To tell you the truth

Posted on April 5, 2011 by John.Myrna

My Director of Technology was venting over lunch. “Why did you agree to purchase that company, John? Their backup product is a pile of crap and now we have to sell and support it. To tell you the truth, I never supported the decision to buy it.” Sigh. I was so wrapped up in the challenge of making the deal, I must have signaled the review team that all I wanted to hear was reinforcement of a buy decision.

What exactly are you saying to people when you use this phrase? “Well, to tell you the truth…”

What I hear is “everything I’ve said up to now has been a lie.”

These days, I always call people on this when they use this phrase. For productive meetings, you need people to speak up and tell what they see to be the truth. Too often, your team thinks they are expected to agree with you rather than share their own individual points of view.

The best decision making includes a stage where diverse voices are heard. Where the opinions of those affected by the decisions are heard and considered. Where potential issues are aired, discussed, and accepted.

Once all this is done and a decision is made, the team needs to salute and focus on successful execution. The sooner you start telling the truth, the sooner you can reach a conclusion that your team believes in and commits to execute.

An End to Meeting Madness documents our decades of experience in facilitating high-stakes meetings. If you’re interested in having productive meetings that help set your strategy and keep your projects productive and on track, read the book, listen to my On-Demand webinar Run Leadership Meetings That Burst With Fresh Ideas, or contact me at (800)207-8192 or johnw@myrna.com.

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How to determine how much your “value-added” is worth

Posted on April 4, 2011 by John.Myrna

One day my IBM sales rep Steve dropped by and asked why I continued to purchased hardware from him. “We don’t have the lowest prices. We don’t always have the newest features. Why do you continue to use IBM as your primary vendor?”

As the datacenter manager at that point in my career, I had many of IBM’s competitors offering to bid for my business. In discussing why I told most of them not to waste my time or theirs, Steve shared an insight he and the other IBM reps had developed. “It appears that a competitor would have to offer identical features at a savings of at least 25 percent before most datacenter managers would even bother to entertain a proposal.”

As I thought about it, that 25 percent represented in hard cash the worth of the “value-added” we got from IBM. What warranted that 25 percent premium? The ongoing support, the conservative design of hardware, the periodic visits to IBM facilitates, and, most of all, the lower perceived risk of relying on IBM for a critical part of our business. The cliché in our business at the time was that “no one ever lost his job for recommending IBM.”

My approach to determining what a client’s value-added is worth is simple. Ask existing customers, yourself, or your salesmen, “What would it take for you to entertain an offer from a competitor for identical services?” Would it be 25%? 15% 10% or less than 1%? If the price sensitivity for an existing customer is under 1 percent, you are selling a commodity.

As an industry matures, products move inexorably in the direction of becoming undifferentiated commodities. Your strategic plan needs to include actions that both drive productivity and increase value-added. Productivity gains enable you to maintain profit margins and market share at competitive sales prices. Increasing value-added enables you to sustain the same or maybe an even greater sales price. (Consider Apple’s iPad 2, which had enough added-value to be marketed at the identical premium price as the original iPad, even with more marketplace competition.)

For more on strategic planning that lets you work through issues like this, review the first two chapters I wrote in the Business Expert Guide to Small Business Success. If you’re interested in having a facilitated strategic planning meeting that sets your strategy and launches its implementation, contact us (800) 207-8192 or johnw@myrna.com

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Smokestacking in the 21st century

Posted on April 1, 2011 by John.Myrna

Business-to-business salesmen in the good old days used to arrive by train in a new community and climb up the highest hill in town. They would look out and identify where the smokestacks were. Each smokestack identified a manufacturing prospect for their product.

More recently, a Long Island community used Google Earth to identify home owners who hadn’t obtained building permits for their new swimming pools. The town of Riverhead found at least 250 residents who built pools without a permit, and most paid up, netting the town about $75,000 in fees.

