In coaching, consulting and reviewing the reports from our on-site trainers, human capital challenges are at the top of the list of items we’re hired to fix. As I’ve done with most systems, challenges and opportunities in business, I help my clients and trainers develop and deploy “litmus tests,” or quick “yes/no” tools to help guide next steps.
Here’s one you might put to good use when your next employee challenge or frustration arrives. Ask if this is an issue of character or circumstance.
Our data indicate: underperforming employees are rarely an issue of character. These situations are almost always an issue of circumstance.
For example, we failed to place the employee in the proper role. The training program was inadequate. Oversight and motivational systems were not being deployed consistently. Communication was unclear. We did not support the employee’s desire to learn new things, master his own environment and contribute to a higher sense of purpose.
And yet, I see employees in our clients offices being disciplined or terminated because of circumstance. This is a horrible mistake. Do not let good people go if you haven’t done your job in placing them in the best-fit position, training, managing and motivating them and then getting out of their way so they can help you achieve your vision and mission.
In the rare situations where an employee has demonstrated a problem with character, in a twist of irony, many practice owners drag their feet in firing the employee.
Listen. There are no quick fixes for issues of character. There is only one solution for an employee who is dishonest, has a poor work ethic, refuses to be a team player and sabotages new projects in the office: swift termination.
And yet, too many business owners fail to address this problem because the employee has been with the team for a long time, performs their job, at least from time to time, sufficiently, etc.
Isn’t that interesting? The fact that most small business owners will tolerate a crisis of character but not one of circumstance? Why?
For starters, it’s easier to blame the other person for poor performance than it is to look in the mirror and admit that your systems for hiring, training, management, motivation and culture all stink like yesterday’s garbage.
Our egos don’t get damaged when we point our fingers at someone else. But, like my mother used to say, “when you point your finger at someone else, there are three more pointed back at you.”
This advice and litmus test, if you take a moment to unpack and consider them, make perfect sense in the larger picture of running a successful business. Because if you get this right, you’ll behave in the opposite fashion of every other competitor in your industry.
From the first Netflix earnings call of 2020 and MarketWatch:
“What does it mean to “watch” a show on a streaming service? For Netflix Inc., it now means viewing at least two minutes. The streaming service noted in its first quarterly earnings report of 2020 on Tuesday that it has changed the definition of viewership — while Netflix used to consider any customer that streamed 70% or more of a single episode or film as having viewed that property, it now will count a view after viewing two minutes or any offering. The company admitted that it would boost the limited viewership numbers it provides by more than one-third.
“The new metric is about 35% higher on average than the prior metric,” Netflix executives said in their quarterly letter to shareholders. “For example, 45m member households chose to watch ‘Our Planet’ under the new metric vs. 33m under the prior metric.”
This, my friends, is the definition of insanity and a very slippery slope.
I’ve said for years that the internet is largely an unregulated cesspool when it comes to advertising and false metrics. Does anyone remember Jay-Z’s album selling a million copies in five days? Except it didn’t. His streaming service, Tidal, is under criminal investigation in Europe.
Facebook logs a view for advertisers when a video plays for at least three seconds. YouTube uses better metrics and bills the advertiser when a user watches a complete add that’s 11-30 seconds long or watches at least 30 seconds of an ad that’s more than 30 seconds or interacts with the ad. Instagram has admitted to wasting billions of paid sponsorship dollars on followers that don’t exist. Every year Facebook deletes billions (with a B!) fake accounts.
According to Forbes, “In the six-month period from October 2018 to March 2019, Facebook said it removed 3.39 billion fake accounts. That’s twice the number of fake accounts detected and removed in the previous six-month period and over a billion more than the 2.37 billion people who actively use the social network on a monthly basis.”
Netflix is following Facebook down this insane rabbit hole. It’s one thing to hoodwink investors about the number of actual users and views but advertisers won’t tolerate it and eventually everything comes home to roost. Streaming services will need to significantly increase subscription costs or introduce more advertising, something Netflix has said it will never do. Uh huh, Facebook said the same thing. “We changed our minds,” is the most-common phrase ever uttered by companies that follow the dollar down these rabbit holes.
As a small business owner, not only can you not afford to behave like this (you have to count with dollars in the bank and lifetime customer value and return on investment, etc.) but you must also pay very close attention to any advertising platform or media channel that counts with funky math.
The most transparent and effective online advertising platforms right now, for my businesses, are Amazon and Google, respectively.
I’m optimistic that Amazon can take over both of these categories (transparency and overall effectiveness). How much juice they will want from the squeeze is the only hurdle that remains for local service providers. But, rest assured, Amazon is coming for your advertising dollars.
