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It's rare we read good business posts, that can be backed by real studies. If we do come around some, we'll post them here for you.

Keep Balanced

Carmine Coyote (Love the name!) encourages entrepreneurs to keep balanced. We're major fans of balance in business. That is, use the sprinter's mindset--not the marathoner's mindset. The more you work, the more you deplete your energy reserves. It takes relaxation, then, to refill those reserves. Otherwise, you're a burnout waiting to happen.

Unions Suck

Steve Rucinski gets it right: Unions kill profits. Yeah, it probably helps rank-and-file employees already in the unionized business, but that's it. It hurts companies from hiring future employees, destroys opportunities for existing employees, damages shareholders, batters working conditions, decreases customer value, etc., etc., etc. I've yet to hear one good argument for it. Bad arguments? GM, Ford, Airlines, American Schools--just to name a few.

How to Enforce Integrity

I was struck by this statement: "Have every employee sign a Code of Conduct and Business Practices." It sounds routine, but here's the magic behind it: If you get people to commit to something, they'll likely follow the rule. It's the whole psychological-I-wanna-be-consistent-cuz-I-said-I-would phenomenon. Pschology mega-star Robert Cialdini calls that the "consistency" persuasion. Make people commit to something, but don't force them--give them the choice, and they'll more than likely commit to whatever they say. Disagree with anything? Please let us know and we'll post your unedited response on our journal.
Posted on June 07

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Forget business plans. Forget leadership books. Forget innovation. If you're just starting your business, the most important task is keeping your company afloat. How do you do it? You do it through quick, efficient, and effective sales. Cashflow, as they say, is king. As cliche as that may sound, and as "de-mythified" by the pseudo "biz-expert-cuz-I-declared-so" crowd as it's been, cashflow for a startup has and will always be king. If you don't have the cash, you won't have the resources to serve your grand ideas. You won't be able to manage employees because you have no cash to pay them. You can't use the various Web 2.0 tools for your business because, well--you're living with your mama. No, I'm not saying you should be focusing on the me-first selling attitude. I'm saying this: serve your customers well, but in areas where they'll pay you--quickly, and surely. Rough rule of thumb: the money you make is proportional to the value you provide to your clients. So, serve them well. Focusing on something besides cashflow will keep you in mom's basement. Word.
Posted on June 07

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Harvard's Theodore Levitt sums it up nicely:
It is to be expected, therefore, that today's most ardent advocates of creativity in business tend to be professional writers, consultants, professors, and often advertising agency executives. Not surprisingly, few of these people have any continuing day-to-day responsibility for the difficult task of implementing powerful new business ideas of a complex nature in the ordinary type of business organization. Few of them have ever had any responsibility for doing work in the conventional kind of complex operating organization. They are not really practicing businessmen in the usual sense. They are literary businessmen. They are the doctors who say, "Do as I say, not as I do," reminiscent of the classic injunction of the boxer's manager, "Get in there and fight. They can't hurt us." The fact that you can put a dozen inexperienced people into a room and conduct a brainstorming session that produces exciting new ideas shows how little relative importance ideas themselves actually have. Almost anybody with the intelligence of the average businessman can produce them, given a halfway decent environment and stimulus. The scarce people are those who have the know-how, energy, daring, and staying power to implement ideas.
Posted on June 06

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The talk about open source, wikis, AJAX, Ruby on Rails, MashUps, etc., etc., etc. It's hype. Yes, we'll agree that it's revolutionizing the internet sector. But, unless companies know how Web 2.0 technology fits into their strategic goals, the overhyped Web 2.0 tools will not revolutionize their businesses. Don't let the technology "gurus" fool you. So, please fellow tech folks: Stop the hype, and let's get back to business basics.
Posted on June 05

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Leadership isn't about egos. It's not about "I". What is it about? Being humble. It's the exact opposite of the people you see on Trump's Apprentice. Goldman Sachs, with its leadership factory, emphasizes humility, recruits humility, trains humility, cultivates humility:
Goldman grooms [future leaders] in ways that later can prove useful in politics. The firm, more so than other Wall Street banks, has emphasized teamwork and leadership development. Forget the star system. Goldman "insists on minimizing the use of the first-person pronoun," says Bush adviser Friedman. To make sure that the most promising recruits serve all constituencies, the firm uses a "360-degree" performance review process, soliciting evaluations from supervisors and underlings alike, as many as 15 per review. Those lessons have served Friedman well in Washington, where he says managers whose egos are "under control" are far better at leading people. He says they also tend to be better listeners, a key skill at Goldman since clients soon grow cool to someone who pays them too little mind.
Forget CEO Hollywood. It's not needed, nor is it wanted.
Posted on June 04

