Pursue Good Profits
Life is short.
A fair profit comes from the melding of resources such that the results are worth more than the sum of the inputs. This is the point in which true “value creation” happens. Good profits don’t come from charging customers just because you can at a particular moment in time – say an emergency. This is price gouging. Beyond being illegal in most circumstances, it is also a sign of an opportunistic company thinking only of the short term. Good profits leave both transacting parties in a place of satisfaction. The pursuit of fair profits speaks to the integrity of an organization across multiple dimensions.
If you have leverage over a customer and you use it unfairly, customers will pay you back at their earliest opportunity (e.g. think Blockbusters late return fee policy in the age of Netflix and video on demand.) If you care to build a sustainable business, balance the profit taking of today with the profit earning of tomorrow. Here are some things to keep top of mind.
– Pursue the win/win with customers in every situation.
– Strive to beat your competitors, not your customers.
Know your Thesis for Winning
It’s good to be good. It’s better to be lucky. But don’t bet your future on luck. Know your thesis for winning.
When done right, a company’s thesis for winning should be aligned with it’s leadership, culture and the corporate DNA. It’s important to understand why you win and how you win, as this is the only way to purposefully capitalize on ones strengths. Take the time to understand the why, how, when and where you win. Know your strengths and weaknesses. Exploit your strengths, minimize your weaknesses.
Results & Fast Execution
There is no substitute for results and markets don’t reward slow. In software, every feature has a half-life.
Lead with Vision, Values and Culture
People are the most valuable input to any businesses. Hire for passion, attitude, values, IQ and train for aptitude. The people who come or stay only for pay aren’t the ones you want working for you. Pay and reward well, but realize that x-factor isn’t bought. It comes from the heart and it’s fuel is vision and passion. Treat people with respect, create a positive environment, inspire alignment around vision and values and then get out of the way. Get this right and everything will fall into place. Get this wrong and you will always be sub-optimized. Ignore them entirely and you will fail eventually — if not immediately.
“We” before “I”
It takes many people to move a big rock. When the needs of team and the needs of individual are at odds, focus on the team.
So many companies treat people like machinery with a defined output. This is short sighted and wrong. If you care to manage to the minimum bar, treat people like revenue producing units (“RPU’s”). If you wish to do something spectacular, put them first and let them put your business and customers first. If they know you have their back, they’ll focus their energy on your customers and your business.
Create Feedback Loops
Without feedback you’re flying blind. Treat everything like a closed loop system. Look for the places where feedback will help you make quicker, more accurate decisions. While the past cannot predict the future, not knowing where you’ve been or how you got there isn’t a recipe for success.
Hiring Comes First
Jim Collin’s had it right — first who, then what. Hire the best. Don’t bypass cultural fit, and focus on leaders first. And while a persons accomplishments are important, more important are their raw attributes. I’m fond of saying, I don’t know if a hire is right for a year. People are complicated, and you need to see them in enough situations to know if they are right for your organization. We all have to earn our way onto the team.
10/10 = Extraordinary
There is only one way to get to a great company with a great culture. It’s to hire great individuals. I call these people 10/10. They have great attitudes and they are highly capable. They get the job done. They are the whole package. I don’t believe you can build a 10/10 organization with just anyone, you have to recruit 10/10 individuals to get there. Of course people can change and improve, but just know that people come to you mostly formed. Really good leaders and coaches can move the needle, but we have far too few real coaches in business.
When you achieve 10/10 as a company, you’re extraordinary by definition.
You are not a leader without followers
Your leadership won’t scale if you don’t transition from doer to enabler
If you are not cultivating a successor, you can’t move up
Lead by example
Own the culture
Be frugal with company resources
Hire better than yourself
Measure everything. You’re instincts are great, but you can’t influence everyone with your instincts. If you can’t influence people, you can’t redirect resources. If you can’t redirect resources, you won’t be an effective leader. The world is full of smart, intuitive yet ultimately ineffective leaders.
Why Budgets Matter
Budgets are more than just a way to direct or predict spend. Done right, budgets keep the psychology of the organization in the winning zone. You set the budget once per year with the board, but everyone, including the rank and file, live the performance for the next 12 reporting periods. Get it right, and people feel they are winning and work harder. Get it wrong, and people are demoralized, lose faith in leadership and look for other opportunities.
Paradox is Everywhere
Straight and steady is often the fastest route to ultimate success
To lead, often one must serve
The world filters out the uncommitted and is run by those who show up and hustle.
Check Your Ego
There’s a saying that an “ego is a terrible thing to waste.” While a healthy ego is a requirement for entrepreneurs and their early teams, big ego’s often lead to big mistakes.
When it comes to behavior motivated by ego, the ends do not justify the means. Perhaps if you seek short-term profit, you can manipulate people, customers or future debt to obtain unfounded near-term profits. But if you look at winning holistically and consistently, and take into account winning across every dimension, you cannot make good decisions based upon ego.
No Short-Term Decisions
Many companies and management teams are plagued with short-term thinking. Many incentive plans only exacerbate the issue, focusing on quarterly or annual performance without due consideration for future ramifications.
The consequence of short-term decision making is that over time, your lack of investment will limit your future options, largely because they tend to compress tomorrow’s profits into today’s time frame, while pushing today’s costs into the future.
Avoid the Hail Mary
We all love the idea of the 11th hour win or the so-called “Hail Mary Pass.” It creates a dramatic Hollywood ending. If you complete a Hail Mary, be thankful, enjoy the drama for a minute, and then figure out what went so terribly wrong with that you required a Hail Mary to survive.
When you rely upon a Hail Mary, you place your future in the hands of luck. This is a poor strategy that will likely end badly. Remember the following when you contemplate a Hail Mary as the best course of action.
If it’s worth doing, it’s worth doing right.
