Wednesday, October 17, 2007

How Do You Define Good Business Partners

Finding good business partners is critical to the success of growing businesses. Businesses, especially small businesses, can live or die based on the success of their partnerships.
Partnerships can help you take advantage of or create opportunities. Partners can typically share resources and knowledge and achieve objectives sooner than they could have otherwise on their own. A new partnership increases the size and scope of a business which can open up opportunities that the business was previously not open to participate in.
Although there are many advantages to partnerships we all need to be wary and choose partners carefully as you will be judged by the company you keep.

So how do we define a good partner?

Whether looking for a direct partnership with someone who will own shares in a business, or an indirect partnership with an independent product or service provider, partners can be found for any aspect of a business. These days it's possible to outsource all business functions to partners. Partnerships can be formed on loose verbal arrangements or formal agreements with penalties for failures.

My first career job, many (many) years ago, was actually my own business. In the first year of operations my partner and I decided to base our business on a single vendor's product. The product was innovative and promised ease of use for our customers and ease of support for us. We were fortunate not to sell a lot of those products in our first year as we spent our second year of business replacing that vendors product with another product at our own expense. This was the manufacturer's (Our partner) first offering using new technology that they obviously did not fully understand. This was a hard lesson to learn and it nearly killed our young business. We had other failures but they were on a much smaller scale as I adopted a policy of assessing and testing new products internally and with a few customers before I approved those products for sale. Over the years I researched and tested many products from the least expensive to the most expensive and tracked and assessed the long term support costs. If I attached the long term support cost to the initial product or service price it wasn't always the cheapest product or service that was the most profitable.
The right product or service could be the difference in your maintenance and support being an expense rather than revenue on your balance sheet. For example license or maintenance agreements are only profitable if fixes and maintenance aren't required. This is where many new and small businesses can get into a lot of trouble. After all, it's the after sale costs that will provide a clear understanding of real costs and only then can a pricing model be developed that guarantees profitability. If the product or service is sold too cheaply it will effect cash flow and the businesses viability going forward. And if there is a lot of unexpected after sale support then your customers aren't likely to recommend you to others. Therefore product/service cost is not a factor of reliability or profitability.

So based on my experience a great set of partnership rules would be:

  1. Consider more than one potential partner (investor/vendor/manufacturer/distributor)
  2. Research the partner's capabilities directly and by calling at least 3 references
  3. Quantify those capabilities by testing (pilot projects/beta testing)
  4. Calculate the real costs over time of using this partner
  5. Assess the partner's value not only monetarily but through customer feedback
  6. Keep you eyes out for better partners
  7. High cost does not always mean high quality. Low cost does not always mean value.
These rules only really scratch the surface though because if you aren't just piggy backing on your partner's product, service and brand then what are the differentiating factors in choosing the right partner(s) to do business with.
About 5 years into my first business we decided to partner with a company in a vertical industry. We felt that this would be a good strategic partnership because we could cross sell each others products and drive new business without hiring more sales staff. In a further effort to save costs we also decided to move into, and share, new office space with this company. It wasn't long before cracks started appearing in this relationship. We created a compensation model for this external partner to resell our products and services. The compensation model included a fee structure for them to refer a client to us as well as a commission structure if they sold the product or service directly acting as our agent. Because the direct sales commission model was more lucrative they opted to do this every time. This satisfied us as it would be less sales calls for us and more sales.
Unfortunately their sales staff would and did say anything to the customer to close a sale. A customer to them was someone to extract money from in any way possible. Particularly disturbing was how they preyed on those aged over 65. They had no concern for referrals or repeat business and it was our high rate of referrals that had precipitated our growth up until that point. When we showed up to deliver our product or service we would invariably have to talk the customer down and do a complete redesign on-site. There were also situations where we had to just walk away from the project because what they sold could not be delivered to the customers satisfaction. This always cost us hours or days of productivity and future referral business from these clients. In comparison we did not try to sell their products or services outright because we just weren't knowledgeable enough about them. Initially we referred our customers to them but after learning that our values were not shared we started referring our customers to one of their competitors who did share our values.

