Summit Small Business Blog

STUCK: Why Most Companies Don’t Climb from Survival to Success

When a company gets past the start-up/survival stage of their business, it’s like arriving at the foot of a tall mountain. Yes, they've achieved something significant--80% of start-ups fail in the first two years--but they haven’t reached the summit of success. In other words, getting to base camp is great, but what you really want to do is climb to the top of the mountain.

Sadly, another 80% of companies at this stage will fail in the next three years. If you’re keeping score at home, that’s a 96% small business mortality rate. A terrible statistic. The reason why these companies fail is they get stuck, never making the climb from start-up to success, from base camp to the summit.

Here are three reasons why you may be stuck at base camp and how to get unstuck:

REASON #1 - Activity without Priority

We would all agree. There’s lots and lots and lots (did I say lots?) of things to do as a small business. Oddly, we often take comfort in our long lists, concluding by them that our perpetual busyness will result in a successful business.

This is a big mistake!

Consider the treadmill, a modern-day marvel found in any athletic club. You can run for hours on a treadmill and not get anywhere. So, too, other modern-day marvels like email and smart phones, Twitter and Facebook have the potential to consume our days with a flurry of activity that achieves absolutely nothing.

To prevent this utter waste of time, everything you do, and I mean everything, must be sifted through the grid of your company’s priorities. Here are two questions to help you with that process. When you can answer yes to each, then--and only then--take action.

1. Will this activity move us closer to achieving the goals we have for the business?

2. Is this activity the most important thing we could be doing RIGHT NOW to achieve the goals we have for the business?

Notice how both questions assume you have goals in place for your business. You can't make the climb from survival to success without a set of specific goals that progress is measured against. Goals set your company’s’ priorities, they establish your strategy for the future, and become the grid through which all activities are screened.

If you’re like most small businesses, you’re flying by the seat of your pants. It’s my duty to tell you--as a flight instructor, if you will--that this approach to business will only result in a crash landing that you may not survive. Merely doing something, however good the something, does not mean what you are doing is actually accomplishing anything. Do not sacrifice your business, and your life, on the altar of activity that has no connection to priority.

REASON #2 - Employment without Measurement

So it’s time to hire someone. You’ve got way too much to do and need help. You can’t wait to get more people on your team. The relief will be immediate. Right? Wrong.

I’ve watched again and again small business owners hire employees that added to their overwhelming workload and emptied their already slim bank account. Maybe this has happened to you, and you swore never to hire another person again.

What’s the problem? Is the whole workforce filled with stupid, lazy people? No, not really. It’s a failure of clarity, or Reason #2 - Employment without Measurement.

Here’s the solution. Never hire a single soul unless you have three things:

1. A detailed job description for the position

2. A set of one-year accountabilities

3. A clear onboarding plan

A detailed job description, of course, defines a position fully and completely. But a job description is not enough. One-year accountabilities determine the exact measurements this person will be held accountable for delivering in the first 12 months based on their job description. Without this kind of clarity, people don’t know what’s expected of them and won’t do their best work for the very simple fact that they can’t read your mind.

Finally, an onboarding plan lays out precisely how this person will be prepared and trained to do the job being asked of them so they become fully productive employees as rapidly as possible.

Yes, doing this kind of work before you hire someone takes time. But think of the hours and hours and hours you’ve wasted with employees who have never worked out. Conservative estimates calculate that one bad hire costs a company three times their annual wage in hard costs, lost customers, and reduced employee productivity (including you!). In other words, if someone’s total compensation was  $80,000 a year and they didn’t work out, that bad hire cost you $240,000.

So as the grizzled mechanic used to say in the old Fram® commercials, “You can pay me now (oil filter/hiring plan), or you can pay me later (engine overhaul/firing waste).”

Additionally, a list of one-year accountabilities based on a very specific job description with an clear onboarding plan will screen out those who are just looking to fill a slot and steal a paycheck. Conversely, the very best employment candidates will jump at the chance of meeting challenging goals. Because, as the very best employees will tell you, having a job and knowing how well you’re doing on that job with clear, fair measurements is fun. These are the kind of people you want working for you.

Here's the bottom line on this: you can’t make the climb from survival to success on your own. You must have a world class team climbing with you. Being able to hire and keep the very best people is a critical business building skill.

REASON #3 - Shooting without Aiming

When asked about the secrets to his success, the ever-quotable Ted Turner replied, “Early to bed, early to rise. Work like hell and advertise.” With all due respect to the media mogul—and with a nod to healthy habits and hard work—small businesses who follow this advice today with fail.

Why?

Because advertising today is not what it was a few decades ago when Ted Turner launched his empire. In the 1970’s the average American consumer was exposed to 500 marketing messages a day. Today that number is 3,500. Yes, the average American consumer is assaulted with 3,500 marketing messages a day. That’s one every 24 seconds, or 1.25 million marketing messages a year.

In other words, the brutal reality for small businesses today is that they could spend thousands and thousands of their hard-earned dollars on advertising that NEVER connects with their customers and prospects. And many do, advertising themselves into bankruptcy.

Before you spend one penny on advertising, ask these two critical questions:

1. Who is your core customer EXACTLY?

2. What does your core customer read, listen to, or watch?

Central to the success of your business is identifying your core customer. If you were an archer, central to your success would be hitting your target. But small businesses everywhere shoot endless arrows with no sense whatsoever about the target, let alone hitting it. Then they run out of arrows (money) and go out of business.

The most important investment you can make in your small business is the investment you make in knowing exactly who your target is. Who is your most valuable customer? Who is the person most likely to buy your products and services in the quantity required for optimal profit? Take the time to answer this question NOW.

Most small businesses get stuck at base camp trying to do too much. They do one thing for one customer one week, another thing for another customer the next, and a third thing for the customer after that, never specializing with one kind of customer or one kind of service. In this way they diffuse their limited resources an inch deep and a mile wide. Targeting your core customer allows you to be an inch wide and a mile deep, having the focus that is essential to success in today’s competitive marketplace.

