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The Entrepreneur CEO’s job description

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Earlier this week, I began a series of articles on the Harvard Business Review blog site that will deal with the job description of the entrepreneur. The series arose because while people talk a lot about what qualities make up a good entrepreneur, the world is strangely silent on how an entrepreneur should actually spend their time. They always run around like the sky is falling, and they’re busy beyond belief. But doing … what? And how do they know what they’re doing is actually moving the company forward, versus just being whatever activity caught their eye at the moment.

Read my HBR.ORG blog post on Advanced Entrepreneurship: The Entrepreneurial Job Description.

Planning for operational growth

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A key element of working less and doing more is preparing enough for the future so you have systems in place when the demands on you grow.

If your business is lucky enough to be on a growth path, you still have to deal with setting up operations before the growth happens. Otherwise, you get caught unable to deliver on the extra sales you’ve generated. If you need examples, look no further than AT&T’s inability to deliver adequate data coverage in major markets since the introduction of the iPhone, five years ago. I was interviewed by Latino Business Review on the preparing for operational growth. It’s interesting that the article characterizes me repeatedly as “conservative” in my business practices. I wouldn’t consider my advice conservative; I’d just call it common sense. If you’re growing into a country or product line you have no experience with, why in the world would you make a huge bet with no data? Far better to make a small bet that lets you collect the data, and then commit major resources.

Read the article here: http://www.latinobusinessreview.com/business-features/operations/think-medium-term-planning-operational-growth

Business has a lot to learn from theater people

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We wrapped up Evil Dead: The Musical this weekend. I am sad. I miss rehearsal every night. I miss singing and dancing. I miss wondering if that is water in the makeup, or whether Zach’s drool was a bit too enthusiastic. Part of why I decided to start acting was the suspicion that it would be good for me socially and emotionally. I couldn’t have been more right.

The amazing thing about the experience was how quickly we created a feeling of community, shared goals, and closeness. We were all working together on a project much larger than any of us could possibly have done alone. Most people on the project were under 25 (and many were still in college). No one had any formal training in teamwork or group dynamics. No one was using models from Leadership 101, or Good to Great, or … or, frankly, any of the 80,000 business titles that purport to teach people to work together.

And yet, the production demonstrated teamwork that most businesses would kill to have. How could a student theater group on a shoestring budget with no  education or background in training or group process pull this off? It really gives me pause.

Perhaps good teamwork isn’t a matter of training. Perhaps there’s something structural that can produce teamwork, simply by its very nature.

I’m intrigued, and I don’t know the answer. What makes the teamwork “just happen” when flesh-eating zombies are involved, when it takes pushing, shoving, pulling, tearing, and training to do the same thing when soul-eating corporations are involved? What do you think?

Customer service requires substance and style

I had a customer service need today. I called the company, whom we’ll call Canadian Mozy, and got a very nice young man named “Johnny.” He seemed to have a genuine American accent, clearly understood my issue, and was able to respond in complete sentences. That’s a good first start. Sometimes, I call a company and someone with a thick foreign accent answers, introducing himself as “Biff Johnson.” That’s a bad sign, especially if you recognize the accent and know that folks in that culture rarely have names like Biff. When a company’s first instruction to their phone reps is, “lie about your name,” you know you’re in for a real treat.

A lot of companies know that having polite reps who tell the truth makes a good impression. Canadian Mozy certainly understood this.

Johnny listened to my problem and explained, “we used to do what you’re asking for. We see we’ve done it for you several times. But our new policy is that we won’t do it any more.” Interestingly, I was asking for something that had no business implications for Canadian Mozy. It did not require them to spend a penny on my request. It did not expose them to any additional risk, nor did it obligate them to anything in the future. It was free for them to provide, they’d provided it before, and some random mid-level pinheaded bureaucrat decided to retract the policy.

Did I get good service? Johnny provided extremely polite service. He was gracious and dealt with my hissing, booing, and making funny noises into the phone with professional aplomb. But he was powerless to fix the situation.

As a result, I’m pulling tens of thousands of dollars’ worth of business from Canadian Mozy and shifting it to other vendors. Though Canadian Mozy likes to trumpet themselves as a “partner” to the small businessperson, they aren’t. Their reps aren’t allowed to think for themselves, and the managers who set their policies don’t understand a whit about how to evaluate the actual business impact of a policy decision. They eliminated a policy that gave customers great value at no expense to themselves, and never thought about how customers might react.

This brings me to the much misunderstood truth about customer service:

  • Good customer service requires good style. Your customer support reps must speak the language of your callers, shouldn’t tell obvious lies, and should be polite, courteous, and trained to deal with irate, irrational customers.
  • Good customer service also requires good execution. Your customer support reps must have the training to investigate someone’s problem, and the ability to do something about it, especially when the request is one you’ve honored in the past and which has no downside for you but tremendous upside for your customer.