This brings us to the meat of great partnerships. Just like personal relationships, successful business relationships are based on what the partners share in common. They may share common goals, values, objectives, visions, standards, interests and the more of these things they share the stronger the bond.
My first business was a 2 person partnership that was very successful in that we seemed to compliment each other as our areas of interest were in different areas of the business. My partner took on the hats of sales and finance and I took on the rest of the operational roles. Having more than one internal partner take on the same role or accountability is one of the top reasons for acrimony and failure of businesses that are formed by partnership. One person is not going to execute as well in the same role and at the end of the day it's almost impossible to determine WHO is really accountable or responsible for failure or success.
Our values and standards were different but we were open about and understood the differences and we shared a common goal. We both wanted to create something on our own terms and do it better than everyone else. The two of us together created a dynamic that was much larger than each of the individuals. We brought different perspectives to every issue which was a natural antidote to group think. I pushed for rapid expansion and my partner pushed for limited risk.

Vision is very important because you need to know how your partner envisions their business going forward. The partner may want to maintain the same size and scope or may envision something much bigger for the future. An important part of their vision will be their exit strategy. Will they still be around in five years or will they exit when a financial or personal milestone is met. You need to know if your relationship is just a stop gap or something that is strategic to their organization long term. They could be considering a shift to a new business model, a move to a another partner, a different product or service or they may even be planning on doing what you do themselves.
Vision is one of the most critical aspects of a partnership and it is a discussion that you should have with your partners at least annually so that you are not surprised by, and can prepare for, change. If your partner doesn't know where you are going then they won't be able to help you get there. The end to my first business came when our vision for the business diverged.

Once the vision thing is out of the way you can get to the heart of your relationship which will be the Objectives.
The objectives, or goals, of each partner will be what is used to create the basis for the relationship for it is the shared interests that will determine the near term success of the partnership. Knowing what each partner wants will not only help align and justify the partnership but will also help facilitate efficient communication. If your partner doesn't know what you want they won't be able to help you achieve it. Without understanding objectives or aligning objectives it will be difficult to really quantify the success of the partnership. If your partner does not deliver on time or does not deliver new business or makes you unproductive they would not likely be meeting your objectives and the partnership would be a failure. The objective(s) should be used to determine the value of the relationship and the most important thing to remember when setting objectives is to make sure the objectives are quantifiable. This means that there should be numbers attached to the objective(s) so that you can keep score. For example you may have partners that resell your product or service and you may decide to sign up as many of these types of partners as you can. This is a great way to build a sales force but what is the real cost to support all of these resellers and are all of the partnerships returning enough new business to meet your objectives. Setting objectives like the number and value of sales will help you quantify your partnership(s). An example would be to pay commission on a sliding scale rising with the number of sales or with the total amount of sales over a specific period of time. Also don't forget that when rating your partners always, always, always include the customer experience or customer feedback in your rating.
When setting financial and functional objectives make sure that your partner is investing human and financial resources to ensure the success of your partnership. If you are purchasing product or services you will need to know that your partner is making a special effort to address your current needs and is preparing for changes in the market so future offerings will be as compelling as current offerings. A lot of time signing on a partner is the beginning and the end of the relationship because neither or one of the partners is not upheld to a set of functional and financial objectives.

And finally we come to the one area that will create most of the conflicts and place most of the stress on any kind of partnership, Values and Standards.
It seems obvious that shared values and standards would be the cornerstone of any partnership but it is the area most ignored by people entertaining and entering into partnerships. I think that most of the time we are so blinded by the short term opportunity that we forget about the risks. Probably the biggest risk is not getting paid or paying for something that isn't delivered but it could be even worse if the product or service is of poor quality and places you at the wrong end of a multi-million dollar lawsuit. You will want your partner to be open and honest and uphold the highest standard or a least agree to uphold your values and standards prior to you entering into a partnership agreement.

Look for clues in how the potential partner speaks. If the potential partner only talks about sales and profit you should expect that money is their prime motivation. If money is the sole motivation then customers are only a means to an end and that primary motivation will also be the basis of your relationship with that partner. In this type of partnership one of the partners may eventually be looking to cut the other out to ensure more money for themselves. Another speech pattern to be wary of is talk of working around regulations or agreements as if the source of all of problems were external forces weighing in against them. Well, guess what, you may just become another external force to this partner and it won't be long before they are complaining about you, demonizing you, and then justifying working around you. Another form of speech pattern to be wary of is the "no money" mantra. These people will continually respond that they don't have the money even as they shake your hand at the end of a meeting and step into their brand new $50+ thousand dollar vehicle. Your partners should be investing their time and their money to ensure the success of the partnership.
Weave behavioral types of questions (How do you, When do you, Why do you) into your initial conversations with potential new partners. Find out how they create, deliver and support their product or service and how they overcome failures or reward successes each step of the way. Discover what their primary focus or motivation is whether themselves, customers, employees the community and what mix of any or all. It's easier to communicate with people and organizations that behave in a similar fashion as you or your organization. Knowing they will respond to success and crises the same way you or your organization does is very reassuring especially when your customer relationship is at stake.