To make the climb from survival to success identify your core customer, ask them honestly what they read, listen to, or watch. Now advertise in those mediums--and ONLY in those mediums--no exceptions (Even if that means saying no to your favorite media sales rep!). In other words, stop throwing your hard-earned dollars away on advertising that doesn't work. It's killing your company!

Owning your own business can be the most enjoyable, exhilarating experience ever with no comparison to the cubicles and silos of corporate life. But, like scaling a mountain, there are mistakes that can be made along the way, mistakes that can lead to the death of your business. Fix these three and you’ll be well on your way to reaching the summit. I assure you, the view of the valley below is amazing.

Six Rules for Using Email to Sell (Never Break Them!)

I don’t think anyone doubts whether or not email is here to stay. Like cell phones and iPods, Twitter and Facebook, these disruptive technologies are now an integral part of our daily life. With the onslaught of spam in all of our inboxes, however, email’s effectiveness as a sales tool has greatly diminished. Nevertheless, using email well is a critical sales skill. Here are six rules to follow without exception:

RULE ONE: The subject line is king.

In medieval society, the king was everything: all wise and all powerful. That’s the role the subject line plays in all of your outgoing email. Like a headline in a newspaper article, it must be short--6-8 words--and it must be compelling.

As you know from using email yourself, if you don’t know the sender, you read the subject line. If that doesn’t grab you, the email is trashed. According to a 2007 study by Juniper Research, 35% of all email users open messages because of what’s contained in the subject line.

Here’s an example of a good and a bad subject line:

BAD SUBJECT LINE: Advertising deadlines for our eighth annual holiday shopping guide are fast approaching

GOOD SUBJECT LINE: Reach 1000’s of women with your unique gift ideas

Apart from being way too long, the first subject line is sender-centered instead of recipient-centered. I’m sure the sender thinks that mentioning the fact that their holiday shopping guide is in its eighth year will be inspiring, but the recipient of this email doesn’t care about that. And I am also sure the sender thinks that mentioning approaching deadlines creates scarcity (Which every seller knows, sells. Right?), but, again, the recipient doesn’t care about your approaching deadline. Really!

What does the recipient care about?

The recipient, along with every other business leader right now, cares about building their business. In other words, they care about their gift ideas and the audience they need to reach to sell them. You must show from the very start of your email that you are a serious business person as well. Work on your subject line until you’ve achieved that objective.

RULE TWO: The first sentence is queen.

Still royalty, the queen in medieval society was also powerful, just not as much as the king. After your subject line, your first sentence is critical in using email effectively. Once opened, you’ve got five seconds to keep the momentum going. That’s all, five seconds. This rule, like rule one, is about being recipient-centered and not sender-centered based on your understanding of the prospect’s business needs.

Again, here are two examples:

BAD FIRST SENTENCE: Yes, it’s that time of year again! Our eighth annual holiday gift buying guide is here!! This award-winning, 100-page glossy-printed publication is packed with amazing gift ideas for every item on anyone's shopping list!!!

GOOD FIRST SENTENCE: I noticed that your company just released a line of learning puzzles for preschool children. Congratulations. This is just the sort of unique family gift busy moms are looking for as an alternative to video games and ray guns.

What rule one and rule two mean for you as a seller is that outgoing email must not be sent generically from a distribution list, otherwise know as spam. Every email must be customized to your prospect as a result of basic research regarding their products, target audience, and seasonal business cycles. This will result in fewer email sent, but significantly increased response rates. That’s the point, right?

RULE THREE: Keep the body short.

Okay, now it’s time to talk about yourself. But do it carefully, and do it briefly. Avoid all the self-congratulating terms (like amazing, award-wining, cutting-edge, blah, blah, blah) that litter sales communication today. And please, please, please lose the exclamation marks. Keep it real and keep it short, 150 words or less.

You should, however, talk about actual business results. Just don’t do it in a self-congratulatory way. State the facts and use recognized business terms like increased sales, reduced down time, improved productivity, etc... Also, use actual numbers and actual names (if possible).

Here’s how I would do this for the holiday gift guide we’ve been discussing:

Every year at the holiday season we print a gift buying guide. This is a high-quality publication that’s distributed directly to professional women from an opt-in subscription list. One of our clients, Thinker Toys, LLC , experienced a 45% increase in retail sales in December from this publication alone. What would a 45% increase in sales do for you?

RULE FOUR: End with a call to action.

Outgoing sales email is, of course, one step in the larger sales process. Know what the next step is and state it. Then follow-up that step without exception. For most of us this means not mentioning price in any way, even a great, limited time sale price. For most of us email is a way of opening up a relationship and expanding the know, like, and trust quotient. Jumping right to price and product destroys that possibility.

Here’s how I would close the email we’ve been working on:

I’m sending you a copy of last year’s gift buying guide and placed sticky notes on the pages I thought you’d find interesting. I’ll be calling you next week to discuss this year’s publication. If you’d like to speak to me before then, my direct number is ...

RULE FIVE: Keep the signature simple

Lose the fancy signature line with colorful graphics and handwritten autograph. Not only is that distracting, but you’ll get sent straight to junk mail by a spam filter. List your name, position, company, and basic information in straight type (add color if you must). Again, this is not the place to throw in a self-serving tag like, “The World's Leader in ....” Drop it. Your signature should be limited to three lines, four lines max.

RULE SIX: Don't send attachments.

Like the signature rule, following the attachment rule will keep you from the junk mail folder. It’s tempting because we love our colorful graphics and beautiful documents, but don’t do it. It’s also considered rude to send something that will use up precious hard drive space without being asked to do so. If you must provide a sample of your work, do it through an HTML link that the recipient can follow.