In the 21st century we don’t have to get on a train. With Google Earth, a salesman of swimming pool supplies and services can look down on a neighborhood to locate prospects. An automotive parts manufacturer can use LinkedIn to identify engineers at a division of Ford or GM. The Immigration and Naturalization Service can review payroll records with the social security number verification service (SSNVS) to identify companies employing undocumented workers.

How can you mash up 21st century technology with the deep understanding of issues that only comes with age and experience?

Maintaining a diversified team is the best way to do this and support innovative thinking. A team that is diverse in profession, age, sex, ethnicity, and social status will bring different experiences, problem solving, and worldview. It’s more likely that someone who has lived with Facebook or Twitter in school is more likely to come up with an innovative use of social media. It’s more likely a creative response to an economic downturn will come from someone who has lived through multiple downturns.

To fully realize the benefits of your diverse team requires effective tools. One of the most useful tools is a productive meeting.

An End to Meeting Madness documents our decades of experience in facilitating high-stakes meetings. If you’re interested in having productive meetings that help set your strategy and keep your projects productive and on track, read the book, listen to my On-Demand webinar Run Leadership Meetings That Burst With Fresh Ideas, or give us a call.

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Chemistry — the critical secret ingredient in the hiring process

Posted on March 31, 2011 by John.Myrna

I wondered what I did wrong in hiring Joe. We prescreened all candidates carefully. We did multiple interviews. We had everyone who would be working with Joe talk with him and make sure the fit was right. We double-checked all his references. I even made sure that I understood his personal goals for the next five years and assumed that he could reach them in our company. After two years of trying, I finally threw in the towel and fired him. Not only was I relieved, so was he. What did we miss? In a word, chemistry.

HR professionals have told me that in their experience, you need to hire three people for every two that you end up keeping. This ratio assumes that you have an excellent hiring process.

I’ve purchased cars, carefully weighing their features, only to find out that that I didn’t love them once I actually owned them. Thinking back, I experienced much the same ratio of having to purchase three to end up with two I loved. I’ve also found that the new products I was responsible for developing didn’t really “connect” until they were put into actual use and modified based on the reality of that use.

Why can’t we “get it right” 100% of the time, three out of three times? The answer is “chemistry.” Until an employee is functioning in the actual job, neither they nor you can be sure of the fit. Until you drive the car every day you can’t be sure. Until you run actual production with your new scheduler you can’t be sure.

For hiring, I recommend a 90 day “warranty” period. If the job fit doesn’t feel right within that period for you or the employee, it won’t ever be right. Cars can be replaced. Software can be modified and enhanced. It isn’t fair to the misfit employee or his teammates to keep trying to make it work out. “Hire slowly, fire quickly” is the motto of successful managers.

Once you’re beyond the 90-day period you want to focus on coaching for ever-increasing success. I’ve outlined a process for a better way to structure the job description and performance review process in an article published in the Business Strategy Series (Turning the Tables on Performance Reviews: How to Create a Better Process That Empowers, Energizes and Rewards Your Employees). Take a look, and contact me if you’d like to learn how to apply this process in your own organization.

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Montana, meteors, and opportunity

Posted on March 30, 2011 by John.Myrna

“The great secret of success in life is for a man
to be ready when his opportunity comes.”
— Benjamin Disraeli, prime minister of England

clip_image002Too often when success happens, employees ascribe it to “luck.” This is particularly true with regards to the results of planning. Employees assume that somehow a plan is purely deterministic and since you couldn’t have predicted when the happy event happened, it had to be pure chance.

Strategy is a shared visualization of where the team wants us to be within three to five years. Each day we ask ourselves if what we are doing is consistent with producing that outcome.

With the shared visualization – the picture on the puzzle box – we are prepared to recognize opportunities when they enter our market space. (Note that we don’t predict exactly when and what opportunity, only that over a long enough period of time there will be opportunities.)

With our daily actions we get ourselves prepared to act on those opportunities when they arrive.