Which brings us to the final act. Get it in writing. The purpose of the written agreement is not so you can sue your partner over perceived failures but to document the terms and quantifiable objectives. You may have conversations with your partner over time and you don't want to rely on verbal communication when it comes to responsibilities and accountability.
It's also a good idea to create a Service Level Agreement. SLA's commonly include segments to address definition of services, performance measurement, problem management, customer duties, warranties, disaster recovery and termination. It's important to note that agreements can be simple letters of intent. If you plan on taking your partners to court for failures then you should consult a lawyer. Most people will just find a new partner if the current one is failing so creating a detailed legal agreement is not necessary and legal agreements can be expensive to create and time consuming to administer.

These rules should also be added to the list:
  1. Discuss Vision - how big, where and for how long
  2. Define Objectives - What will be achieved financially and operationally short and long term
  3. Define Values & Standards - How we treat customers, employees, the community
  4. Ensure partners invest human and financial resources to ensure success
  5. Define and divide up roles and assign accountability
  6. Formalize your agreement in writing
Partnerships are a great way to stimulate growth and improve efficiencies. Great partnerships create a dynamic that is far greater than all the individuals involved.

Dave Soteros is President of Alrym Consulting. He believes that great companies have great partnerships and return value to not only customers but to the greater community.

Tuesday, October 9, 2007

The Art of the Start

If you are still in start-up mode or a young company or even just considering starting your own business then I recommend you view this video featuring venture capitalist Guy Kawasaki here.

Monday, September 24, 2007

Why Don't They Do What I Want?!

Do you find it stressful or awkward to deal with someone who is not performing?

Do you have recurring employee productivity or performance issues?

Do you have high employee turnover? (Replace employees every 2 years or less)

Do you have to fire employees?

Did you know that all of the above issues are really symptoms?

Would you like to remove these symptoms from your work and improve your life?

The solution

Apply the “Systems” approach to solving personnel problems!

Many years ago I took on the challenge of opening a 24 hour call center. This was not just a 24 hour call center, it was a 365 day a year call center. It wasn’t just the continuous 365 day operation that was a challenge, it was also dealing with the fact that any mistake made by the staff could lead to client property loss or damage. The call center monitored our clients security, fire and environmental systems so I'd have to say they were very sensitive to failures in our systems.

As the person responsible for all operations I also supported, designed and implemented all the computer software and hardware for the company. Needless to say I carried a pager and rarely went on vacation.
Before we opened the call center I documented the processes or actions to be taken by our staff for all activity in our operation (the Operations Manual). Processes like, what to do if we received a Fire signal from our monitoring equipment at a client site etc…
Getting my staff up to speed was a challenge but since I had documented the processes I could ask them to review it many times over until they knew it by heart or review the manual before taking action. We asked them to commit to and be accountable to this Operations Manual and all of it’s defined processes. I also made it quite clear that failure in meeting this commitment resulted in disciplinary action and/or termination.
Of course, any time my staff was unclear as to the action required in a given situation they would call me, whether it was 3 in the afternoon or 3 in the morning. And this they did, wreaking havoc on my personal life.
As new questions arose I would ask the employee involved to update the process and to communicate the revised process to the next shift. The next day I would review the new process and then update the Operations Manual as well as make the rest of the staff aware of the changes. If someone asked a question that was covered in our operations manual I would not always be polite when pointing out that fact especially if I was woken up to answer it. This did not ingratiate me with my staff but it did create a basis for my staff to defend themselves against a superior. How many of us have been in a position where, due to lack of documentation, we have no basis to defend ourselves against a wrathful superior. The lack of documentation or poor documentation and communication are the symptoms of poor systems and consequently, management.

If questioned, my staff could always refer to our Operations Manual and know that it protected them at all times in any scenario. This was very reassuring to my staff and removed the ambiguity from their work. They always knew that if they followed the processes they were secure in their job and did not need to be concerned with office politics to keep their jobs or to move ahead within the organization. The procedures kept everyone focused on what was truly important. The outcome for our business was low staff turnover and a stable long term work force. Our procedures also allowed us to more easily quantify our individual productivity and effectiveness. In productivity reviews it was more likely that the staff member brought up their deficiencies for discussion. I also rarely had to fire someone because it did not take long for staff to figure out if their role was something they could be successful at and was worth committing to for the long term.
Also, I was always excited to bring on new staff as it gave me a chance to test our systems and to make them better. New staff always seemed to find a new take on a given situation creating gaps in our systems that needed to be filled. The documentation really shortened the training cycle and we saved money by having new employees review the operations manual at home on their own time. Along with that accountability I did not assume that the processes were perfect. All the staff knew that they could improve our processes and many took up the challenge themselves which breathed life into the operation manual. The processes were reviewed and updated as opposed to collecting dust in binders on a shelf somewhere.