BONUS: 35 words to avoid being sent to spam filter purgatory

Purgatory, how’s that for another medieval concept? Here are 35 words NEVER to use in your email because they have been deemed as being associated with spam according to Josiane Chriqui Feigon in her terrific book Smart Selling on the Phone and Online.

free
specials
market
no obligation
gift
bonus
offer
bargain
click
limited time
marketing
advertising
deal
discount
ads
sales
pleasure
sell
pricing
lowest prices
shopping
guarantee
clearance
package
renewal
final days
finance
just released
performance

The Third Phase: Your Most Dangerous Business Challenge

Successful small businesses move through four distinct phases of development: from an initial idea to actual start-up, and from start-up to ultimate maturity. In keeping with the metaphor of our company, Summit Small Business, we identify these phases as living in the village, getting to base camp, climbing the mountain, and reaching the summit. It is the Third Phase, climbing the mountain, that is the most dangerous of these four.

Imagine you’re living in the village working for a proprietor. On one particularly boring day you’re staring out the window near your cubicle and gaze at the top of the mountain that rises from the foothills of the city. It’s towering and majestic and awe-inspiring. And suddenly you think, “I shouldn’t be wasting my life working in this cubicle. I should be at the peak of that mountain on top of the world, because ________________ (Fill-in the blank with the great idea you have or the special skills you possess).”

Although a lot of details are left to be determined, in that moment a business has begun. This is the first phase of small business development, the Idea Phase.

Months, or perhaps years, later you leave the village and the stifling cubicle you’ve slaved in. You gather your family, and maybe a few friends who believe in you, and hike to the foot of the mountain. It took all the money you had (and then some) to fund the trip, but you arrive at base camp safe and sound. You just completed the second phase of small business development, the Start-up Phase.

When you get to base camp you discover, to your surprise, that a lot of people have tried to get to base camp and ended up going back to the village. Four out of five to be exact. But you’re not one of those people. Neither are you satisfied with just hiking to the foot of the mountain. You’re going to reach the summit. So you begin to climb and enter the third phase of small business development, the Growth Phase.

What you don’t know about this phase is: the issues of survival that had to be overcome in starting your business pale in comparison to the issues that await you on your climb to the top. Here’s what makes the the Third Phase so dangerous:

1. The Third Phase demands specialized skills.

If you know how to walk, you know how to hike. It might be harder, but the basic skills are  the same. Climbing, however, is not hiking. It involves some hiking, but much, much more.

Sustained business growth is the same. It involves some of the things you needed when you started your business, but much, much more. You must have an understanding of long-term strategic planning and the essentials of day-to-day execution. You must know your gross profit margin on the products or services you sell and you must meticulously manage your cash. You must have utterly reliable systems in place for marketing, sales, hiring, and compensation. Without mastering these skills, and others like them, you will never reach the summit, and may even lose your footing entirely.

2. The Third Phase can’t be done alone.

It may go without saying, but it must be said. No one climbs a mountain on their own. Or if they do, they don’t do it for very long. You may have gotten this far by carrying your business on your shoulders, but it’s too big now, and, if you keep trying, it’ll break your back.

The problem is few business owners know how to multiply themselves in others and cap the growth of their company to the limits of their personal capacity. While that capacity may be many times larger than the average human being’s, it’s still limited and will limit the growth of the business as well. The most critical skill, then, for this phase of business development is leadership. The ability to be a leader that people trust and respect and to assemble a group of leaders that are trusted and respected by the entire organization. In others words, getting things done through others instead of doing everything yourself.

3. Mistakes are costly in The Third Phase.

If you don’t make it to base camp, the start-up phase, you can go back to the village. Perhaps a bit poorer and a little embarrassed, but alive and in one piece. A slip on the edge of a cliff as you’re climbing the mountain can be devastating. The risks associated with the growth phase are grave. When a growth company fails, not just the owner loses a job, but many other people, including family and friends. When legal or financial crises strike, the fallout can life-long impact. Mountainous terrain is treacherous, claiming another four out of five businesses (That’s a total small business mortality rate of 96%).

The costs of the climb can be deeply personal as well. Many business owners have lost their marriage and ruined relationships with family members and friends. Still more have struggled with issues related to physical health and destroyed their emotional well-being.

Here is the saddest part of this scenario: every one of these Third Phase mistakes are preventable. How? Even the most experienced mountain climbers use a guide for their ascent from base camp to the summit. If you were on an expedition to the top of Mt. Everest, you would hire a Sherpa for your trip. Sherpas are experts in the terrain of the Himalayas and skilled at averting the dangers present there.

The Third Phase is the focus of our work. We are experts at the journey from base camp to the summit, from start-up to maturity, and skilled at helping people climb that treacherous terrain. But we aren’t the only ones doing this work, there are lots of skilled coaches, consultants, and small business experts available to help. Find the Sherpa that’s right for you, even if it’s another business owner who’s further up the mountain. Don’t climb alone!

Once a business has mastered the skills of climbing the mountain, it reaches the summit: The Maturity Phase of small business development. This phase is not measured by amount of employees, volume of revenue, or years of existence, a common misconception. Small business maturity is measured by its degree of dependence the primary leader. In other words, systems and processes are in place so that the business runs itself and has become a self-sustaining enterprise.

Another way of looking at this phase is through the lens of human development. Using this imagery, The Idea Phase of small business development is birth and The Start-up Phase childhood. The Growth Phase is adolescence and The Maturity Phase adulthood. My oldest daughter just graduated from college. She has a good job and pays all her own bills. This is what a mature business does as well, maintaining its own sustained momentum. One day my daughter may get married and have children (Yikes!). Mature businesses do this too, birthing other businesses and beginning the process of development all over again.

This is the great adventure of small business ownership!

This Year’s Best Business Book: The Inside Advantage by Bob Bloom

When I buy a book, I expect to find an innovative idea or two. The thousands of dollars that can be made from a new idea is well worth the twenty bucks or so I might spend on a book. Occasionally, however, I run across a book that’s packed with such incredible content that I mark-up most every page.

