Brain Breach

I know! I love the title too.

One evening I reviewed an email from Bob Pritchet, founder of Logos Research Systems.   After picking my jaw up from the desk, I started to form my response.  In the short time of research I put into his name, I realized he was an author, and the book looked quit compelling.  Fire Someone Today is a book I will read every two years from now on.  It’s so insightful, and easily worth my cash.

Such clarity.  I certainly appreciate the fact that he is a successful business man, since many times authors are only able to tell you what should work.  He’s clearly not trying to use fancy lingo and impress the M.B.A. audience.  There wasn’t a single term that I wasn’t familiar with.

The concepts….beautiful!  My favorite is the quality,price,service triad.  What a wake up call.  A young punk like myself thinks he can prioritize all of these at the same time, but Bob’s point was clear:  draw a triangle with each of those at a point.  You can only go one direction.  Maybe that direction is smack dab between two (quality and price for Bixly), but it certainly can’t be for all three.  You would be spinning in circles.

What’s more, it validates a lot of other reading I have done.  I love objectivity.

Thanks so much Bob for an excellent read.

Just recently I was reminded how “personal” software engineering education has been for the unschooled.  Sadly, the basics are sweapt aside and in their place are “how to get it done” techniques that make everybody look bad in the long run.

On my quest for a good engineering education, I have stumbled upon this great explanation of when to form a class, and when you are NOT supposed to form a class. For example, the rule of one property states:

IF a noun has only one property to remember

THEN it is an attribute of another class

ELSE it is a class

Example: If we need to remember only city name, city will be an attribute ofanother class. If we need to remember city name, the type of city, the state itbelongs to, then city should be modeled as a class.

See the page here.

Forcing myself to find SOMETHING to read in the generic selection my local library offers, I picked up the most insightful looking book I could find: The Halo Effect

It’s funny, how simple an idea it exposes. Simple and wonderful. The other “Business Delusions” really just support the Halo Effect.  The Halo effect is simple: Generalizing a company based on their profits. It also impedes our learning, which is the real purpose behind the book.  Once you understand the Halo Effect ( you will in a moment ), you begin to see that it is proliferated in most business writing and research.

I will give you an example of the Halo effect.  Which internet company is best known for:

• great technological advances
• being the best place to work
• new strategies/processes that are different but great
• a true focus on what customers what

Google! Your right.  In fact, you would have to live in a box not to have ready an articles praising how Larry and Sergey tie their shoes in the morning.  Here is the problem: Research and journalism at large will not call ANYTHING Google Inc. is doing wrong.  They are making a generalizing, based on how much money they net.  So now, we are left with a distorted model on how to run our companies.

The halo effect infects most every level of journalism and research.  So if we take an employee survey, and ask Googlians if they are treated well, or if their company has an unusually strong focus on customers, the results are predictably positive.  Phil systematically shows how companies that are making a lot money have these generalizations made about every part of the company, and the same thing happens in the negative when the company does poorly.  One Forbes reporter was questioned why he was negative about the very same company he once praised, while really nothing had changed besides their cash flow.  The tactics of that specific company didn’t change, and when Google stops preforming as well ( thousands of years of market history say it will have a downturn ) , the very same tactics/focus/work environment will be castigated as “too loose”, “lazy”, “over the top” etc..

Nowhere does a halo currently shine as brightly as upon Google. Reporters marvel at Google’s wonderful “anything-goes spirit” where the absence of supervision is said to stimulate creativity and where no one needs to worry about whether projects will be profitable. Co-founder Larry Page is said to praise managers who made million-dollar errors, thanking them for their willingness to take risks. In fact, what’s said about Google is eerily similar to what was said about another New Economy wonder, Cisco Systems, a decade ago. That company, too, was admired for its wild ways—until a sharp downturn led critics to castigate it for those same qualities. From Halo to Hell

I have know acknowledged the existence of Halos, which will aid me from this point on evaluate research with much more discernment.  In fact, just the other day I heard a author interviewed on PBS state that Starbucks is loosing profit because they have lost their once great focus on the customer.  Really?  My usual iced green tea tastes great, and is delivered by smiling, competent employees.  I would like to hear the proof that they have lost their “customer focus”.

