When the economy catches a cold, the poor have pneumonia.”

Who's spending and who's hurting?
Who is spending and who is hurting?

A poll on LinkedIn asking about business spending patterns shows a wide range of responses to how much the economic downturn is effecting spending patterns (self-reported) of businesses.  At last look, 100% of those in large enterprises reported that the economy had no effect on their spending, while 76% of those in small businesses report that they are scaling back or operating on necessities.

I hate to be grumpy about this, but I have to make these two points:

  1. An awful lot of money was pumped into the economy – guess where it went. Large enterprise, though it is easy to write just one large check rather than thousands of small ones, do not represent either most of the spending or most of the jobs in the economy.
  2. The small businesses are the ones that innovate, create substantial new value, and are most at risk of failure.

Healthcare socialism would benefit small business substantially. Bail-out socialism helps only those at the top.

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Sales Training for Entrepreneurs

My father always told me that every job is a sales job. That’s at least a little bit true, but in my experience, most entrepreneurs are a little disconnected from their inner sales person

Harvard Business Review offered a special issue on Sales in 2006 (Vol 84, Issue 7/8) that included a number of articles that offers a number of quick reads that should at least help you purge whatever negative image you might have of sales and begin replacing it with an appropriate understanding of where it fits operationally across the life-cycle of an enterprise and as am integral part of the Sales and Marketing continuum.

Psychologist and Anthropologist G. Clotaire Rapaille is interviewed in a piece that presents a concise discription of the sales person archetype as Happy Loser, someone as motivated by the hunt as the kill.  Usually entrepreneurs need to develop rejection coping skills, but they don’t enjoy rejection. Sales people love it…according to Clotaire anyway.

For entrepreneurs, I suggest you learn a few solid basics:

  1. Focus on zebras – Even though your business plan says you are targeting a huge market, chances are your initial offerings will only really appeal to a small portion of the market in a particular place in their life-cycle (there are lots of horses, but you only want the zebras). In marketing, we might develop a persona of the most likely customer so that the sales team can ask just a few qualifying questions to can help determine if they are talking to the right people at the right time.  Remember each sales activity has a cost and spend your budget wisely. You’ll still face rejection for reasons you may not understand, but you can optimize your closure rate and minimize your funnel by maintaining focus.
  2. Mostly listen – The shape of your products and services and the way they are priced should evolve with your understanding of the customer. Listening to the way customers think about your product, what their expectations are, and what created the situation where they are considering your offering are invaluable as market research, engaging as a business development practice, and a time-tested means of closing a sale.
  3. Respond – Remember that “time kills all sales.” Respond in a timely fashion – think about the service you expect in a restaurant, except the tips you’ll get as an entrepreneur will likely be in the form of a positive referral.

It would be helpful for you to have an objective sense of where you are on your sales skills. I love the very affordable assessments available from the managment psychologists at Pradco. For $50 you get an assessment of your skills and attitudes and a prescription for improvement.

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Redesigning Product

If things are still slow for you, it’s probably a good time to rethink how you define product.

I spend a lot of time with clients outlining the space between how they define their products and how their customers define their products.  Sometimes this has to do with real or perceived benefits. Sometimes this has to do with where the edges of the product are – the arc of the product experience. Sometimes this has to do with the transaction.

I recently gave away some advice to a potential client that is an excellent case study in this.

This client sells to a particularly downtrodden market (lots of those right now). They have a product offering that is very successful at driving efficiency – real, realizable savings – 150% ROI within the first 18 month. The problem is in initial purchase. There is a significant up-front cost.

No matter how good the ROI is on something right now, it is very difficult to find extra funds, either from funders or from cash flow.  I suggested  to this would-be client, let’s call them StartUpCo,  that, faced with no sales, they try to close some deals with a pseudo-lease deal that spreads out the risk. Real capital items might be able to be financed by a leasing company, the service costs and profits probably have to be financed by StartUpCo.

