Who Knew Software Geeks Were So Smart

Way back in the mists of time, maybe 30 years ago or so, software developers then, like today, were struggling with the unreasonable demands of their customers - both internal and external.  The customers wanted a solution tomorrow, that was bug-free, and didn’t cost an arm-and-a-leg.

Someone very smart came up with a simple solution to communicating the problem to customers and getting them to make tough choices.  It was called “Pick Two”, and did more to crystallize the problem than any lengthy whitepaper could dream of.

• You can have it Good.
• You can have it Fast.
• You can have it Cheap.

          Pick Two.

Just 17 words.  Even shorter than the Gettysburg Address, and just as effective.

Pick Two Applied to Healthcare

Not too long ago, Arnold Kling of EconLog posted his version of a “Pick Two” on healthcare:

• You can have the best quality healthcare.
• You can have unrestricted access to healthcare.
• You can have someone else pay for it.

          Pick Two.

I think this does a great job of summarizing the debate on healthcare in just 23 words.

Delegation and the Business Owner

So, in the spirit of experimentation, I am going to attempt an occasional series of Pick Twos.  Maybe we can create a new Meme together.

Today’s inaugural contribution:

• You can grow your business.
• You can do everything yourself.
• You can have a life.

          Pick Two! 

(To be honest, if you pick the second option, you’re probably stuck with Pick One.)

Think about it.  Agree? Disagree?  If you think you can have all three, prove it.

Have any Pick Twos you’d like to share?  Comments are open.

They’ve put up a companion blog for the book and will give you a free sample.  Check it out.

Next, Conversation Starter has advice on How to Reward (and Retain) People When Money Is Tight.  Here’s a snippet:

• Responsibility along with empowerment is the best motivator
• Recognition inspires, not only the recipient but also others
• Different people see value in different things, so one should strive to understand what is important to individuals working for you. This is especially critical when working in an unfamiliar cultural environment.

Lastly, Jeff Cornwall of The Entrepreneurial Mind says: "Turn Your Competitors into Your Sales Force."

What seems like crumbs to them can become your feast.

Read the whole thing to see what he means.

Of course, it’s easy in hind-sight to see the mistakes that the newspaper industry is making, but what about you?

Of course, there are trees in your business too. There are trees in the photography business (chemicals) and in the music business (plastic) and even in the personal computer business (computers). They may not be called trees, but they’re there.

This idea is worthy of some discussion.  Have any trees in your business you’d care to share?

The MarketingProfs give us Five Inexpensive Direct Mail Tools to Generate Sales Leads Fast.

My favorite counter-intuitive Tool: Special Delivery.  You’ll have to read the article to see how this can be inexpensive - and effective.

Finally, John Jantsch of Duct Tape Marketing advises Creative Emulation as a means to innovation.

Some of the best marketing innovations I have witnessed came about by some smart marketer emulating a concept long established in one industry and brining it over to another.

Happy Hours for florists?  How ’bout Ladies’ Night for dentists?

To illustrate my point, here’s a classic thought experiment, with a twist, using a two-sided coin with a 50/50 chance of landing on heads or tails on any one flip.

Imagine that 2,097,152 people "invest" $1,000 each to enter a coin flipping contest.  The rules are simple: on each round of flipping, those who flip heads get to continue and those who flip tails are out of the contest.  This continues until one person is left - the person who has flipped all heads, however many in a row it takes. (It will take 21 rounds.)

All that money that was invested by the participants becomes the prize pool and it is awarded thusly:

• 9th through 64th place finishers receive $10,000,000 each.
• 2nd through 8th place finishers receive $100,000,000 each.
• The sole survivor, and winner, receives the balance of $837,152,000.

Because of the size of the prizes, this contest would receive a great deal of publicity.  Everyone would comment on how lucky the winners were, because everyone knows that you can’t control which way a flipped coin lands.

However, let’s change the scenario from flipping coins to starting up a business. 

And, instead of heads or tails determining the winners, it’s the outcome of make-or-break decisions.  Things like identifying lucrative target markets, developing successful products or services, entering new geographic markets, hiring a VP of Sales or a Production Manager, or dozens of other decisions that will determine success.

Now the winners are celebrated for their intelligence and hard work.  The $10 million winners become minor celebrities in their hometowns and make the rounds of speaking at local Chambers of Commerce.  The $100 million winners get cover articles in Inc. magazine and the grand prize winner gets on the Forbes 400 list.