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So, how do you find answers to your business questions? Easy. Make mistakes. Lots of 'em. Says CEO of Decision Strategies International, Paul J.H. Schoemaker, and the research director for the Mack Center for Technological Innovation at the University of Pennsylvania's Wharton School in Philadelphia, Robert E. Gunther:
Sometimes, committing errors is not just the fastest way to the correct answer, it's the only way. When college students were allowed to test as many sets of three numbers as they wished, fewer than 10% discovered the pattern. The vast majority became locked into a narrow hypothesis and tested only combinations of numbers that would confirm it. Whenever you have few data points, the chances are low that you'll be correct in your first guess about how they fit together. The fastest way to find the pattern is to try many disconfirming tests.
It's rare you could plan for a right answer. The key, then, is to make enough mistakes so that they'll guide you to the right answer.
Posted on June 03

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Yeah, it's common sense. It's boring. It's not sexy. It's not earth-shattering. But, it's vital. Pay on performance. What a concept--yet, a concept nobody seems to use. When you pay based on performance, it sends a message. It tells your employees that you won't accept mediocrity. You send subconscious signals that you'll reward the brightest; the ones, then, who don't contribute, fall out. Pay on perfomance. Easy. But, not too many companies get it. They're paying on wages. On fixed salaries. On bonuses that didn't tie into performance. It's as if you're rewarding Michael Jordan the same as you would a third-string player who averages 2.1 points per game. It doesn't stop at employees. The same concept applies with leaders, senior managers, etc., etc., etc. If they're not performing, why are they getting paid? Yes, money will not motivate people to higher performance. But, it will send clear signals to people who belong in the company--and those who belong elsewhere. Yet, not too many companies get it.
Posted on June 02

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Well, because humans like things that are familiar to them. If you never tried squid, then it'll take much more to get you to eat it than someone who has already eaten it. It's the whole I'm-familiar-with-you-so-I-know-what-I'm-getting-myself-into principle, otherwise know as the IFWYSIKWIGMI principle. (Yeah, we made that acronym sucker up.) Psychologists Larry Gregory, Robert Cialdini, and Kathleen Carpenter studied the effects of imagination on customers:
They sought to experimentally test the power of consumers' imaginations with regard to subscription to a cable television service. They had research assistants go door to door, telling residents that they were doing a survey on the local television cable company. The research assistants informed each resident that they would be reading a snippet from the cable company's brochure and then ask for the resident's responses to the snippet. For half of the residents, the research assistant read a description of some of the features of the cable service. For the other half of the residents, however, the research assistant asked homeowners to imagine themselves utilizing the features of the cable service. Several weeks later, representatives from the cable company solicited the very same residents to offer cable service. Did the seemingly small change in the research assistant's interaction with the residents make a difference in subscription rate? Indeed it did. Whereas 19.5% of the residents who had simply heard the features of the product described several weeks earlier ultimately subscribed to the service, a whopping 47.4% of the residents who had been asked to imagine themselves enjoying the features of the cable service ultimately subscribed.
Crazy. But, it works. Give your customers some familiarity--and if you're telling the absolute truth, you'll build lifelong customers for a long time. Word.
Posted on June 01

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Growing your business for growth's sake is a path to failure. Case in point: Gateway. The Irvine-based company rivaled Dell through the 90s. Good revenues, good employees, good start. Good catch: cow-spotted computer boxes and computers. It had brand recognition. But, it wasn't perfect: It still had to take care of customer complaints. Its computers weren't reliable. Its support were non-existant. Too many issues to take care of. Then, in spite of those issues, the company focused on growth. Next thing you know, Gateway's opening Gateway Country Stores. Then, it's selling home entertainment. Digital cameras. Blah. Blah. Blah. It's expenses ballooned like Anna Nicole. All for the sake of growth. All for the sake of me-first-customer-second. The conversation in the boardroom, we're sure, wen't like: "Let's avoid our current problems. Let's forget our customer complaints. Let's outsource our support to an unqualified staff. Let's just...grow." Too bad. If Gateway had built a solid "small" company before building a solid "big" company, it could've been something.
Posted on May 31

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So are people really motivated by money? If so, why did Goldman Sach's chief Hank Paulson, who made more than $38 million for himself last year, leave his high-profile firm to become Treasury Secretary of the United States? We'll tell you--but first, a glimpse of Goldman: it's the Harvard of Wall Street, it's the most highly-regarded investment bank, it moves billions of money worldwide, it's the top firm MBA students want on their business cards, it affects just about every public firm on the face of this planet. Goldman made Paulson one of the richest CEOs in the world. Goldman made Paulson the Peyton Manning on Wall Street. But, Goldman couldn't keep Paulson. You'd think not too many people would pass up such a sweet job, but Paulson did. And, we'd guess, many of you would too. Here's why: When you're confronted with doing something greater than you, greater than your company, greater than anything you've imagined, you take it. Humans aren't motivated by money. Humans are motivated by purpose -- a purpose beyond materialism, beyond benefits, beyond compensation--beyond any freakin' thing this world offers as a tangible good. Humans want to be a part of something greater than themselves. It doesn't matter if it's bettering the country, building dreams in the classroom, igniting the world to salsa, or electrifying an eclectic environment to serve food to every man, woman, and child--it doesn't matter how you do it. It doesn't matter. Humans want it. We crave it. Tap those motivations. Please. The world needs it.
Posted on May 30

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