Having experience playing important roles in a couple business, I found myself quite familiar with many ares of business. One area I hadn’t researched was sales. How does one become a respectable salesman? After spending an hour in Barnes and Noble’s business section, I picked up Exception Selling. Certainly, I am not proposing I lead this area in my company, but until the resources justify a sales team, here we go.

The following are some of my notes on the adventure. I recommend this book, but I don’t know what that’s worth to you, being my first book on sales.

Exceptional selling, notes

Pages 1-50

• when you are feeling pressure, you are doing something wrong
• never answer unasked questions

• just making a value proposition makes customers see your service as a commodity. Then they make a decision based just on price.

• don’t be a lecturer, It’s a ineffective way for them to learn.
• stop persuading and start collaborating

• don’t come in thinking you are a salesman, but a trusted advisory

• value proposition is not enough, everyone offers that.

• value gap, the gap between what you think it’s worth, and what customers do. crossing this gap is done by offer the customer value as they see it in their world

Sales life cycle

value proposition – tell them what you do

value assumption/premise – something you both agree could be a value to them, and MIGHT be confirmed after further investigation.

value absent – investigate the consequences of absent value, quantify, and show

value required – the customer acknowledges value is required

value expected – where you confirm exactly what can be done, for how much

value achieved

Pages 50 – 100

• diagnosis mindset is opposite from presentation mindset.

• you diagnose WITH the customer. selling is something you do TO them(bad)

• go for the ‘no’ early and often. make sure they are ready for what you offer, and if they aren’t, move on quickly to qualified sales leads

• diagnose the problems without insinuating they are incompetent

Mindset

– change guidance
– mutual self respect
– don’t let them run over you
– emotional maturity
– you must remain emotionally detached, but professional in tune

• the process,
  discuss, diagnose, design, deliver,
  the following is the application of those.

• be prepared , and research the company/person you are calling.

• people won’t reject you if you aren’t being a salesman.

• the first call should be one of discovering the problems, from the people closest to the action. – Questions like: do you see this happen? What are the results? – Ask for facts and consequences, – don’t talk about yourself for more than a few seconds

• discovery conversations are not sales calls

• cold call script, pg 92
• towards discovery stage script, pg 97

• don’t answer with questions
• When getting customer is digging to deep before you have appropriate information, keep answers to 20 seconds, and continue where you left off.
• The questions will be; how much and how long, etc. Answer, and get back to learning about them.

• give the customer a small assignment, it keeps them engaged and conjures a sense of collaboration

• high probability to close sale when they learn they have great need

Pages 100 – 220

• once you have permission to move on, start the diagnosis.

• this phase is about thinking of their situation, not your solution

• never let the customer self diagnose, you have the domain expertise

Diagnostic conversation model

– what is happening
– why is it, how bad
– is it bad enough to act on?

• don’t use insulting questions when exploring what they said. neutral ones like ‘can you help me understand ‘not fast enough’’ ?

• questions should start with asking observations, not accusations.

• never insult competition, acknowledge them.

• ask what methods they have used already to fix the problem. don’t assume they haven’t tried.

• let the customers co-create the solution with you, this way, you get a better solution for them, and they gain more trust with customer.

• ask questions from customer point of view; ‘when would you like to see this solution up and running?’, not ‘when can you make a decision?’.

• actually, that’s wrong wording by Thull, again. more like, ask questions from a customer value position, not a sales value one.

Proposals – a confirmation on what has already been decided

1. No surprises
2. Us their wording/phrases wherever you can

• don’t skip diagnosis even if they think they have a problem. they don’t know the value of fixing it until you lay it out for them.

• if you can’t put a cost to the problem, you don’t have a problem

Financial conversation

– how much does our absence cost them?
– What return can they expect from solution?
– How much is that worth to them?