But what about all those people who were equally intelligent and worked just as hard and had luck go against them?

Granted, business decisions are rarely 50/50 propositions and there is much you can do to influence the odds in your favor.  However, think of it this way.  If the odds of flipping heads were 90% to 10% for tails, the odds of flipping 21 heads in a row are still only 10.9% (1-in-9.)  If your coin flipped heads 95% of the time, you would still only have a 1-in-3 chance of 21 in a row.  Being the best decision-maker in the world will improve the odds of, but not guarantee, success.

Being the numbers geek that I am, this is all very fascinating to me, but what are the lessons for the entrepreneur?  I can think of several:

• Take the advice from the latest business celebrity du jour with a grain of salt.  Maybe they really are smart or maybe they’re just lucky.  You must evaluate for yourself.
• Do your homework and move the odds on any one decision in your favor.  The higher the odds on an single event, the higher the odds of a string of successes.
• Limit the number of make-or-break decisions.  Experiment small.  Experiment a lot.  Test, measure, rinse and repeat.  You stand a greater chance of 10 successful outcomes than 20. 
• Stay around long enough for good odds to result in good outcomes.  Be profitable.  Be cash flow positive.  Be well capitalized (or at least well enough.) Don’t rely on the outcome of one big decision to rescue you if you’re in trouble. Make sure that you’re alive when Lady Luck comes around.

I guess the best advice I can give is do your best to improve your odds, don’t get too discouraged if it doesn’t work out, and don’t get too big a head if you hit the jackpot.

As always, comments are not only welcome, but appreciated.  Especially if you have any examples of moving the odds in your favor.  Or, the opposite if you think we can learn from them.

The basic premise is that people can be influenced to make a decision by how the default position is crafted.

Because inertia is so crucial, world-class nudgers recognize that the default option is critical. Chances are, you weren’t craving the USA Today that came with your last hotel stay, but you just couldn’t be bothered to call the front desk and reclaim your $0.75. (Notice that if the default option were reversed, and you had to call to get your copy, there’d be more trees and fewer infographics in the world.)

Ethics Alert:  if you become one of the "world-class nudgers", remember to use your powers only for good, never evil.

Next, Newt Barrett of Content Marketing Today expands on the recent trend of the internet lengthening the buying process.

This is horrendous news for you if:

• You have no web presence.
• Your website does not make it easy for visitors to find exactly the solution they are seeking.
• Your website does not contain intrinsically valuable content that will put you at the top of the list of potential suppliers.
• Your only e-mail communications with your buyers are self-promoting and irrelevant to their information needs.

Finally, John Jantsch of Duct Tape Marketing says that public speaking is a competetive marketing skill for any and all entrepreneurs.

When you have to get your thoughts down into a concise 30 minute talk and then go out and get instant, sometimes too truthful, feedback it develops character and poise along with an improved message.

Be sure to follow the link to the podcast interview with Tom Antion.

His first point:

You are a marketer, not a provider of product x or service y. You are a marketer.

There’s more, so be sure to read the whole thing. 

Next, Paul Michelman, posting on HBR’s Conversation Starter, tells us How to Resist the Urge to Overreach.

We all need to take a cold hard look at our spheres of responsibility and make sure we’re dedicating the right resources and attention to the right things. Have you taken on too many responsibilities? Could burnout affect your performance and your ability get the most from your part of the organization? It serves no one best interests to let that happen. More so, when your performance suffers, you lose control of your agenda. (emphasis mine)

This is a problem I see consistently with my business owner clients.  They have 50 things on their To Do list and every single one of them is urgent.  Then, on top of that, they have a dozen new products or services that they want to introduce by next week.  It’s a recipe for losing focus at a minimum, and, in the worst case, serious burnout.

Finally, a little levity from Donald Luskin at Chronicle of the Conspiracy.  He offers up a few pics from the road in California.

My question is this:  Is the owner of the car in pic #1 being ironic?  Since it’s California, you can’t be sure.

Pic #2 is a perfect example of my personal philosophy that there are a million ways to make an honest dollar.

Seth Godin says that when customers complain, your response should be: "You’re Right."  He is NOT saying the customer is always right - read the whole thing to see what he means.