Marketing expert Bob Bloom, one of the masterminds behind the launch of now well-know brands such as Southwest Airlines, Juicy Juice, and T.G.I. Fridays, has written such a book. It’s called, The Inside Advantage: The Strategy That Unlocks the Hidden Growth in Your Business. Here’s an overview of the four key concepts of Bob’s book and what he refers to as The Growth Discovery Process:

CONCEPT ONE: Your Core Customer

The most important word in the vocabulary of business, Bob declares at the very beginning of the book, is this: customer. Sustained success in business is not about me, my great ideas, my hard work, my incredible product, pricing, whatever. Sustained success in business is about the customer, meeting her needs in a real and meaningful way.

Apart from having a deep understanding of your customer, however, there is no way you can meet her needs. Bob refers to this as knowing your WHO and instructs every business to have a simple, 10-15 word statement defining your core customer.

“The first ‘ingredient’ in your WHO statement is a brief phrase that describes your most valuable customer--one person--in a very clear, vivid and precise way,” Bob advises. “The next ‘ingredient’ in this 10-15 word statement describes, in a very explicit and expressive way, what your core customer needs, desires, prefers, seeks, wants, or demands from a firm like yours.”

Your core customer is the person most likely to buy your product or service in the quantity required for optimal profit. A good WHO statement captures both the demographics of this customer, and, what has been referred to as psychographics, the emotional, human side of the people you seek to serve. Knowing both of these are essential for business success.

CONCEPT TWO: Your Uncommon Offering

“What business are you really in?” Bob asks. The business you are really in, the product or service that sets you apart from the competition and atop of the mind your core customer, is your uncommon offering. It is your WHAT.

“You should view your uncommon offering as the way your product or service is experienced by your customers, the way it helps them by providing them with tangible benefits and inspires them with positive emotional experiences,” Bob explains.

Too many businesses define themselves merely by the monetary transaction that occurs with the customer. This is fatal mistake. Yes, on the surface there is a tangible exchange of value that takes place, but the source of sustained business success runs much deeper. The source of sustained business success is emotional, not intellectual, and must impact every interaction with your customer and build deep and abiding loyalty.

“What your customers feel and experience at the hands of your company is your uncommon offering from their perspective. Your highest business priority is to consistently provide a total customer experience that will positively influence each customer's perspective about purchasing products and services from your firm.”

As with WHO, Bob instructs us to craft a 10-15 word WHAT statement. He then moves to HOW.

CONCEPT THREE: Your Persuasive Strategy

“The success of your business depends on your acknowledgment and true understanding of the fact that all businesses, big and small, compete with other businesses for customers,” Bob explains. “The penalty for not running a business with this reality firmly in mind can be severe and include the failure of the business.”

I have met many small business owners who bragged, perhaps with the purest of intentions, that they didn’t ‘lower’ themselves to do the ‘dirty’ work of marketing. These are the same business owners that go out of business the minute a competitor arrives on the scene or changes occur in the marketplace.

With all due respect to Dilbert and his crew, marketing is not inherently evil. In fact, it’s just the opposite. The only marketing that stands the test of time is marketing that tells the truth. That’s how I define marketing: telling the truth in a compelling manner.

“Your persuasive strategy cannot be made up or fake--if it is, it might work for a short while, until you are found out, at which point you will lose your customers, your reputation, and any hope of growing your business,” Bob warns.

So look at your WHO and examine your WHAT and determine your HOW.

How will you convince your core customers to buy your uncommon offering in a way that is bold, brilliant, honest, and ethical? And do so instead of buying your competitors’ offerings? The answer to that question will set your business on a course of incredible growth and success. Again, this step in The Growth Discovery Process, as with the previous two steps, should be summarized in 10-15 words.

CONCEPT FOUR: Imaginative Acts

The concept of imaginative acts is a non-traditional one because of the challenging context in which we are trying to connect with customers today. Having been blasted with decades of--mostly unwanted--marketing messages, people have become cynical and jaded, unreceptive to traditional advertising. With the explosion of alternative media, these same cynical, jaded prospects are now overwhelmed with an onslaught of information and are tuning out.

OWN IT! is the title Bob has given to the final step in his Growth Discovery Process and is a call to creativity. Not random creativity that has no purpose or meaning, but creativity fully aligned with your WHO, WHAT, and HOW. It is a celebration of your uncommon offering that makes it well known to your core customer.

“OWN IT! aggregates a series of imaginative acts to achieve cumulative impact. It’s designed to be flexible, easy, quick to implement, and cost effective. Here’s the most important point to keep in mind: OWN IT! is not about creating a collection of tactical marketing elements--it’s about executing a program tightly integrated with your strategic framework as defined by the Growth Discovery Process,” Bob explains.

This is good news for small business owners. Effective marketing does not require the biggest budget on the block. It requires creativity and ingenuity, and those things are free. Here’s some examples of imaginative acts:

 

• Making personal follow-up phone calls thanking customers for their purchase
• Coordinating a summer reading program for kids
• Writing a daily blog that gives away free, helpful information
• Providing chapters of a new book downloadable for free
• Sending handwritten thank-you cards
• Hosting monthly parties for customers whose birthday is in that month
• Highlighting real customers on your web site, not stock photos
• Inviting reading groups, knitting groups, discussion groups to meet at your facility.

For more examples of WHO, WHAT, HOW, and OWN IT! (the book is loaded with them) purchase a copy of The Inside Advantage or visit Bob’s web site for the other resources he has available on the Growth Discovery Process.

Four Laws of Leadership

There are laws that run the universe. Not civil laws, but physical laws like the law of gravity. In the same way there are laws that run the leadership universe. Not management laws, but principles of influence that determine how we impact people.

It doesn’t matter if you’re a CEO of a large multi-national corporation or a single mom of three, the laws of leadership affect you. This is true whether you believe in them or not, just like gravity.  

As a small business owner, you probably don’t see yourself as a leader. You see yourself as a  _______________ (Fill in the blank with the expertise that motivated you to start your own business). This is a tragic mistake. You can't abandon the role of leadership in your business without disastrous results, because leadership affects everything.