• it’s critical that company execs take part on the sales team when talking to other execs. they have the experience and depth of knowledge regarding their value

The following entry is a summary of this amazing article, Engines of Democracy . This is exciting info, and a good follow up on the previous entry on Simplexity. You can read my drab summary of the article, or read the 12 pages yourself, which I highly recommend. I understand the ideas presented here aren’t turn-key solutions for every organization. It sure is interesting to think HOW these principles can be applied to my current and future companies.

• Just one floor manager for 170 employees
• Teams, averaging 16 people, create jet engines
• Three levels of techs, with clear pay grades
• Level 3’s can do any jet job
• Each task has clear directions, with photos of each step
• Interview process takes 8 hours:
  > They are given tasks, work with the team, and build a presentation
  > Team rates interviewee on 11 criteria, many involve teamwork
• They give each other feedback when needed. They don’t have resentment, or hide feelings
• Employees get creativity with the exact process of building engines
• They are trained on how to reach consensus, or live without getting their way:
  > they know if it doesn’t work out, the have a chance to change it later on
• Sharing skill is important, it allows the team to operate without you when you need time off
• Teams are really tribes: accountability, culture, training, loyalty
• Members periodically join councils to decide hr/discipline/rewards for other teams
• A team is responsible for themselves with things like cleanup and tool tracking
• Basic principles, from managers mouth:
  > Layerless organization
  > People paid according to skill
  > Everyone certified/trained by FAA
  > Tribal mentality
• Three types of decisions for the company
  > A decisions – The plant manager decides (She only makes 10-12 of those a year)
  > B decision – The plant manger decides with input from teams
  > C decision – Decision is made by employee consensus (most common type)
• Though they technically have only one boss for 170 employees, they see it as having 15 bosses. Their peers.
• Employees don’t think their job is making jet engines, but making them better

Simplexity is the prefect marriage of simple and complex.  It’s accomplished by creating many simple parts, that create a larger complex system. Miguel Cunha is gold, if you haven’t read him before. He has a fascinating, although rough draft, article on Simplexity. There are many parallels for business, software, and life in the idea of simplexity, but he focuses on Business. It’s worth a read if you can find the time, otherwise, here are my notes from his article

Ashby’s Law:
only complex organizing – rather than complicated organizations – provides enough complexity to cope with environmental turbulence.
basically means only complexity can cope with complexity

Unintentional Complexity

Complexity is the cumulative by-product of organizational changes, big and small, that over the years weave complications (often invisibly) into the way work is done. pg 7

It is fought with intentional simplicity. Jack Welch turned around GE with his simplification process.

Unintentional simplicity is a problem also. it encourages exploitation over exploration. pg 8

Loosely coupled organizations can better handle the unexpected. pg 17

Only the complex organizing provided by simple structures – rather than complicated organizations – is flexible enough to cope with environmental complexity. pg 18

Complexity, top-down hierarchy, overdeveloped systems and processes seem to turn workers into machines. A hive-mind mentality should foster creativity.

organizations need to create designs that favor alertness and capacity of response, triggered wherever the information is. pg 19

Although the behavior that emerges is complex, the rules that guide it are necessarily simple. In fact it is their simplicity that creates the freedom to behave in complicated adaptive, and surprising ways. pg 20

One of the potential results of deliberately simple organizing is the creation of a developed collective mind, or what Weick and Roberts (1993) described as heedful interrelating. The concept refers to a developed attentiveness and caring about the actions of the other organizational members, in such a way that individual know-how is made subservient to group processes. pg 22

Simple infrastructures may result in complex behaviors because they support and facilitate a number of processes that encourage rich and mindful interactions. pg 22

in his Mann Gulch study, which showed that training and specialization may actually hamper the variety of behavioral repertoire. Again: complexity may block learning and adaptation. pg 25

This read was particularly reassuring for me. It’s the collective intelligence of the company that can really make a great company, not just mine. That’s great! Now the leader’s role is to facilitate such an atmosphere.