If you’re missing style or executions, customers get upset. In the language of kindergarten, good support comes down to: be polite and keep your promises.

Good customer service requires substance and style

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Good customer service requires more than just nice phone manners.

I had a customer service need today. I called the company, whom we’ll call Canadian Mozy, and got a very nice young man named “Johnny.” He seemed to have a genuine American accent, clearly understood my issue, and was able to respond in complete sentences. That’s a good first start. Sometimes, I call a company and someone with a thick foreign accent answers, introducing himself as “Biff Johnson.” That’s a bad sign, especially if you recognize the accent and know that folks in that culture rarely have names like Biff. When a company’s first instruction to their phone reps is, “lie about your name,” you know you’re in for a real treat.

A lot of companies know that having polite reps who tell the truth makes a good impression. Canadian Mozy certainly understood this.

Johnny listened to my problem and explained, “we used to do what you’re asking for. We see we’ve done it for you several times. But our new policy is that we won’t do it any more.” Interestingly, I was asking for something that had no business implications for Canadian Mozy. It did not require them to spend a penny on my request. It did not expose them to any additional risk, nor did it obligate them to anything in the future. It was free for them to provide, they’d provided it before, and some random mid-level pinheaded bureaucrat decided to retract the policy.

Politeness Wasn’t Enough

Did I get good service? Johnny provided extremely polite service. He was gracious and dealt with my hissing, booing, and making funny noises into the phone with professional aplomb. But he was powerless to fix the situation.

As a result, I’m pulling tens of thousands of dollars’ worth of business from Canadian Mozy and shifting it to other vendors. Though Canadian Mozy likes to trumpet themselves as a “partner” to the small businessperson, they aren’t. Their reps aren’t allowed to think for themselves, and the managers who set their policies don’t understand a whit about how to evaluate the actual business impact of a policy decision. They eliminated a policy that gave customers great value at no expense to themselves, and never thought about how customers might react.

This brings me to the much misunderstood truth about customer service:

  • Good customer service requires good style. Your customer support reps must speak the language of your callers, shouldn’t tell obvious lies, and should be polite, courteous, and trained to deal with irate, irrational customers.
  • Good customer service also requires good execution. Your customer support reps must have the training to investigate someone’s problem, and the ability to do something about it, especially when the request is one you’ve honored in the past and which has no downside for you but tremendous upside for your customer.

If you’re missing style or executions, customers get upset. In the language of kindergarten, good support comes down to this: be polite and keep your promises.

The future of social media: pay content, gossip management

I’m Twittering today. And I’m Facebooking. And I’m blogging. And I’m writing my newsletter and my podcast. In pursuit of building my so-called personal brand, I’m getting my name out there and sharing my brilliance with the world. Once I get some decent lighting, 2010 will see me introduce a video blog as well. Yessiree, I’m building that brand right on up. Yup. Building that brand. Look at it go. Right on up there…

What’s striking, however, is that none of this pays a cent. Not only does it not pay, but it conditions people to want my content for free. I had the audacity to pose a question to my Twitter subscribers last week, to get some suggestions for an upcoming episode. One happy person responded, “Dude, STOP ASKING US how to get stuff done and START TELLING US how to get it done!” I have hundreds of pages of free articles. I have written close to 500 pages of podcasts, all freely available, and apparently that’s not enough.

The social media promise

The theory is that social media lets people discuss my products and services without my intervention. I can now enter into a dialog with my customers, that will let me optimize my products, respond to my markets, and manage my reputation real time. The magically I’ll be successful and have a thriving business. That sounds really good on paper.

Then I think for a moment. I’ve always been able to read reviews of my products. I’ve always been able to survey my customers. And if I’m at all smart about handling customer queries and support calls, I can even optimize my products and design in solutions for my customers based on their problems. In short, pretty much everything social media can do for me, I could do in a pre-social media world. So what’s the difference?

The social media cost

One big difference is the cost. Maintaining an ongoing social media presence is a huge use of time and effort. If I were a big company, I might hire someone full time to do nothing but tweet, twitter, Yelp, Blorp, and Blubber. But as a one-man shop, I have to do all this myself. Then I have to track the responses and figure out which channels are actually getting attention (that will change in six months, requiring another full round of marketing research), and then generate content content content.

At some point, I’m apparently supposed to develop products and services, which is where I make the money. And by the way, those products and services better contain content I haven’t given away for free in the process of generating all this social media.

My prediction

Where will this go? Based on my own experience, I think social media will continue to be important as a channel for monitoring end consumer needs, wishes, and experiences using products. At the end of the day, it’s a giant gossip network, and your reputation is part of your brand, so you’ll have to manage it.