Fortunately, the laws of leadership are few and accessible to everyone. Again, we’re not talking about turning you into a manager, which for most small business owners is an impossible feat. We’re talking about making you a person of influence with your staff, your vendors, your community, your colleagues, your family and friends. I’ve summarized these laws in the following four fundamentals:

1. The Law of Character

Like oxygen for breathing, leaders cannot lead without credibility. You cannot influence people who do not trust you. End of discussion. You may be able to order them around or manipulate them to do things for you, but that’s not leading and will not bring out their very best.

“We trust--and follow--people who are real, who are consistent, whose behavior, values, and beliefs are aligned,” write Richard Boyatzis and Annie McKee in Resonant Leadership. “We trust people whom we do not constantly have to second-guess.”

So this is where leadership begins. Being real. Being consistent. Having our values define who we are, not just in our words but also in our actions. That’s the meaning of character. And character allows for trust and credibility, the oxygen of leadership, to exist.

2. The Law of Clarity

So based on consistent character, you’ve established trust and credibility. Congratulations! Most business owners never get this far with their people. Are you ready for the next law? Now you must know where you’re going. In other words, you need a map. This is the law of clarity.

Clarity, your map, must exist on two levels for it to be effective. These two levels are vision and execution, or, as I like to refer to them, the forest and the trees. In other words, you must be able to see the forest, the big picture, to be able to lead. But you must also be able to execute day to day, working in the trees, or you will not get anything done.

Vision (the forest) without execution (the trees) fails to deliver any of its promise. It paints a picture of glorious blue skies, but lacks the hard work of digging in the dirt. Execution (the trees) without vision (the forest) is all hard work with little insight or inspiration. It doesn’t have a broader context with which to frame that work or a higher cause that work is serving.

You can motivate people through vision, but without execution even the most inspiring motivation will wane as people get the distinct feeling that the dream will never actually become reality. You can organize people through execution, but without vision even the best organization fails to cross the finish line. This is because humans beings, who are creatures of emotion, need a sense that what they are doing actually makes a difference.

In other words, every plan needs a dream to empower it, and every dream needs an plan to complete it. You can’t choose between heads or tails on this one. You’ve got to have them both. That’s how the law of clarity works.

3. The Law of Collaboration

“Does not play well with others,” is a troubling epithet on any first-grader’s report card. We’re adults now, though. We’ve grown up. We know how to get along with people. Right?

Essential to leading is “playing well with others.” What I mean by that is the ability to give and take, to speak and listen, to assemble a team that works together and not act like the Lone Ranger.

What I find happens with most small business owners is that they swing between two extremes when it comes to working with people: confrontation and accommodation. In an attempt to grow their business, many owners assert themselves and become confrontive at every turn. Then, awash with waves of guilt or just exhausted from the stress of confrontation, they back way off and let people do their own thing, accommodating every whim. That, of course, doesn’t work either, so they return to confronting, then accommodating, then confronting, then accommodating.

Collaboration is different and delivers very different results. With collaboration a business owner is fully engaged with the issues in their business, but also fully engage their people on those issues. They speak up and assert their point of view, but let others speak up as well in open dialogue, discussion, and even debate. There is mutual respect and mutual give and take. This collaboration builds consensus, and consensus builds the camaraderie that any team needs to win in a competitive environment.

At the end of the day, better decisions are made and a better business is built because other people have a role in the process, not just one person. As the Bible puts it, “Iron sharpens iron.” That’s collaboration.

4. The Law of Encouragement

For those of you who don’t like headings that all begin with the same letter, you’ll like like the fact that this fourth law starts with an E. But look again, encouragement simply means “to fill another person with courage” (And yes, courage starts with a C). In other words, as leaders we must attend to the inspiration, motivation, and emotional well-being of the people we lead. We must infuse them with courage.

A survey of millions of American workers conducted by the Gallup Corporation discovered that 65% of them received no praise or recognition for the work they did in the past year. That’s right, for two-thirds of the workforce a whopping 52 weeks went by without any affirmation. It’s like we’re saying to our employees, “I told you I loved you when I married (hired) you. If it changes I’ll let you know.”

Is this what it’s like working at your small business? No praise given for work well done? No thanks offered for extra effort? No recognition awarded for accomplishment? Here’s the crazy thing: praise is free! Entrepreneurs working on a limited budget have just as much access to this resource as the largest corporation.

It costs you nothing to thank someone and merely a stamp to send them a hand-written note. Giving a team member a standing ovation at a weekly staff meeting for going the extra mile doesn’t waste a single dollar. Yet all of these things are very, very powerful means of encouraging your people, and the lack of them diminishes your leadership.

“Because of its power, ridiculously low cost and rarity,” Gallup researchers Rodd Wagner an James Harter write in 12: The Elements of Great Managing, “praise and recognition is one of the greatest lost opportunities in the business world today.”

Get the law of encouragement working for you.

Use These Three Interviews to Achieve Hiring Success

Being able to hire good people is a critical business building skill that few small business owners possess. The good news is most people prefer the freedom and camaraderie of the small business environment and will jump at the chance to work with you. You’ve just got to know how to hire the very best.

Once you’ve written a complete job description for the position you are seeking to fill with a list one one-year accountabilities; and once you’ve assembled a pool of candidates from which to make your final selection, you’re ready to use three different kinds of interviews in the following order:

1. The Phone Screen Interview

If you’ve done a good job sourcing candidates, you should have at least 40-50 resumes. Right now, with the high unemployment rate we are experiencing, it’s not unusual to receive over 100 resumes for an open position.

A few of these resumes, maybe as many as a dozen, will rise to the top, but you will not be able to thoroughly interview all of these applicants. The place to start is with the phone screen interview.