Our documentation created a baseline of a standard accepted behavior that could easily be communicated and duplicated.
This documentation made organizing and communicating with my staff effortless and created a positive and relaxed work environment.
Our staff, armed with effective documented processes, were more easily able to deal with the security industries highly sensitive clients. This approach to people management removed the pain and stress typically associated in managing our employees.

So, what is the “Systems” approach to solving personnel problems?

When you adopt a systematic or “systems” approach to problem solving you effectively separate the personality (the person) from the problem.
Anything else is simply managing personalities in which very few succeed. Without systems most managers end up in an endless cycle of “Fighting Fires”.

It’s not the person who is causing the problem or failing to perform, it is the system that has failed. The system was not designed to incorporate the problem or that person’s personality hence you did not get the results you desire.

The focus shifts from the person, with all the inherent stress and emotion, to a System which can be applied despite the personalities concerned. Including your own!

Think about what this means? Your thought process changes from, “Why can’t he do this?” to, “What did he fail to learn and why, and what can I do so that anyone can learn this”.

The System is “How we do it here”

So what is a system and what are the benefits?

What is a System?

A system is a process or series of processes that are designed to effect an objective or result. E.g. The human arm muscle and it’s movements are processes of a system called the arm. Imagine if the muscles were not co-coordinated in movement, or without objective. It is a condition of harmonious, orderly interaction.

Systems are documented procedures or processes that are designed to achieve a specific result.
In other words it is a set of written procedures which defines what someone is expected to do or accomplish every day, week, month and year. It can be very detailed or very loose (a framework) depending on the job responsibilities and accountability.

Why a system?

People just feel more comfortable and are more productive when they truly understand what is expected of them. It removes the unknowns, the ambiguity from their job. It is a reference tool that teaches. It reduces or removes unnecessary communication which lowers support calls and more importantly returns time for you to do more productive things.
It is a tool used to organize any business operation which is the primary role of management.

What will a System do for me?

A good System will accomplish all of the following objectives:

  • Improve staff and client interaction and relationships
  • Introduce staff/management accountability
  • Ensure quality – repeatable products & services
  • Effectively delegate responsibility
  • Measure productivity
  • Facilitate growth
  • Facilitate change management
  • Reduce employee turnover by building trust and loyalty
  • Ensure corporate strategy, standards and values
  • Can be used as training material for new hires freeing up your time

With systems in place the communication with your staff becomes about how the processes they are accountable for are working, and how you both are working towards improving them. This is in stark contrast to the typical communications where business improvement issues are rarely expressed.
This takes the pressure off you and your staff when it comes to productivity and activity discussions. You staff will be able to use the documentation to justify their daily activity and you will be able to use it to quantify their productivity. When you include a process to change the system the system becomes dynamic in that it can be changed by anyone to meet internal or external clients needs. This guarantees innovation. Your staff starts thinking about how they can serve the client better and how they now need to build a business case to prove that there is a better way. This will stop all those meetings around ideas that never result in action.

The creative types, the ones that like change, will have an opportunity to make their jobs better and will feel like they have a vested interest in the success of the organization. The steadfast types who feel more comfortable with standards and processes will be eased into change and the goal oriented types will know how and by what standards their goals must be achieved.

A simple form of a change management system is the "suggestion box". It is what you do with the suggestions that makes the difference between ordinary and extraordinary.

If your employees are trained on each others processes (cross training) they will have a deeper understanding and appreciation of each others roles and responsibilities. An added benefit is that, with good systems (documentation), anyone should be able to learn a new position with much shorter training cycles. Even your own!

But I want things to be fluid, dynamic?

Systems can be intrusive, constraining or even debilitating if not designed properly. Systems can also impose restraints that ensure repeated failures.

So how do you avoid system failure?

  • Include accountability – Someone owns the system
  • Include a change management process – How do we change it to meet client needs
  • Include your corporate strategies, standards and values in every system
  • Audit your systems – at least quarterly

Systems as Sales tools?