Finally, MarketingProfs gives us a simple way to use flowcharting to increase the effectiveness of our lead-generation efforts in Lead Generation Blueprints.  Spending a half-hour or so thinking about HOW you generate leads and WHAT you’re going to do with them will increase your return on investment of time and money.

He has 4 dead-on points, and here’s one I didn’t think of for my series on Surviving and Thriving in a Recession:

…identify your most critical suppliers and distributors, and determine if any face the possibility of severe impairment to their business due to the economic downturn.

Next, Peter Paul Roosen and Tatsuya Nakagawa offer us "Give Yourself a Productivity Boost: Learn from Kodak’s Transformation" in Lifehack.

They interviewed Jeff Hayzlett and David Lanzillo of Kodak about their F.A.S.T program.  "A" is for Accountability and "S" is for Simplicity - and in my view Simplicity makes Accountability a whole lot easier.  It’s to easy to dodge responsibility when you can hide behind complexity.

Finally, BusinessPundit tells us how entrepreneurs can use social media in The Entrepreneur’s Guide to Social Media.  The post has links to a number of resources, so you might want to save a copy to your desktop.

This post is about marketing in a recession.

Don’t Be Timid

Businesses that survive and thrive during slow-downs, and become even stronger during recoveries, are the ones who aren’t afraid to go after growth when their competitors are hunkering down.

Preserving profits and cash flow is important, and cost management (see Part 2) is an integral part of your recession-proofing strategy, but sustainable long-term financial health can only come by increasing revenues.

Identify Ideal Customers

Every business has an ideal customer type and you probably already have some on board, although you could use more.  Take a look at your customers and see who is profitable, who improves your cash flow by paying on time and who doesn’t take up your valuable time by making unreasonable demands on your customer service infrastructure.

After examining your customers for the above, look for common characteristics. 

• Are they large volume buyers or small? - a large group of small buyers can be very profitable because they don’t expect volume discounts.
• Are they repeat buyers?  - why or why not?
• Do they have similar demographics?  - age, gender, income level, etc. for consumers;  industry, revenue size, geography, etc. for businesses.
• How did they come to be your customers? - referral, advertisement, walk-in, etc. (more on this below)
• Do they tend to buy the same product or service?
• {insert your particulars here}

Fire The Bad Customers

This may seem contradictory - firing customers at the same time you’re trying to grow revenue.  However, bad customers can not only suck up profits, but they can put stress on your business that you don’t need at this time.

Would you rather have a $1 million business with $100k in profits, work 80 hours a week and have stressed-out employees…or…a $900k business with $150k in profits, happy employees and time to spend with your family?

Take the extra time, money and energy you’ll get by firing bad customers and go find some good ones.

Find Out What Works For Your Business

Just about every business, from the smallest to the largest, has some marketing techniques that are effective and some not so much.  The trick, however, is to know which are which.

Start with the information you gathered about your ideal customers and see if you can determine which marketing efforts brought you the best customers.  Since you want more of these kind of customers, this would be the logical place to expand your efforts.

Test.  And Test Some More 

Gathering information and looking for patterns is just hypothesis forming.  You have an educated guess, but not real evidence. 

If you think an ad in a particular publication is pulling in customers, run it one week and not the next.  Rinse and repeat. 

The same can be done with online pay-per-click advertising.  And search-engine-optimization.  And…just about anything you can think of.  The key is to start out with an educated guess and then test to see if you’re right.

Ruthlessly Eliminate Ineffective Marketing

If you have marketing efforts that aren’t bringing in enough of the right kind of customers, STOP.  Why would you spend the time and money on activities that don’t bring in customers, or worse, bring in the wrong ones?

Chances are, you’re doing it because you don’t know which marketing activities bring in the good customers and which don’t.  If you do your testing, you’ll no longer be marketing in the dark.

See Make Your Marketing Budget Work—Halve It  for some more ideas on  eliminating ineffective marketing.

Use Guerrilla Techniques

Marketing doesn’t have to be expensive.  Jay Conrad Levinson coined the term and created the system called Guerrilla Marketing and has a wealth of advice on his site to help you create smart marketing on a tight budget.  I recommend signing up for his newsletter.

What’s nice about GM is that it works well in a testing methodology - you can experiment with several different ideas without spending a lot of money.

Here’s the wikipedia page for Guerrilla Marketing.  And here’s the official Guerrilla Marketing website with easy sign-up for the newsletter.

Now, go forth and market…smartly!