I’d probably start by trying to partner with a leasing company and setting up a payment schedule that gets your hard costs off your balance sheet within a quarter or two. I’ve done deals like this myself and included a reward for meeting certain performance criteria. If you can structure it as a percentage of realized savings, clients are usually happy to share the wealth.

For StartUpCo, the product was their software, hardware, and integration service. For the customer, the product was the improved work-flow and cost efficiencies. By including financing in the product, they bridge the gap between the two views, aligning value and cost for the customer.

Episode 5: Economic Justice


Synopsis: The attack on welfare as a cause of all our problems is inaccurate and laughable. Welfare accounts for a tiny portion of the country’s wealth and all the money that these kids get goes right back out as rent and food. We attempt to re-frame the debate and ask the question, “What is economic justice and who’s going to get it?”
Articles Include:

  • Krist Novoselic & Skerik ponder the flow of greenbacks.
  • Start All Over by Tracy Chapman, intro by Eben Eldridge
  • Enough for Us by XTC,intro by Eben Eldridge
  • History of Economic Justice by Stuart McDowall
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Episode 3: Politics – You're Soaking In It

Bob Marley live in concert in Zurich, Switzerl...
Image via Wikipedia

#3 – Politics: You’re soaking in it.
Synopsis: It is popular in some sectors of our society to state, “I am not political.” In reality, every choice we make day-to-day supports one political agenda or another. It can be exhausting to attempt to remain fully aware at all times of the implications, fall-out, and ramifications of our thoughts, speech, and actions. The point of this show is to offer suggestions on how to be political without becoming a political machine.
Articles Include:
The Power of One. Our history is filled with stories of individuals achieving notoriety by doing the right thing when just getting by would have served them better. This is a piece dedicated to the solo effort; our fanfare for the common human.
Hamish Todd tries to wax political with bits from an interview with the editor of Boycott Quarterly
Get up stand up, Bob Marley, intro by Eben Eldridge
Holiday in Cambodia, Dead Kennedys,intro by Eben Eldridge
Dave Dederer from The Presidents of the United States of America on a few small things you can do everyday to make the world a better place

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Farewell to a Great Entrepreneur: John Patrick ‘Packy’ Hyland, Sr.

A goodbye to Packy Hyland, Sr

Entrepreneurship is the art form of organization development. All art forms are about synthesizing or transforming or juxtaposing objects from one realm and infusing them with the life forces of talent, vision, and craft to create something new and quite different from anything that has existed before – something with a life of it’s own beyond one’s self. Paint becomes Picture. Sounds becomes Symphony. Ideas become Industries.

Packy Hyland, Sr. was a great artist. He passed this week, but leaves behind a body of work that should distinguish him as a truly great entrepreneur. His most easily recognizable creation, Hyland Software, stands as one of very few unqualified success stories in Cleveland of recent.

While Mr. Hyland has achieved the success that most associate with great entrepreneurs – profit and growth – his greatest accomplishments are harder to recognize. I write this to honor those accomplishments so that they not be lost to the data that tends to define history.

Packy believed in his son and the power of his ideas, ingenuity, and diligence when no one else did. Even as many economies were being transformed by profit margins and efficiency gains that only software could bring, I know that Cleveland remained committed to more tangible industries. Aside from the struggles that all entrepreneurs face, Hyland had to operate within a culture that was not supportive. What’ s more, he was able to generate trust and enthusiasm, against the odds, and craft a uniquely winning culture in a community where it had few compatriots. In his quiet and friendly way, he was as much a revolutionary as an entrepreneur.

I remember the speech Packy Jr. gave to the entrepreneur’s club at John Carrol where he gave out copies of Rhinoceros Success. It was apparent to me by the dazed and confused expressions in the audience, that Hyland was an important revolution that needed to succeed if Cleveland was to survive, but Packy Jr.’s enthusiasm would have long ago been crushed under the weight of the predominant culture and the realities of company-building if not for the specific gifts of Packy Sr. and his ability to almost trick you into being inspired.