There are a number of ways you can use your systems as sales tools. If your client facing systems are effective your clients will appreciate them and will prefer to use you over others because they know what to expect no matter who they interact with. You can also sell the fact that your systems guarantee that the first product or service will be the same as the next and so on building in quality assurance. Another option would be to promote your system as a methodology or best practice and offer to teach it to others within your industry.
Imagine that! Your systems themselves could be a center for revenue generation.
This is a great way to differentiate your company in the marketplace.

Where do I start?

Start by defining strategic objectives, standards and values for the organization. “If you don’t know where you are going, anywhere is fine”. Communicate the benefits of documentation and systems to your employees. Provide them with a template and ask them to start filling it out, documenting what they do as they do it. Meet with them weekly initially to go over their accountabilities and talk about how they accomplish tasks and why. Ask "what if" types of questions to make sure they are thinking about improving the system. This is a proactive approach to problem solving.
When an employee comes to you with a question don’t answer it directly. Think about what system is involved and how they could change the system to solve the problem. You’ll find that your staff will stop asking questions and start offering solutions. This is guaranteed to boost your own productivity. (more rounds of golf!)
Your success as a manager or business leader depends on your management and leadership skills. You are accountable and responsible for the effectiveness of everyone you manage and lead. The buck stops with you!
Start blaming failures on that dang operations manual and not that person you hired or inherited. And then change the manual to fix the problem.

Dave Soteros is President of Alrym Consulting. He will teach you how to create systems that deliver your corporate strategic objectives as well as coach you on how to communicate those systems to your staff, your customers and your affiliates. We provide executive coaching, business coaching, management consulting and HR consulting.

“This is how we do it”

Friday, September 14, 2007

Leadership or Abdication

Recently I was reading a letter to the editor in a business publication directed at small business owners. The letter, from a business owner, stated that he had two principals, a CFO and VP who seemed to always be at odds. He was concerned over the disruption in his business even though these two individuals were very productive.

The magazine editor quoted an HR consultant whose response was that many times the owner’s behavior or lack of leadership helps to create infighting. She then referred to a study stating that most employees blame conflicts on line managers and that there are some common reasons for infighting like compensation, jealousy, and advancement opportunities. Her solution was what she describes as management tactics like reasoning, pleading and threatening. This is where she lost me. She had the research that pointed to a lack of management and leadership skills but instead of recommending training for the owner she suggested tactics that only would continue to excuse the owner from the problem. The editor goes on to quote a University professor who concedes that the business owner may have to let go one of the employees for the sake of harmony within the organization and that these types of situations can undermine the whole organization. I certainly agree that the infighting can undermine the organization but to blame the employee for the problem is a complete and total abdication of the owner's responsibility.

So, the experts had the research and understood the risks but instead of offering a solution, which would be some leadership and management training for the owner, they suggested that the owner direct his attention externally and blame the executives.

Going through the process of letting someone go, especially someone who is productive and has a stake in the company, can be very painful emotionally and financially.

Imagine firing one of your productive senior managers. Many times the company not only loses a leader and the associated revenue and productivity but also loses the people, emotionally and/or physically, who worked under and alongside this individual. The financial costs are great as conservative estimates for replacing an employee are 1.5 times the exiting employees salary. (cost of severance + recruiting + hiring + training + loss of productivity etc...)

Employees with leadership skills are sometimes seen as a threat to their peers because they try to set goals and evangelize their vision for the future. Being goal oriented is a personality characteristic that has obvious value in any organization unless, of course, the individual goals do not coincide with those of the boss. Sometimes the leader will not make any decisions at all. This enables the leader to deny any involvement and be able to blame an employee who does make a poor decision. Actually the decision can be the right one but without support from coworkers the employee will be hung out to dry. Without a corporate vision (direction), objectives (goals), standards and values, the employees are left to enact their own personal objectives, perceptions, beliefs, values, etc. Companies that lack leadership tend to be wastelands for people who are goal oriented. Even the overachievers are left to overachieve in so many directions that they burn out or give up.

Employees in an organization without a clear vision and objectives learn not to spend too much time or energy on any one objective as the objective can change at any moment depending on the whim of the boss. They learn that when there is no direction, any direction will do as long as it's the direction the boss is going in at that moment. They learn not to stick their neck out and offer solutions because even if you did get approval they would not likely be given the time or resources to complete it as there are seemingly always new problems to fix which take priority. Managers learn that it is easier and best just to say "NO" when asked about new opportunities or possible changes. A "Yes" one day from the boss will undoubtedly be a "No" on another day and the manager will be blamed for any decision. The status quo becomes the objective.