By way of illustration, consider how Montana State University and the Boeing Corporation solved an impossible communications problem in 1968. In an era before ubiquitous communications satellites, how do you communicate over the horizon between two locations that are not within line of sight? You need something reliable to “bounce” radio signals off of. Electrons in ionized gas will in effect create a mirror in the sky that you can use to bounce the radio signal. When meteors enter earth’s atmosphere and vaporize, they create such an ionized vapor trail.

The engineers at MSU and Boeing developed a system that could provide reliable communications 24 hours a day via meteor trails. On the surface this appears absurd. “How can you predict exactly when a meteor will enter earth’s atmosphere?” The answer is – you can’t. What you can predict is that over a reasonable period of time there will be enough meteors entering our space to get the job done. That is, as long as we have the capability to quickly recognize when a meteor enters our space and have prepared a system to capitalize on that entry.

We live in a wonderful country where opportunities are constantly entering our market space. While we can’t exactly predict when and what those opportunities will be, we can prepare ourselves to be able to recognize and quickly act on them. Preparation starts with deciding and defining a vision of your future with your team. I continue to believe that the strategic planning process is the most effective way to create that vision along with the action plans to support that vision. (For more on strategic planning, review the first two chapters I wrote in the Business Expert Guide to Small Business Success.)

How well is your company prepared to recognize and act on opportunities? If you’re interested in having a facilitated strategic planning meeting that sets your strategy and launches its implementation, contact us (800) 207-8192 or johnw@myrna.com

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Is incentive compensation an oxymoron?

Posted on March 23, 2011 by John.Myrna

One formal definition of compensation, one of many definitions:

“Something that motivates, rouses, or encourages; A bonus or reward, often monetary”

I’ve seen incentives work well for a vendor or single specific closed-end dedicated staff project such as creating a new product. If getting the product out 60 days earlier will earn the company an additional $100,000, then it makes good sense to provide early-finish incentives that total less than the value created. (The incentive can motivate the team to work harder, i.e. put more hours per week on the project. It also rewards them for being innovative in finding more productive ways to get the job done.)

I’ve observed other incentives that have less impact:

An annual Christmas/holiday bonus becomes an entitlement and no longer affects motivation positively. (It becomes a negative motivator the first time the company has a poor year and can’t provide the bonus every employee has already mentally spent on holiday gifts.)

A financial incentive for technical people misreads their motivations. Technical people are motivated by the challenge. (They consider compensation as earned for past performance. They will take the money but it isn’t likely to change their behavior. They think it is only “fair” that they get it. Being fair doesn’t provide positive motivation.) They have “video game” motivation, i.e. they are motivated by the opportunity to be challenged again.

Most people don’t value long-term incentives such ESOPs, profit sharing, or phantom stock until they are actually vested in the plan and can see a definable, tangible cash value. Their participation is viewed as fairness. There is limited positive influence on behavior unless it is clear how their specific behavior can affect their share of the pie.

The employees of companies I’ve come in contact with want their company to succeed. They want to do a good job.

Step one to creating compensation programs that motivate employees is to document the results you want to motivate them to achieve. Strategic planning is the process that establishes and documents the results that employees need to be focused on.

Step two is to make sure that the company is organized consistent with the results you want to motivate, and organized consistent with your strategic plan.

Step three is to make sure you have the right people in the right seats.

Step four is to then make sure that employees are being motivated to produce the desired results. While compensation plans can affect motivation, the greatest success comes from having positions filled with people whose personal goals are aligned with the company’s, who are passionate about their jobs, and who are highly competent.

You can tweak motivation around specific projects for most people. The lion’s share, maybe 80%, will be generated by having the right people, in the right seats, with complete understanding of what they need to do to be successful.

The best way to do this is through a well structured strategic planning process, including effective implementation. (For more on strategic planning, review the first two chapters I wrote in the Business Expert Guide to Small Business Success.) Give us a call if you’d like to learn more about how our process can help your company.