Add to this, that once he was successful, he held no grudges against those who doubted him or the city that made his path that much more difficult to tread. He continued to support and encourage Cleveland’s entrepreneurs in the most gracious and generous of ways long past the point where most of us, myself included, have turned away in frustration.

I will always remember my lunch with Packy, Jay Yoo, and Jay’s father at Larchmere Tavern. Jay and I represented an entrepreneurial dream in crisis of both spirit and cash flow. We were the younger generation and we had made some mistakes. The elders at the table bought lunch, imparted wisdom and wrote checks. I have worked in close proximity to dozens of good ideas and good people in search of that one break that will make all the difference when what is really called for is the calm, confident strides towards tomorrow, both cautious and quick. To date, I have never been in the presence of such honest and boundless love and compassion around a business deal as what Packy brought to the table that day. Everything was as it should be. Mentors providing support, guidance and knowledgeable, forthright encouragement that every dreamer needs to make something of real value. I remain in awe of his unique gifts.

It is a magical blend of passion, goodness, and community that always, always, always, sustains the just and their causes. There is no more powerful or beautiful force in the universe and Packy Hyland was one of it’s great practitioners.

Maestro, you will be missed. We will tell your story well and for as long as we live.

Episode 2: Criminal Justice

Ignorance, Fear, Hate, Short-sighted Legislation:
This pattern has been repeated through out history.  Every generation
needs to differentiate itself from the last and music has always played
a role in that redefinition.  Mozart rolled over Beethoven,
Tommy Dorsey was punk,  Richard Wagner’s bombastic opera’s were pre-electric Heavy Metal, and some of your living relatives burned Beatles records.
AMPT Radio illustrates this process with a look at some recent legislation
put forth in the UK called The Criminal Justice Bill that sought to give
the police broad powers to lock-up just about anybody that seemed a little
“different.”
History of the Criminal Justice Bill
The history of the bill.
Working Class Hero
Eben presents the Screaming Trees remake of the
John Lennon anti-anthem.
Chris Nickson with Mark Chadwick
A talk with a member of the band, The Levellers,
about the unlikely coalition that rose up against the legislation.

Roderick is Paranoid?
Roderick Romero of Sky Cries Mary presents a poem
about the ever-presence of thuggery.

Justice/InJustice
Chumbawamba offer some foot tapping thoughts on legal irony.

LINKS from the show

The Songs used in the show:
(Buy them from here to support our
efforts!!!)


Justice/InJustice by Chumbawamba
The Disagreement of the People
Cooking Vinyl
COOK CD 088

Working Class Hero by The Screaming
Trees

Working
Class Hero: A Tribute To John Lennon
; Audio CD;
List: $16.97 ~ Our Price: $12.99
~
You Save: $3.98 (23%)

Hollywood Records
HR-62015-2

various tracks by Critters Buggin’
Guest

Moving Like Water by Sky Cries
Mary

A
Return To The Inner Experience
;

One Way by The Levellers
Levelling The Land
Elecktra
#61325″

Criminal Justice by Satchel
The Family;
Audio CD;
Pastor Niemoler’s Lament by Kitchens of Distiction
The Disagreement of the People
Cooking Vinyl
COOK CD 088
The AMPT Theme was performed by Sweet
75.

Books used to get info for this show:
Buy this stuff to help support
our efforts:

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How to hire a small staff

Jim Collins has offered me no end of simple ways to describe complex issues to my consulting clients.  His book are full of solid wisdom. I’m sure his next book will be no different, but for the moment I’m all about this article in the NYT about his methods.  Genius – especially his hiring protocol.

Spend more time finding and selecting people. Learn about what makes someone successful in your organization. Get to the point where you can write it down and revise as needed.

90% of management is in the hire.