Resources

http://www.fastcompany.com/magazine/28/ge.html
http://www.complexityandeducation.ualberta.ca/COMPLICITY1/pdfs/Complicity11b_Intro.pdf

Here are my notes from Pfeffer’s eye opening talk . He is the Author of

This has really got me excited! Some great information and paths to study. I hate to just have recycled content on my blog, but it’s so good. Let the fairly disorganized notes begin.

Premise is that organizations are stuck in established traditions that mostly don’t make sense, and don’t make decisions based on facts.

Casual benchmarking is harmful

• doing something because folks better than you did it that way

We should examine why they made that decision, and understand the context rather than just blindly applying it.

Ideology and belief

• More than 200 studies prove that giving top management stock options has no effect on company/financial performance.
  
  

Don’t comprise on providing evidence to your team that can lead to them uncovering issues.

One manager did this by titling certain things “we do not have this information” in hopes of having the team find it. That forced management to find ways to that information. If he wouldn’t have done this, they wouldn’t have realized they even needed the information.

Devita CEO

When Pfeffer was consulting for him, he didn’t care about compliments, but cared about the problems.

Yahoo business guru is quoted as asking “why not customers what they want instead of debate about it”

*note: interestingly this comes from Yahoo which isn’t the greatest at useability

Time for reflection is important

Joe Benaducci- COO, Fireman’s Fund and Insurance company

“What makes you so successful?”

1. Read one book a week

2. Critiqued himself after every significant meeting on a notepad

Put your feet up on desk, close your eyes and think.

Debunking common myths

You need the all stars

• the system the company has, not the all stars determines quality and output
• GM operated a lousy plant in Fremont Ca. Low quality, productivity, and large amounts of drug and alcohol abuse.

• Toyota, under New United Motors, ( a toyota/GM partnership ) took over that company with the SAME people and had twice the productivity and quality.
  
  

Financial incentive work

• reward system signal what matters. (Is it money?)
• seems fair
  truth:
• we believe other folks are motivated by money, even though we aren’t
• pay incentives loose effectiveness after a month
• folks that are payed per piece rush through work

** garbage truck example: they got paid for 8 hours of work no matter how long it took. Turns out they just skipped trash cans to go home early

• other rewards must be more creative
  
  

Teacher incentive pay case
Paying teachers more for higher test scores

• it turns out it didn’t work, as you can assume. A study on 100 years of merit pay shows it.
• Teachers are interested in teaching not pay. They would have chosen different field if money was their goal.
• Incentives work on effort, not ability

60% of companies use the Forrester rating system

• This rating system allows the manager to subjectively judge/score every employee and hand out benefits accordingly
• a study showed that if the manager hired a employee, they were given a much hirer review
• this study showed this rating system doesn’t work

Results

• treat your organization as an unfinished prototype, always trying to change, optimize and challenge the norms
• It’s about being the master of the obvious and the mundane
• Test every assumption by its evidence

Resources:

Evidence based management webiste

Facts-Dangerous-Half-Truths-Total-Nonsense

Voice of the customer. Great companies listen to it, and mediocre companies try to listen to it.

The issue of truly hearing your customers isn’t as simple as just reading complaints and comments. If you don’t think it’s a tricky task, think of these issues:

• Who will analyze the problem?
• Who reports it to CEO/COO?
• How will the customer be notified problem is fixed to see if they are pleased?
• How to we effectively sift through the mounds of data to make sense of it all?
• Will the CEO see these as important money making resolutions?

A sound VOC system will take care of these issues and more. This is where it helps to thrive in ambiguity. It’s obvious that a great company needs to hear their customers. The real problem is how does that happen with piles of data and teams already swimming in tasks. Shall we make a system, outsource it, rent software (which one!), hire a consultant, train employees in house, etc.

Regardless of the attack, a great company must attack it.