What you’re wanting to do in the phone screen interview is to find the best of the best for the open position you have. Every person that’s made it to your top ten (or so) list should be asked these questions in this order, according to The A-Method of Hiring designed by ghSmart and Associates:

• What are your career goals?
• What are you really good at professionally
• What are you not so good at, or not interested in doing, professionally?
• Who were your last 5 bosses, and how will each rate your performance on a 1-10 scale when we talk to them?

Good phone screen interviewing should get you down to the top three or four candidates that you will meet with face to face and conduct the next kind of interview, the CIDS Interview.

2. The CIDS Interview

The initials CIDS stands for Chronological, In-Depth, Structured interview and was coined by Brad Smart in the book Topgrading.

The CIDS Interview is based on the simple premise that the past is the best predictor of the future, not personality tests or talent profiles. In his book, Brad Smart extensively documents this premise and presents the CIDS interview as the key to hiring success, a “silver bullet” as he refers to it.

In a CIDS Interview you ask these seven questions to every finalist about every job they have ever worked at:

• What were you hired to do?
• What were your responsibilities?
• What were your successes in this job and how did you achieve them?
• What were your failures?
• Who was your boss (How do you spell his/her name?) and what were his/her strengths and weaker points?
• What’s your best guess as to what your boss will tell me were your strengths and weaker points?
• Why did you leave this job?

Expect to spend about 90 minutes or more per interview, but be prepared to learn more about a candidate than you have ever learned through any other interviewing methodology, time well spent in achieving hiring success. Again, the best predictor of the future is the past.

A best practice in conducting CIDS Interviews is to do them in tandem. That is, two people interviewing one candidate. This brings two sets of eyes, two sets of ears, and two perspectives to the table, not just one. A slick candidate may fool you--a busy business owner--but usually can't fool your battle-hardened assistant. Or both of you at the same time. Right?

Now you are ready for the next kind of interview, the Reference Interview.

3. The Reference Interview

What, we haven’t checked references yet? Yes, that’s right. Reference checking, because of its time consuming nature, is the last thing you do in the hiring process. Here’s how to do it right.

After completing your CIDS Interviews, ask the candidates you would consider hiring--and only the candidates you would consider hiring--for references. But you pick the references, not the candidate, based on the information you learned in your CIDS Interview.

Now have the candidates set up the reference calls, not you. When candidates do this, the chances are better that you will actually hear the unvarnished truth. In fact, a candidate’s timely completion of this exercise in itself is telling.

When a reference calls you, here’s what to ask. Again, as referenced in The A Method of Hiring:

• In what context did you work with this person?
• What were this person’s biggest strengths?
• What were this person’s biggest areas of improvement back then? (The key words back then opens the door for honesty)
• What would you rate his/her overall performance in that job on a 1-10 scale? What about his/her performance causes you to give this rating?
• The person mentioned that he/she struggled with ______________ in that job. Can you tell me more about that? (Again, this question opens the door for honesty.)

The real point of the reference interview is to test theories you have developed regarding this candidate in the CIDs Interview and to see who follows through on this exercise to insure you get the very best person for this position.

For more information on successful hiring, check out these two books: Who: The A Method of Hiring by Geoff Smart and Randy Street and Topgrading by Brad Smart.

Forget About Customer Service! Create Exceptional Customer Experience

Forget everything you hold dear about customer service because it’s not enough anymore. When my mother grew up and it was her birthday, her mother went to the store and bought flour, sugar, milk, and eggs; came home and baked a birthday cake. When it was my birthday, my mom went to the store, bought a cake mix and baked me a birthday cake.

When my kids’ birthday came, I did neither of those things. For about ten bucks I went to the store and bought a pre-made cake complete with Teenage Mutant Ninja Turtles on top. However when parents prepare for their children’s birthday today, a cake is not enough. There must be a party with games, prizes, balloons, and a clown.

This is what Harvard researchers Joseph Pine and James Gilmore call in their book by the same name, The Experience Economy. It is a fundamental shift in the marketplace where “work is theater and every business a stage.”

In other words, people come to businesses today with dramatically different expectations than they did even a few years ago. They don’t want an ordinary product or run-of-the mill service, they want an experience.

And it is the experience that keeps customers coming back again and again and again, or the lack of it that drives them away.

Three Essentials to Exceptional Customer Service

Here’s how you can make every customer’s contact with your business an exceptional experience:

 1. Cast Your VISION

It’s a quaint, yet insightful story told of a Londoner taking a walk downtown at the turn of the last century. He came upon laborers working on a construction project and asked one of the men, “What are you doing?”

He answered, “I’m layin’ bricks.”

Continuing down the block a bit, he asked a second worker the same question, and the man answered, “I’m buildin’ a wall.”

To a third a bit further down he posed the same question. The man stopped for a moment, took a deep breath, and looked to the sky saying, “I’m building a great cathedral!”

Getting very, very clear about the vision of your work, the great cathedral that you are building, has a powerful effect on people. It transforms ordinary, routine jobs, like laying bricks, into a cause. And when people are committed to a cause, nothing can stand in their way.

In short, vision creates passion. And passion for one’s work is what delivers exceptional customer experience that is so critical to succeeding in this experience economy.

2. Empower Your PEOPLE

The carrot and the stick have proven to be poor motivators in the workplace because they do not move people from within. Positive input, encouragement, and genuine appreciation, however, communicate to people their value and worth and motivates them from the inside out.

When provided on a regular basis, work becomes a place people enjoy coming to instead of just putting in their time.

“Because of its power, ridiculously low cost and rarity, praise and recognition is one of the greatest lost opportunities in the business world today,” write Gallup researchers in 12: The Elements of Great Managing.

In other words, your employees are your internal customer. When their experience working for you is affirming and energizing, that positive emotion overflows to your customers creating the exceptional experience you seek.

3. Live Your VALUES

One of the most infuriating customer experiences is to be told by someone that your reasonable request cannot be met because, “It’s not our policy.” Many companies develop policy manuals as a rule book to keep people in line and keep customers from stepping out of line.