When it comes to content from businesses to customers, I don’t think it’s sustainable. The free content generation will die down over time, unless there’s a clear return on investment to it. Quality content is hard to produce. Companies that can afford to hire someone to be a web presence will do so. They’ll be able to produce high-quality content on an ongoing basis.

Small businesses and solopreneurs will gradually drop out of the fray, simply because the demands are too great and the returns too small. It takes good education and/or experience to be able to generate huge amounts of quality content, and those things are expensive. How much time should a smart, capable, good person with great writing skills spend giving away their knowledge for free without expecting a return? If there’s a demand for high-quality content (which there may not be), it will mainly be on a subscription model.

The few who manage to attract large followings will do great, of course, but that’s always been the case. And attracting a large following seems to be a function of direct marketing skill, more than high quality content creation skill.

Bottom line: in five years, by 2014, we’ll see the quality of free content dropping as the high-quality content creators turn their attention to activities that actually drive their business. Social media will remain important for reputation management, however, and as a tool for monitoring our customers and what they’re thinking.

Are people good or bad? It’s literally a self-fulfilling expectation.

I’ve noticed that underlying a lot of political discussions is a fundamental belief about human nature. Some people believe people are fundamentally self-interested. They won’t work unless paid, and helping the downtrodden is something one does to impress one’s friends. The other side believes people are fundamentally generous. They help each other and will sacrifice their own good for the sake of others.

My recent theory is that both of these viewpoints are true. Literally, they’re both true. There are psychological mechanisms that make each of these a self-fulfilling prophecy.

Self-interest usually manifests in turning everything into a transaction, monetizing as much as possible, and tracking things closely. It turns out that when you introduce money into a conversation or transaction, literally the brain areas involved in altruism, helping, and asking for help all shut down. So if you expect everyone to treat you as if they only want transactions from you, you’ll mention money or exchanges or act in ways you would act when putting together a transaction. Those actions will then actually trigger the same impulse in others. You mention money and the people you’re dealing with become more self-interested and less likely to be collaborative. So a world view where everyone looks out for themselves and everyone is greedy becomes self-fulfilling to the person who holds it.

Similarly, the social psychology reciprocity principle shows that when you give a gift that someone perceives as freely given, they feel obliged to respond by giving back, often in greater amounts than the original gift. So giving provides a self-fulfilling mechanism such that the person who gives freely and believes others are generous will trigger exactly those impulses in others.

What’s important to note is that this isn’t just psychological blinders, where both people interpret the same events differently. This is literally a self-fulfilling principle that plays out in behavior. If you act as if people are greedy, you’ll do things that prime their greedy impulses. If you act as if people are generous and worthy of help, you’ll actually activate reciprocal behavior on their part.

Be careful the world you wish for. You just might get it.

Richard St. John’s TED Talk on Success. Is it nothing but delusion?

I was just watching a TED talk by Richard St. John on the 8 Rules of Success. Richard interviewed 500 TED attendees to distill down eight principles. His recommendations are depressingly trite: have passion, work hard, yada, yada, yada. You can see the talk here: http://bit.ly/6VxMaC

REVISION: October 25, 2012: I may have found the recommendations trite, but that doesn’t mean they aren’t true and rigorous. I wrote this article originally making several incorrect assumptions about Richard’s methodology. My bad. My very, very bad. I inappropriately dinged him on research methodology when I, myself, wasn’t doing my own homework vis-a-vis verifying that my points were correct.

Richard writes: Hey Stever – Just so you know, I did also interview unsuccessful people and homeless people as a control group and they DIDN’T follow any of the 8 Traits that are necessary for success. They didn’t love what they do, they didn’t work hard, etc. As for the Halo Effect, many of the most successful people couldn’t articulate why they were successful. They’d say “I don’t know.” So I’d look for examples of what they’d actually “done.” I’d ask, “How often do you take vacations?” A lot would say “I don’t take vacations.” I’d ask, “Why not?” They’d say, “I’d rather work.” I’d ask, “Why?” They’d say, “I like it” or “It’s fun.” So it wasn’t like they automatically blurted out the 8 Success Traits. I had to find them through examples. And by the way, I’m not saying everyone has to be a big success. I’m just saying is if you want to succeed at something this is how you’ll get there.
Richard St. John

What follows is the bulk of my original article. I’ve edited it to remove specific examples to Richard’s situation, since it does not apply to his work. It does, however, apply to a lot of what passes for “how to succeed” literature, so the points are still useful to keep in mind.

It’s not his fault his results are trite, however. As discussed at great length in The Halo Effect by Phil Rosenzweig, when you interview someone after-the-fact about why something was successful or a failure, you always get the same answers.