Goodman, in a study of 100 companies over three years, identifies 8 problems that great companies have already fixed, and mediocre ones haven’t, when it comes to their VOC process:

1. Inefficient and costly data collection
2. Analysis in a vacuum
3. Inconsistent classification schemes
4. Old data
5. Analysis without priorities
6. Analysis that is not actionable
7. Ineffective presentation of data and findings
8. Failure to track the impact of corrective actions resulting
   from the VOC process

Another interesting observation is the need to reward the marketing department for their attention to the data:

While many companies have satisfaction related incentive systems for operations and service management personnel, they rarely exist for marketing and sales. This is a critical oversight;
TARP’s research has shown that 30% to 40% of customer problems are tied to marketing and sales.

Resources:

Stay Close to thy customers

EFM (enterprise feedback management) blog

Goodman, Depalma: Maximizing the Value of Customer Feedback

A colleague at work suggested I read The E-Myth . After picking it up Friday, I couldn’t stop thinking about it, and finished it Saturday. It’s on my top 5 for business, so far. Here is what I learned.
The E is for entrepreneur. The E myth, which Gerber goes on to dispel, says entrepreneurs are super-human. Only these heroes have the right to start businesses. Really what goes on in the rest of the book is a intro to business development. But that would have made a terribly boring title. What’s so exciting about business development? It’s the fact that you didn’t know you needed it.

Gerber first starts with a bit of psychology. Inside of everyone involved in business, there are three personalities:

• Entrepreneur – This is the dreamer
• Manager – Likes order and predictability
• Technician – Likes the art of the craft, the end product.

According to Gerber, most folks start small businesses because they are a good technician. Technician meaning anything technical; baking pies, programming, styling hair etc. . They make a faulty assumption:

The Fatal Assumption is: if you understand the technical work of the business, you understand a business that does that technical work. pg 13

A clear difference from a bird’s eye view, but this misunderstanding is the most common reason small businesses fail. Each of these personalities has a vital role. For example, you inner technician should be the master of the product, documenting exactly how to reproduce it. You inner manager should implement that system, and be consistent. Your inner entrepreneur should always ask, “what would the customer want?”, and not be contented until they have it.

The enigma with a start up happens after your first couple of employees, when you hand off management by abdication, not delegation. For some reason, the widgets have scratches on them, or they come unglued all the time. In other words, your employees aren’t doing as good as you did when you wore every hat. It only gets worse as you get a larger workforce, until you get so stressed, that you throw your hands up and go back to a one man shop.

So why are the big guys big? The big guys had systems in place to control and reproduce everything worth doing right. Everything! They had a system to teach every employee that process. See, every time you are getting something done, you have to think how can this be reproduced exactly right, thousands more times. A franchise mentality! This is a major shift in thinking for a technician. Many folks start businesses because they don’t want their lame incompetent boss directing their life, and they can make widgets better anyways. The problem is technicians aren’t good at running businesses. Managers and Entrepreneurs are, so you must give them space to work.

My favorite idea found in the E-Myth is not to create a business to work at, but create a business that works. Every piece of your business should be well documented, and adhered too. It should provide a structure for employees to flourish, a “game” for them to play. They can flourish and earn rewards by following the rules. It’s a rule of thumb to document the position well enough for the lowest skilled employee can become great under it. Money saver!

There are more tasty morsels that I didn’t mention, and some good insight on what your system should look like. Worth a read if you ask me.

One of the first lessons Lawson Barttell, my mentor taught me was to “hire slow, and fire fast”. What does it mean? Take time on the hiring process and make sure you have the right person. Then secondly fire employees quickly if they give you good reason. The ability to fire folks quickly is a good one to have. It’s one way to save a company from corporate cancer; a non-motivated workforce.

I see two main benefits to hiring slow and firing fast. First, your team quality increases. If you continually shave off your bottom 10%, while hiring the best candidates, your team will really shine. Some of my best employees have come from word of mouth. I wouldn’t be able to say that if below average employees were sending their friends my way. They would be on the same level because folks usually have friends that are similar to themselves.

Secondly, everyone knows you expect excellence, and won’t settle for half-hearted attempts. Fire that deserving employee, and just watch the passions in the workplace grow. Down the road it will lead a higher retention rate.