Leading companies, however, do not do this. They teach people values and how those values apply to the many, and varied, situations that may arise with customers.

Visit any Marriott® hotel and you will experience this phenomenon. “Do whatever it takes to take care of the customer” is their mantra and they live it every day.

The heroes at Marriott® are frontline employees who give money out of their own pocket to help with a guest’s cab fare or take special care of a package so that a traveler’s child receives it on their birthday. Talk about exceptional customer experience!

Not surprisingly, this also impacts the bottom line. Marriott® consistently stands as one of the most profitable businesses in the hospitality industry and in 2005 won an award for best customer service for any hotel chain in the United States.

The Customer Experience Payoff

When I visit Washington, D.C., there is only one hotel I will stay at, The Willard Intercontinental.

Why?

Not because of the complementary bottle of wine that was in my room. Or because when I arrived bleary-eyed from the west coast in the dead of night, the manager came out to greet me. All nice touches!

It is because of a cleaning lady.

I conducted a leadership seminar at The Willard Intercontinental and took off without the power cord from my laptop. Replacing one of those is a pain in the neck, not to mention living with a dead computer until you do.

But on my way to the airport I received a call from, you guessed it, the cleaning lady who found it and took the time to figure out that it was my power cord. She then OVERNIGHTED the cord to me and I had it to use the next day.

What an exceptional customer experience!

Yes, there are much cheaper hotels in Washington D.C., but the experience I had there was unmatched. Why would I want to stay anywhere else? You see, that’s how the experience economy works.

Now pass me a piece of birthday cake.

The Power of Positive Praise, Part III: Two Don'ts

We are discussing this week the power of positive praise as we lead people in our small business. Having reviewed three do's for delivering praise effectively in yesterday's post, here now are two don'ts:
    
As you are being true, specific and personalized with your praise, there are two mistakes to avoid. The first mistake is following praise with correction. This is a common practice and a misinterpretation of the five positive comments to one positive comment rule.

The thinking goes that if you need to correct someone, compliment them first so they can accept your correction. But for the person receiving this one-two punch, it makes praise hallow, manipulative, and fraught with danger. What it will also do is make people wary of you, anxious when you are praising then not sure if the other shoe of correction going to drop. Not exactly the tone of trust you are trying to set with your people.

The point of the five positive comments to one negative comment ratio is the kind of climate you are creating so that when you need to correct someone, they can receive it. Giving correction when appropriate is an inseparable part of effective leadership, but do it honestly and plainly. No positioning or spin. The advice I was given once was: stand up, speak up, and shut up.

A second don’t is similar to the first, though not as devastating. It’s the “keep up the good work” mistake and goes like this: You deliver and piece of positive praise, and, instead of just ending there, you feel compelled to give a challenge to the person you are praising. As if the affirmation will somehow motivate this person to do poorer work rather than better work, so a challenge must be made to keep it up. Does this actually make sense? Then why do we do it?

I remember being contracted to give a series of training sessions to managers on Saturday. Because it was the company’s busy season and they wanted to get this training done, they asked their people to do it outside of their work week on one of their two days off.

Amazingly, everyone was game and at the beginning of our first session the Vice President of the division called into the training class and thanked everyone for their sacrifice. He praised these leaders for their commitment to the company and for the results that had achieved so far in the year. You could see the people in the room rise in their seats and swell with pride. Then the Vice President ended his call with these words, “Now, get better!”

Wham, the oxygen was sucked out of the room. It was like he said to them that everything they had done was not enough and they must do more or he would not be satisfied. Resist the temptation to tag on to the positive words you give people a challenge to keep it up. It’s unnecessary and ineffective. It’s like going to the ATM machine, putting $200 into your account and then withdrawing $200. That’s useless and doesn’t get you anywhere. Praise others truthfully, specifically, and personally with no additional agenda items and no strings attached.

YESTERDAY: The Power of Positive Praise, Part II: Three Keys

The Power of Positive Praise, Part II: Three Keys

We are discussing this week the power of positive praise as we lead people in our small business. Having made the business case for praise in yesterday's post, here now are three keys for delivering it effectively:

1. Make it TRUE
    
The way to start making deposits into your employees’ emotional bank account is not by throwing around happy words indiscriminately. This kind of verbal outpouring, however well-meaning, will breed resentment among your people. Praise is praise only if it is true, otherwise it is flattery (a fancy word for lying). This means taking the time to catch people doing things right not just doing things wrong, which is the modus operundi of most managers.

If I placed a white sheet of poster board in front of you with a black smudge on it, what would you see? Of course the black smudge. It wouldn’t matter if 95% of the poster board was pristine white, you would focus on the black smudge. Unfortunately, this is what happens in our working relationships. In fact, the more time we spend with people, the more fixated we get on the 5% that is wrong with them and not the 95% that is right.

Catching people doing things right is primarily a change in focus that seeks to find the good things people are doing and recognize them for that good. It also embraces the process people are going through and not just the end product. Do not wait for everything to be done right before offering affirmation. Positive praise understands that progress toward the ultimate goal can be affirmed and will fan the flame of accomplishment along the way.

Is the black smudge irrelevant on the poster board? No. Especially if that smudge is seen every day by your customers. Deal with the smudge unapologetically, but in a climate where enough deposits have been made so this withdrawal won’t bounce a check.

2.  Make it SPECIFIC
    
“Hey, you did a great job!” is really an empty accolade. It says nothing and means nothing. Perhaps we say it with the best of intentions, but the words miss their mark. The reason? They are not specific and only specific praise has power.

Consider this alternative, “Hey, you did a great job with that donor. When he called with his complaint, he was hotter than a pistol. I really admire how you kept your cool and were able to give him what he wants. Again, good job!” What is the difference? You state in very clear and concrete terms what this great job looks like and affirm it. The carrot and the stick have proven to be poor motivators in the workplace because they do not move people from within. Positive input, encouragement, and genuine appreciation, however, communicate value and worth from the inside out and bring a sense of energy and strength to both the giver and the receiver. When provided on a regular basis, work becomes a place people enjoy coming to instead of just putting in their time.