That means, sadly, that such answers are meaningless. If you ask someone who’s a known success how they got that way, they’ll say it was vision, passion, hard work, etc. If you ask their friends, the friends will say vision, passion, hard work, etc. If you ask someone who’s a failure how they got that way, you’ll also get the same stories over and over. Humans seem to have built-in explanations for such things.

Most success talks miss the point by not interviewing people who had vision, passion, and worked hard, and failed. Why? Because most success studies start by identifying successful people who have already achieved success and interview them. It may be that for every 100 people who have vision, passion, and work hard, 99 of them end up burned out, divorced, and miserable, and only one goes on to be successful. But if you select only the successful ones to interview, it’s easy to conclude that those traits correlate with success.

A simpler example: every successful person in the world drank either mother’s milk or formula as a baby. Does that mean that drinking mother’s milk or formula leads to success? Not at all. It just means that pretty much everyone drinks those things as babies.

I know some very rich finance people. Their vision? Nil. Really Nil. Like, no imagination whatsoever. Their passion? To show off and impress the neighbors. Their hard work? Signing checks. It’s tough if it’s not special 24-bond paper made for smooth writing. And then all that waiting and waiting! Years of playing golf, waiting while thousands of people work their butts off so the providers of capital can walk off with the profits (that’s what “capitalism” means–providers of capital get the rewards). In short, I know many example of people who don’t have all those nice, feel-good attributes, and are even more successful than many who do.

Since Richard St. John is giving his talks to high school students, he is in the perfect position to do a real experiment to find out what leads to success. Have half of the students he talks to do the things he recommends. Have them work hard, have vision, and so on. The other half? Have them slack off and meander through life. In twenty year’s we’ll be able to see whether or not there’s a real correlation between his recommendations and subsequent success.

Can a corporation be “entrepreneurial?”

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A friend of mine posted a Facebook entry saying his 30,000+ person company is encouraging people to be entrepreneurial. I replied with a remark that I couldn’t imagine a less likely place to find entrepreneurial behavior.

Much to my surprise, he was surprised that I was surprised. But that’s not surprising. It turns out that at his consulting company, they are encouraged to come up with ideas for new products and find new customers. That fits his definition of “entrepreneurial.”

It didn’t fit mine, and I took this as an opportunity to try to define why I had my reaction. Here’s my thinking about what constitutes “entrepreneurial.” Please chime in.

I think we have different definitions of “entrepreneurial.” I hear a lot of corporations use the word “entrepreneurial” as a synonym for “we’re letting you think for yourself and propose creative solutions.” While I applaud that impulse, in my mind, it should be a standard mode of engagement in business and not considered anything to be given a special name.

For me, what you’ve described is being given license to propose new product lines. It fits my definition of “new business development,” and it may or may not be entrepreneurial.

In my definition of entrepreneurship, entrepreneurs (a) are free to change their business offerings, (b) have control over their business model, (c) must raise their own resources and enjoy a corresponding participation in the upside, (d) create an organization, organization structure, and its attendant policies and procedures.

Furthermore, often, entrepreneurs operate in unknowable or cutting-edge spaces. They are introducing new products without the knowledge of whether markets exist.

In essence, an entrepreneur’s product is an organization and business model.

If you can go out to Staples and propose a joint venture where you provide flat-rate actuarial consulting to any insurance company that buys more than $1000 worth of office supplies, with you (personally) pocketing 10% of the revenues, that would be entrepreneurial, in my mind.

If you had the ability to acquire smaller consultancies and attempt a “roll-up,” (without needing corporate approval) that would be entrepreneurial.

If you were to discover that restaurant consulting were more lucrative than actuarial consulting and decide to reposition your job to target restaurants based on your theories/dreams/data about the business model, that would be entrepreneurial.

If your business model is limited (e.g. hourly charging with X% overhead charged back to the parent company), if your ability to raise funds and build an organization is limited (e.g. hiring six people with completely different policies, procedures, dress codes, health plan, etc.), and if your upside is limited (e.g. you can’t create a multinational division and then take home the bulk of the profit as your own bonus), then I would consider you to be in a creative business development capacity, but not entrepreneurial.

Similarly, some people consider franchise owners as entrepreneurial. While they take a risk and share in the upside, I would call them “small business people” and not “entrepreneurs.” They generally don’t have control over their processes, capital structure, organizational structure, or brand/marketing/etc. so while they certainly do start a business with their own funds, they’re sufficiently constrained that they’re essentially employees who shoulder the risk and receive a bonus based on profits.

I don’t think there’s any one agreed-upon definition of entrepreneurship, but in the entrepreneurship circles where I travel, resource scarcity and control over structure, process, and business model are key elements separating entrepreneurial environments from corporate environments.