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Beware of Fortune 500 consultants

Posted on March 22, 2011 by John.Myrna

In 1982, my $20+ million employer STSC was acquired by the over $2+ billion Continental Telecom (ConTel). Post-acquisition, I was invited to join ConTel’s technical committee. As part of our charter, we reviewed the results of a major study of ConTel’s MRP system.

ConTel had commission a six-figure study by one of the most respected big consulting companies. I had the opportunity to listen as they reported their findings. They had a handful of slides which boiled down to:

Look at us, we are really, really good consultants.

Ya got trouble, my friend, right here,
I say, trouble right here in ConTel. (What an insight! Why else was the consulting firm hired to come up with a solution?)

Their proposed solution was simple. Spend an additional seven figures to hire the consultants to come up with an actual solution.

Six figures. Six slides. Zero content. But the Senior ConTel executives appeared pleased by the report and signed up for the next stage. (I supposed that’s how things worked in big companies.)

When we started Myrna Associates in 1991, I was invited to make presentations to groups of CEOs. One of my consulting colleagues told me that a consultant should never provide solutions. “Keep telling them why they have a problem that requires them to buy your services.”

What a waste of time! Life’s too short. (After my consulting colleagues’ presentation, a CEO was heard to say: “There’s 45 minutes I’ll never get back.” That consultant was never invited back.)

I have little patience for traditional consultants who won’t talk about how they are going to solve a problem without being paid anything up front. And, too often they don’t even solve the problem even after being paid.

I also have little patience for politicians who spend all their time repeating that we have a problem without explaining how to solve it unless you elect/reelect them. And, too often, just like many consulting firms, don’t even solve the problem after you’ve elected/reelected them.

I skip over potential vendors that aren’t willing to share useful insights. When I’m looking for a vendor partner, it’s hard to establish trust with someone who only focuses on what’s in it for them.

One of our core values is to always provide exceptional value. Our website is a rich source of pragmatic strategic planning and implementation content. We are always looking for ways to share the insights we’ve gained over the years, through articles, webinars, newsletters, and blogs. Our processes and facilitators are recognized by our clients for the superior value they provide.

Call on us when you are looking for a truly solutions-focused partner in strategic planning and implementation.

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Never try to teach a pig to sing

Posted on March 21, 2011 by John.Myrna

Software development teams never seem to make a release deadline. Things always seem to take longer. They will report that they would be ready to ship March 2nd, but if you showed up that day with bottles of celebratory champagne, you’d find the product isn’t ready. Not ready April 2nd or even May 2nd, or even June 2nd. You will always get a great product when it is finished, but…

One year I was told we (STSC) would be ready by November, the month of the Fall Las Vegas COMDEX trade show. COMDEX was the biggest computer trade show in the world. I signed our company up for a display space, purchased a booth, and scheduled meetings with the press.

In the seven days before the show, we were able to finish the software and documentation, create a brochure, finish a presentation, etc. It was magic. Basically, everyone involved could internalize that being “only one week late” would have a devastating impact on the company. Deliver on time and we get full press coverage and exposure to over 100,000 show attendees. Deliver one week late and we get zip.

One of my favorite quotes is

Never try to teach a pig to sign. It’s a waste of time and it irritates the pig.

People behave the way people behave. They don’t always make “rational” decisions. They put undue weight on trivial matters and underestimate the importance of major matters. They are driven by fear and greed.

In other words, they are just human no matter what their jobs are.

Don’t get angry about this. Accept the reality and learn how to live with it. In my case, I didn’t lament that development teams needed an external event like COMDEX to deliver on time. I simply began to align product release dates with external events like COMDEX.

Implementing a strategic plan is as important as developing one. A key element of successful implementation is establishing drop-dead dates that the implementers take personal accountability for achieving.

The second chapter of my chapter in the Business Expert Guide to Small Business Success details how to optimize implementation of strategic plans. The techniques apply equally to all forms of implementation.