If you can’t afford to do it right, you likely aren’t yet good enough to be playing the game you’re playing
Accruing Debt Kills the Future
Don’t push the true cost of today’s actions into the future or worse yet, onto others (externalization).
The first is a bad strategy and you’ll pay the price later (plus interest). The second is simply wrong.
Balance is an Active State
Finding and maintaining balance is hard, that’s because it’s an ‘active state’.
If you don’t plan to last, don’t bother with balance. You can sprint and crash. Planning for short-term outcomes can be profitable, but risky because they tend to limit your future options. They create a future debt that will eventually have to be paid.
Some don’t worry about the future debt they create because they don’t intend to pay for it themselves. Instead, their strategy is to make it someone else’s problem. This strategy lacks integrity.
In nearly every decision, a view towards balance should be considered.
How does this short-term decision impact you long-term?
What takes precedence when work and family life are fighting for attention?
If you sprint now, how long will it take to recover such that you can sprint again?
Innovation Stems from a Culture accepting of Risk
Innovation is how we grow the pie and create matter from energy (something tangible from an idea). It’s the foundation of abundant thinking and win/win philosophies. Innovation comes from within. Don’t expect your customers to lead you there, they are looking for the next great feature, not the next great break-through.
Often times, scarcity is the sandbox of innovation — which is in of itself ironic. It’s ironic because scarcity is the spring well of abundance.
Nothing will kill innovation faster than a culture intolerant of failure. Conversely, if you foster a culture which learns from mistakes, you open the door to new ideas and to the risk which accompanies breakthroughs.
Run Lean. Always
Just because you can throw money at a problem doesn’t mean you should. In fact, it likely is the worst thing you could do, and it’s lazy. It deprives you of the creative solution (e.g. an innovation opportunity) and it saps the company of precious resources that could be used more effectively elsewhere.
Running lean doesn’t mean run your resources to zero excess capacity either. Saving some energy for the unexpected event is simply smart.
Run the business or the business will run you.
By the time you’ve let something become a fire drill, they’ve already spread to other departments and take on a whole life of their own. Drills like this sap productivity, energy and enthusiasm within your teams. Being so disciplined that you anticipate everything won’t feed your ego if you like to be the hero and save the day, but if you spend all your time fixing things, you won’t be looking up to see the brick wall that you’re about to run into.
Bad News First
Good news is energizing, but it shouldn’t come at the expense of the truth. A culture that doesn’t want to hear bad news is a dead man walking.
Avoid the Roller Coaster
Crazy is all around us. You can partake in the roller coaster, but be ready for the lows that come with the highs. I love roller coasters, but I hate being on one with my business. I’ll take the steadier path any time. Steady up and to the right.
In business as in life, I believe there is no final destination. Only a series of challenges and summits followed by a series of challenges and summits. It ends when you want it to end, or when your poor decision-making forces it to end.
“Best” is at best — temporary. There is always better. Life is a journey in which, as long as you’re alive, you can strive to do better.
Simpler is Better
The world is complicated. Don’t make it more complicated. It’s a true gift when someone can distill complex problems into elegant solutions. Until you truly understand the essence of the problem to be solved, it will be hard to make it simple.
No Failure, only Learning
If you’re not uncomfortable, you’re not growing and if you’re not failing, you’re not trying.
But keep in mind that failing isn’t failure unless you haven’t learned. Pick yourself up and try again. Anything and everything can be achieved with will, passion and hard work.
Actively Manage Expectations
Whether you’ve won or lost is largely a matter of expectations. Setting the right expectations, achieving them and then exceeding them early can create an uplifting vortex of momentum that carries you and an organization into over-achievement. Create the wrong expectations and you will quickly demoralize yourself and your team. If you allow your ego to penetrate your decision-making, you’ll set poor expectations.
Causality is Real
You are not the victim. You’re in control of more than you give yourself credit. If you take the time to retrace your actions, you’ve had some part, likely significant, in every circumstance that surrounds you today. Taking ownership of that fact is powerful. It means you’re in control and can effect change. Don’t sell yourself short by blaming others for your circumstances. Own your situation. Be accountable.
Think, Plan, Aim, Act
Fools rush in and false starts are more expensive than you likely realize. If it’s worth pursuing, it’s worth the time to investigate, plan and do it right.
Turn Art into Science
If you don’t understand it, you can’t repeat it. If you can’t repeat it, you can’t scale it. If you can’t scale what’s working, you’ll never be successful.
There is an art and science behind everything. The art is beautiful. It’s like magic, you can’t explain it, but you love the outcome. When you’re lucky enough to have a person who has the art of making something work, consider yourself lucky, but don’t rely upon it. You’re job is to turn the magic into science, to demystify why something works and turn it into a simple, repeatable processes which can be achieved by mere mortals.
You may be smart but you won’t predict everything. Adapting to a changing environment quickly is a weapon not just of survival, but also of offense. To any surprise in life the human mind has two distinctly different modes that tend to fight each other. One is that of emotion and the other of the mind. It is the leader’s responsibility to tap the motivation of emotion while harnessing it with the composure of the intelligent reaction. After all, business is ultimately supremely rational.
Assumptions can Kill
One of the things I love about being an entrepreneur is our confidence. The problem is, we often don’t know when we should say no to opportunity. We think everything is possible.
As companies grow, one takes bigger and bigger risks, often times, based upon a few key assumptions. Assumptions are really dangerous, especially when you’re optimistic by nature. Take the time to really scrutinize your assumptions. Leaping and missing is painful, and you should not ‘assume’ you will always recover — sometimes you won’t.
Understand the Psychology of Winning
People work harder when they are winning. It’s a leader’s job to get (and keep) their teams in the winning zone.
Remember, Happiness = Reality – Expectations. As a leader, set expectations with care.