An additional benefit of catching people doing things right is being able to effect behavior. Like a magnet over shavings, praise will pull out the true metal in the pile and motivate people to do those actions again and again and again. You can’t very easily punish a killer whale, but with a regular system of positive reinforcement they have been trained to achieve the most amazing feats. “When good performance is followed by something positive,” Ken Blanchard writes in his book on this very subject Whale Done! “people naturally want to continue that behavior.”

3.  Make it PERSONALIZED

If you were in Japan, you would use yen. If you were in Mexico, you would use pesos. If you were in Germany, it would be the Euro, and in American, the dollar. Different places, different currency. And it is only that currency that will work in those places. Different people have different currency as well. This is the reason for personalized praise.

Some people are terribly embarrassed by being spoken about in public, others thrive on it. Some people read every note, card, and letter you send them; others toss all written communication aside preferring to be spoken to face-to-face. Some people only want business to be business and never talk about their private life at work; others post the pictures of every family member and their pets outside their cubicle. Again, different people have different currency and if you are going to be effective in making deposits in their life, they must be made in the currency they trade in. Praise must be personalized.

“I don’t have time to coddle my people like this!” one leader blurted out to me in a coaching session. I asked him to look at it this way, “If you knew for a fact that if you invested one dollar in a venture you would receive two in return, would you do it?”

“Of course!” was his reply. “Who wouldn’t?” That is exactly what Benjamin Schneider, Professor at the University of Maryland, discovered. In operations as diverse and bank branches, call centers, insurance companies, and hospitals, for every 1% increase in climate there was a 2% increase in profit. This is what positive praise does within an organization, a pretty good return on investment!

TOMORROW: The Power of Positive Praise, Part III: Two Don'ts

YESTERDAY: The Power of Positve Praise, Part I: A Business Case for Praise

The Power of Positive Praise, Part I: A Business Case for Praise

Pull out a pen and paper and take this quick quiz:

1.  The US Department of Labor recently reported that the number one reason people leave an organization is:

A.  The pay is not good enough.
B.  Someone else got a promotion and not them.
C.  They don’t feel appreciated.
D.  They want better benefits.

2.  According to a recent Gallup Poll, what percentage of the American workforce received NO praise or recognition in the last year?

A.  25%
B.  45%
C.  65%
D.  85%

3.  According to the Gallup Corporation’s research of five million employees worldwide, the frequency of praise and recognition in the workplace should be no less than:

A.  One time per day
B.  One time per week
C.  One time per month
D.  One time per quarter

4.  Researchers have determined for healthy relationships the perfect ratio of positive comments to negative comments is:

A. 1 to 1
B. 3 to 1
C. 5 to 1
D. 10 to 1

5.  Cigarette smoking has been shown to decrease life expectancy by 5.5 years, but a recent Mayo Clinic study showed that positive emotion can increase life expectancy by:

A. 4 years
B. 6 years
C. 8 years
D. 10 years

To see how you did on this quiz, turn to the end of this article for the answers.

A Business Case for Positive Praise
    
Well, how did you do on the quiz?

The leading reason, by an overwhelming margin, people leave organizations has nothing to do with pay, benefits, or promotion. The leading reason is their not feeling appreciated. This is because 65% of the American workforce did not receive any praise or recognition in the last year. It’s like we’re saying to our employees, “I told you I loved you when I hired you. If that changes, I’ll let you know.”

Contrast this frequency, zero times a year in two-thirds of workplaces across America, with the frequency of praise and recognition needed for fully empowered employees. Gallup found that no less than one time per week is the proper frequency for praise and recognition. In fact when managers achieve this frequency, Gallup has documented data that indicates it results in 56% higher attainment of customer loyalty, 38% higher results in productivity, and 50% lower employee turnover. What would these numbers do for your organization?

Furthermore, the distribution of positive comments to negative ones must be within a 5 to 1 ratio for workplace relationships to be healthy and whole. That is, there must be five positive comments given for every one negative comment. Amazingly, in 1992 psychologist John Gotman had 15 minute conversations with newly married couples and used the 5 to 1 ratio to predict whether or not these marriages would end up in divorce. Ten years later his predictions were 94% accurate.

Other dramatic benefits come from the fostering of positive emotion.  Studies at the Mayo Clinic found that it can increase life expectancy by 10 years, twice as much as the 5.5 years smoking a pack a day takes away from your life.

This is so because everyone who works for us has an invisible checking account within their soul. Just like our personal checking, you can make deposits into and withdrawals from this account. Throughout the course of the year in working with people, in big ways and small ways, we increase the equity in the account we have with them or decrease it. Just like our personal checking account, we bounce checks when there are not enough deposits in the account to cover the withdrawals. This happens relationally when we use and use and use a person giving nothing back to them in return. The next request we make, or the next mistake we commit, gets a volatile reaction, the emotional equivalent of a bounced check.

Wise leaders are always investing in the equity of the emotional bank account of the people they lead. They see it as one of their top priorities. They understand the five to one ratio and make far more deposits than they do withdrawals. Then when it is time to make a withdrawal, or they make a mistake because they are human, their checks don’t bounce. People receive what they have to say, even if its bad news, and give them the latitude they need to grow as a person in the job. Positive praise is a key way to do this.

One of my clients shared with me the story of the greatest day in his professional life. He had crushed his sales number and won the highest award in his division. At an end of the year banquet, he was brought on stage and cheered by his peers. Then his manager said this, “Everyone knows this is a very hard job to do and none of us could do it without the support and sacrifice of our spouse.” This brilliant boss had the sales person’s wife come on the platform and she received a standing ovation. To this day he still chokes up a bit telling the story.

This is the power of positive praise!

TOMORROW: The Power of Positive Praise, Part II: Three Keys

Here are the answers to the opening quiz: 1. C, 2. C, 3. B, 4. C, 5. D