How do you know you are in this type of organization?

  • Recurring problems and issues
  • Employee conflict
  • Inconsistent product and/or service delivery and support
  • A lack of employee accountability and responsibility
  • A culture of "NO"
  • Slow or no growth
  • High employee turnover
  • High client and partner turnover
  • High failure rates
What do employees learn?
  • Not to stick their neck out
  • Band-Aid it and continue on
  • Do enough to get by
  • Bide their time until another opportunity comes along
Companies without effective leadership typically have employees who have no real responsibility or accountability at all. The most basic decisions are made by the leader and sometimes decisions are just avoided to maintain the status quo. If this sounds like your company you can be reassured knowing that many companies share the same symptoms.

I've personally been in an organization that had 7 layers of management, none of which was accountable as the person at the top made all the decisions. The managers could only point fingers up and down the line and the employees who were ultimately held responsible for any problems were the front line staff. The turnover rate for front line staff was over 40% and senior managers seemed proud of that fact. The statistic justified their belief that they just couldn't find good people. None of the 7 layers of management recognized that high staff turnover was a symptom of poor management. The managers were only accountable to being liked by their leader.

So how can you become an effective leader? Define how big, how much and where you want your business to go and what values and standards you want your business to embrace and deliver. The answer to these questions will become the corporate vision and objectives that you communicate to your staff.

To better understand this let’s separate the role of leader from the role of manager and the tactical or technical roles. The leader's role is to communicate a bold and compelling vision of the future, spotting opportunities and threats, considering "what if" scenarios and ensuring the company’s future viability. The manager’s role is to organize and coordinate, building the systems and processes to achieve the vision and objectives.

Many business owners and managers state that having control over decisions was a primary reason for starting their business or taking management positions in the first place. When they finally create that opportunity for themselves, meaning their own business or attaining a leadership position, they realize that control over decisions or direction is too overwhelming or that they are unprepared for the responsibility. Effective leadership is apparent as the followers are simply following. The followers all move in the same direction at once creating a dynamic that is exponentially greater than any individual. These productive people typically are passionate about, and believe in, what they are doing. The passion comes from a belief in where they are going and what they are achieving together collectively .

So, to answer the question posed by the CEO, I would recommend that the CEO has 3 options:
  • Learn how to be an effective leader

  • Hire an effective leader

  • Promote one of the 2 productive employees to leader

All other solutions will lead to continued problems in the organization.

Dave Soteros provides executive coaching services to start-ups and fortune 500 companies.

For more on Leadership and Management insights please stop by his blog at

Sunday, September 9, 2007

The Art of Your Business

Recently I was asked what is the art and the science of business. The answer to this question is often surprising and compelling.

When we think of art we think of creativity and limitless boundaries where time is not relative. We think of freedom and having control over our own life and it's destination. We think of those "artsy" people who always show up late, are always daydreaming, lack focus and can't seem to get anything done on time. It's unfortunate that the word "art" is a part of the word artsy because art has really nothing to do their behavior. What the "artsy" people create is the art, their behavior is not. Creating art can return those feelings of limitless boundaries, freedom and control and I'll tell you how.

Artists have to follow "systems" that are made up of objectives, rules, processes, procedures, techniques, frameworks, standards etc. to create their art. Hey, does that sound familiar to you?

A great photographer has to be an expert in many areas including lighting and shutter speed and has to be able to frame the subject to reach a desired effect. We see the photograph and say "that is art", but we don't usually think about the many regimented and defined tasks that went into creating that photograph - unless, of course, you are another photographer yourself.

And how do we judge artists? We judge their work based on how well they used their systems and processes to deliver the result. Artist who use unique systems often are the ones who set trends and can even change what we accept as art.

The truth is that art has constraints, limits and boundaries. It is about creating something, building something, something that is understood, can be translated and repeated. The "scientific method", for instance, is art.

The creation of "systems" and their processes is art.

A system is made up of defined processes that are designed to meet an overall objective. The human arm is a system that is designed to achieve set objectives. Each of the arms movements are processes that are all a part of the overall system.

Systems create common repeatable actions which should ensure that objectives are met. The science (qualification and quantification) will prove the systems are truly meeting their designed objective.

So what about science in Business?