If you’re interested in having a facilitated strategic planning meeting that sets your strategy and launches its implementation, give us a call.

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Why do the rich get richer?

Posted on March 18, 2011 by John.Myrna

Have you ever wondered how the rich get richer?

Consider the old saying. “The higher the risk, the higher the gain.”

The type of risk I’m talking about isn’t putting on a blindfold and walking across the highway. It’s the risk that a well thought out investment might take longer than projected to deliver a return.

When you have limited resources as an company or individual, you are basically living month to month. When you invest in hiring a new employee, creating a new product, or opening a new office, you have to get to breakeven within weeks or you will run out of investment capital and have to pull the plug. When you pull the plug you lose your entire investment.

If you have to see a return in days or weeks you will focus on investments with low risk. However, low risk investments carry low returns.

The rich, whether companies or individuals, can invest in opportunities that may take years or decades to pay off. They have the resources to stay with the investment even if it takes eight years instead of four to break even and start returning.

As an industry matures, the investments it takes to remain competitive get larger and larger. At some point, typically only the top three players can afford to stay in the game. This is one reason you may need to keep growing. You can’t remain competitive if you can’t ante up the resources to sustain investments for new equipment, technology, people, and products.

A major responsibility of senior management is managing risk. The better the team and support tools, the more successful the strategy, meaning a company can manage more risk. The best way to do this is through a well structured strategic planning process, including effective implementation. (For more on strategic planning, review the first two chapters I wrote in the Business Expert Guide to Small Business Success.)

If you’re interested in having a facilitated strategic planning meeting that sets your strategy and launches its implementation, give us a call.

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The morning I spent with Steve Jobs

Posted on March 17, 2011 by John.Myrna

My wife Mary has a new iPhone. Watching her use and embrace this product reminded me of the time I spent a morning with Steve Jobs.

In the late seventies, my group was creating a major software system for Apple’s next-generation computer. I was in Cupertino with my Project Manager for an early morning meeting to finalize the contract with Apple’s co-founder, Steve Jobs. We were ushered into his office late in the morning and Steve gave us 100% of his attention.

He was mesmerizing and every bit a sales showman as Ron Popeil or Billy Mays. He shared his vision for the personal computer as well as his technical philosophy.

He was excited about integrating audio technology so you could even use his new machine as your telephone.

Bandying about a light pen, a personal input device that pre-dated the mouse, he rhapsodized how for less than two dollars he could include one with every machine. “If you make a component an option, then application developers won’t incorporate it.” He didn’t believe in having optional functionality.

“An Apple computer on every desk.” He saw the personal computer ultimately as ubiquitous as the telephone. And he emphasized that telephones don’t have slots, don’t have options, and are extraordinarily easy to use. If he could have his way, his computers would have every feature standard and be easy to use.

Steve remained true to his vision over the years, although for many years his vision was too far ahead of the available technology. Products he had direct control over were crippled by their lack of expandability. By the 21st century, however, the technology had finally caught up with his vision.

With the iPhone, introduced in 2007, everyone can enjoy the full flowering of a vision that took shape nearly thirty years earlier. An Apple computer not on every desk, but in every pocket.

What is your company’s vision? What do you and your team visualize the company will look like in five years? In ten? In twenty? The best way to do this is through a well structured strategic planning process, including effective implementation. (For more on strategic planning, review the first two chapters I wrote in the Business Expert Guide to Small Business Success.)

If you’re interested in having a facilitated strategic planning meeting that sets your strategy and launches its implementation, give us a call.

p.s. Before I left Steve’s office I asked what he would do if our software was the main reason people ended up buying his new computer. His answer? “I’ll buy your company.” I laughed since we were twice as big as Apple. By next year Apple was bigger than us and within a couple of years an order of magnitude bigger. Apple clearly had a vision of where it was going and the leadership and implementation to get there.

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