The science of business is the numbers. The numbers are what we use to quantify the systems and the processes to ensure that the system is returning a desired result or is meeting a planned objective. The science for a photographer may be the number of photos sold versus the number of photos made. A high ratio would mean that the photographer would only need to create a few photos to generate more sales. A low ratio would mean that the photographer may have to spend most of their time taking masses of photographs in order to generate enough sales. I think you will agree that the photographer who can sell most of what they produce has a better system . This is quantification and that is the science of business.

Another example would be a beautiful building designed to please anyone experiencing it. The art may be pleasing and enticing but without good science, like the science that predicts stresses and other forces on building materials, the structure may be no more than a hazard to anyone that comes near it. Failures are common within new organizations and can even fell established organizations if they fail to create or maintain art and/or fail to maintain and apply good science. Enron is a good example of compelling art supported by junk science.

So, how do I start creating art in my work or my organization?

What I recommend to clients is to have everyone start documenting their existing daily, weekly and monthly actions. These are reviewed and added to an operations manual. When you document your processes and amalgamate them into a central repository you will have created a system, and that is art. It may not be beautiful but it will free your time to spend in the creative process of building better systems. Better systems will include quantifiable objectives (numbers) so that you will be able to track the effectiveness of your systems. This will be the science of your organization. Numbers like, how many calls, how many positive customer responses, how fast, how many failures, how much profit or loss etc...

Every time I have clients go through this process the initial response from managers is that the daily questions from staff slow and eventually stop. The documentation provides a resource and reference for staff which frees up time for managers to be creative, improving their systems and their results. After all, the role of any manager is to organize and systems (art) facilitates this. The answers to questions posed by staff or clients become new opportunities to improve processes that improve the overall system. Managers will start looking for questions and comments from clients (internal or external) which will drive innovation within your organization. Managers will relish a chance to solve a new problem as opposed to being knee deep in them. One problem turns into a new solution, a new process, that can be followed by anyone at any time (one to many). The organization will start to exceed or more easily meet objectives. Managers will even start looking forward to new hires as the new hires will challenge their systems in ways they hadn't dreamed of. It changes the whole way managers deal with staff. The question goes from "why can't he do this the way I want?" to "what has failed in our system and how can it be improved so that anyone can do this?".

The transition from ad-hock management to systems based management is typically the first major plateau for any manager or growing organization and typically the glass ceiling for companies that don't systematize. After all, it is impossible to manage groups of people without very good systems in place. Everything has to be organized (managed) or the group will quickly splinter into many factions that don't work with each other.

Systems work best when the objectives or vision are shared amongst all the the participants and the people who deliver the systems also participate in the perfection of them.

You don't have to be a photographer, painter or an actor to be an artist. Art is everywhere and you can make it a part of your profession and your life.

Give it a try!

Dave Soteros is President of Alrym Consulting which is focused on teaching the art and science of business to leaders and managers.

Wednesday, August 29, 2007

15 Rules for Managers

  1. Accept Responsibility - You are the person responsible and accountable for your staffs productivity, actions and behaviour.
  2. Manage Systems and not personalities - People come and go, systems don't. It's always better to blame the system and then fix it than to blame the person. After all you responsible for the system and you are likely the person that approved their hire in the first place - see rule 1.
  3. Acknowledge the Differences - Everyone does not think the same way you do. Understanding human behaviour is very important and something that, for most of us, is a lifelong practice.
  4. Delegate - Hand over the technical/tactical work and teach them how YOU do it. Set quantifiable objectives and make staff accountable to them and, most importantly, give them the opportunity to come up with a better way to do it.
  5. Innovate - Seek better ways to do it. Innovative companies listen to their customers and their staff and then change to meet their needs.
  6. Hire the best - the right person the first time. Seek out hiring best practices and interview with technical and behavioural questioning. Always, always call at least 2 professional references. The cost of replacing a staff member is at least 1.5 times the incumbents annual salary.
  7. Communicate Effectively - Don't assume they understand as some will require different learning methods and/or require repetition. Tell your staff what your vision and objectives are and set standards - "How we do it here". Include your staff in the decision making and planning process.
  8. Document Systems and processes - This will ensure everyone understands exactly what is expected of them, clears away ambiguity, introduces accountability and reduces the cost and time to train.
  9. Listen - Look at them directly in the eye and let them finish before you speak. The closer your staff is to the customer the closer you need to listen. If your staff is not close to the customer then have them and yourself take front line jobs for at least a day every year. It's amazing how customer service or quality is re-prioritized when the customer is yelling at you!
  10. Gather Feedback from customers (internal and external) - It's a lot like listening except you are formally asking to listen. Make it a part of your productivity reviews.
  11. Review Productivity and Performance - All staff at least semi annually - Use quantifiable criteria and objectives. Set individual goals. Ask staff to rate your performance.
  12. Leverage Information Technology wherever possible - Shared client/contact records with documented communications ensures consistency and efficiency. IT should reduce or remove manual intervention and return value to internal and external customers. The data can be leveraged for more effective marketing and sales.
  13. Provide Motivation & Praise - Reward the achievement of groups or individuals when they meet or exceeded objectives - Share group successes. Praise in public and reprimand in private - There are exceptions in cases of gross negligence or where violations of corporate policy are concerned. For example: Threat of injury or violence, harassment, racism etc...
  14. Provide Inspiration - Set the standards and live by them - (do unto others) Create standards for general behaviour, customer service, quality, etc... !
  15. Ask Questions! - Answers will change over time but the questions will always be the same. "Can we do this?", "How many will you need this year?", "Where do you see yourself in 5 years?", "When is the best time to contact you?", "How are we doing?", "How can we do this better?", "Will we still be able to meet this deadline?", etc...
Dave Soteros is President of Alrym Consulting Services.
Alrym is in the business of removing the boundaries that keep business owners and managers from getting what they want.

Sunday, August 26, 2007

The Every Man's Guide to Incredible Wealth!

Do you have to be a great salesperson to be one of the wealthiest people on earth?
There are many, many consultants touting many different flavors of sales tools and techniques to help you to create incredible wealth. They would all like you to believe that by learning their method you will achieve it. If it were only that simple.
Unfortunately sales it is only one component or one hat you'd have to wear.

Let's talk about the wealthiest 2 people on earth.
I certainly wouldn't be buying a "how to" sales book from either of the two wealthiest people on earth, Bill Gates and Warren Buffett.
I'd be very surprised if any of you reading this even knew the title of a Bill Gates book let alone read one. In fact, of the top 20 wealthiest people, only 8 started out as salesmen. So if it's not pure sales ability, what is it that propels someone to these financial heights?
The answer in every case is the business or businesses that these people created or inherited.
Their businesses generated this personal wealth.
Thus to generate incredible wealth we need to create a business or businesses that are big. Not only big in financial returns but big in numbers of employees and numbers of customers and typically a global presence. They have leveraged the capabilities of many to generate exponential returns.
Let's take Mr. Gates as an example.
He started Microsoft with his partner Paul Allen just at the time the biggest computer maker, IBM, was building a personal computer. By convincing IBM to sell their operating system, DOS, they were able to leverage IBM's brand name, worldwide presence and marketing. It is also arguable that Bill acquired the idea and the know how for his operating system from a pioneer of the computer industry, Gary Kildall of Digital Research. Gary believed that the company that owned the operating system would also control the computer industry. That statement turned out to be prophetic. Gary Kildall created an operating system called CP/M that was designed to be a disk operating system which Bill Gates leveraged to create his operating system called DOS - Disk Operating System.
IBM created a personal computer and it became very popular and along with those IBM PC's came Microsoft DOS.

What does this all mean?
It means that you may need sales skills but it is only a part of what you need if you want to accumulate great wealth.
Bill and Warren wanted to create something bigger than themselves. They had a vision (a mission). Their vision included many people and many companies and vast resources. They both leveraged outside knowledge and resources to achieve their vision and because they had a vision they were able to recognize an opportunity worth pursuing. If both Bill and Warren had spent the time it took to master all of the roles of each person they employed or partnered with I wouldn't be talking about them I'd be be forced to write about the #3 and #4 on the wealthiest list, Carlos Slim Helu and Ingvar Kamprad. You can technically master a tactical task, like sales, but-

If you what to generate incredible wealth you will need to learn how to manage and lead.
Bill and Warren must both be great communicators with compelling visions (the leader) and very good at organizing and delegating (the manager).

Leadership and Management skills are what make the difference.
Master these skills and you will be able to leverage 10, 100, 10000 or more skills to your advantage.

One question that sometimes comes up with clients in my executive coaching and business consulting practice is a concern over value returned to employees and partners. Some business leaders and managers wonder why others work for them and with them, and are afraid that they will leave. I always respond that it is easier to follow than to lead and as long as you have a compelling vision people will want to follow. They will follow you and likely do extraordinary things as long as your vision coincides with theirs.

The vision must be bold and compelling.
If it is, people will give you money or work off the clock just for the pleasure of participating with you.

Maximize your leadership potential.

Dave Soteros is President of Alrym Consulting Services.