I’d leap for joy if they allowed targeted in-package advertising for new movers, grocery deliveries and standard packages. It’s not a far leap for Amazon to allow local service providers to advertise in specific packages and via email footer ads with coupons for furniture assembly, appliance installation or lawn service. They have the best 360 degree view of their 101 million Prime members. Why not leverage those data points and sell to local service providers, after which Amazon could easily acquire or affiliate with the most successful of the bunch?
As a sound business principle, seek out and work with organizations that consistently raise the bar.
Google has done this consistently for years and has allowed very smart marketers like Jimmy Marketing to help local service providers make a ton of cashola. Amazon will hopefully do this even better.
Everyone else, unfortunately, is feverishly lowering the bar. There is no excuse to follow them into oblivion.
I’m back from a whirlwind trip to Las Vegas, where we hosted 50+ TC Boot Camp attendees, three private coaching clients, a quarterly planning meeting for two of my companies and a scouting trip for a few long-shot investments. In two of the three private coaching meetings, a common theme we discussed was systems management. I reviewed business systems through three lenses: communication, oversight and recalibration.
Everyone seems to enjoy talking about systems, creating systems, perhaps even training their employees on new or existing systems. Since the first mention of “business systems” in 1980 by McKinsey and Company and through the creation and adoption of Six Sigma, business leaders throughout the world have been obsessed with automation and systems, to help eliminate defects in any process.
Sounds great, right? Just like “running a marathon” sounds great, the problem arises in the distance between idea and implementation. We all want to be in great shape. Getting off the couch and running every day is another story. We all want our businesses to run smoothly with maximum profit and happy stakeholders and shareholders. Systems oversight and management is another story.
Who Moved My Cheese? is a simple yet effective business fable about adapting to change and overcoming fears. The book has sold more than 26 million copies and remained on the New York Times business best-sellers list for nearly 5 years. It offers very little in the area of systems development, but it diagnoses precisely why systems fall apart and why we need them in the first place: change.
Your top competitors in business today will not be your top competitors five years from now. The problems you solve for your customers, clients, patients or donors today will not be the same problems you will solve a decade from now. Your employees, shareholders, stakeholders and strategic plans will change. Everything, in fact, will change; and that’s precisely why clients consistently travel to me with challenges and frustrations in dealing with change; anticipating change and overcoming their fears in adapting to, circumventing and even enjoying the change in their lives.
This morning on your way to work, your car keys were probably right where you left them last night. In business, however, nothing is where you left it. Change is continuous and often compounding or confusing for you and your employees. For example, if you left your employee training systems where you last touched them, perhaps when you started the business, they are not where you left them. Your training systems have, for good or for ill, been changed, improved, strengthened, weakened, diluted or condensed, etc.
Your systems have either adapted to or been run over by change. When’s the last time you took a look at them? How consistently and effectively do you oversee the systems in your business?
Things are not where you left them.
Five years ago, Nir Eyal wrote a book called Hooked: How to Build Habit-Forming Products, which helped startup tech firms understand user psychology. He discussed the research on slot machines, which use variable rewards and pleasures that come at unpredictable intervals. If you haven’t read, Addiction by Design, it is both amazing and alarming.
In response to pressure from psychologists and child development specialists, tech industry insiders have blown the whistle at Google, Facebook and WhatsApp, becoming critics of the very tools and addictive apps they spent years developing. In his latest book, Eyal admits that there will be a movement to be “post-digital” in 2020. He says, “We will start to realize that being chained to your mobile phone is a low-status behavior, similar to smoking.” But, he does not think technology is the problem. We are.
Throughout the book, Mr. Eyal challenges the idea that technology is doing all of this to us. “These are things we can do something about,” he argues, “It’s disrespectful for people who have the pathology of addiction to say we all have this disease. No, we don’t.” Eyal says technology is something people overuse, which suggests we need to do something about it ourselves, but Tristan Harris, the former Google ethicist, argues the opposite. Harris speaks around the world, leading the movement to regulate big tech firms and require that they change how they develop tools and apps, putting the onus on them to make their devices and apps less addictive.
Although I don’t expect these two narratives nor their arguments on technology and behavior to be settled anytime soon, I do think there are some valuable takeaways for your business, when faced with any challenge or opportunity:
First, never forget, regardless of the narrative in your mind, there is always a counter-narrative. Make it your job to get better at seeking out the counter-narratives in your life and in your business. Work to understand them, whether you ultimately accept them or not.
Second, ask two important questions when you face any challenge or opportunity: “Am I sloughing off personal responsibility or reclaiming it?” and “What does my understanding about this issue, opportunity or challenge tell me about me?”
Eyal equates his stance on technology and personal responsibility to a time in his life when he was obese. The myriad digital detox crash courses he attempted were just like the 30-day fad diets he tried but were unsuccessful. He finally lost weight for good when he asked himself why he was eating.
The solution he advocates and the narrative he’s accepted on technology overuse is a slow process. “People often look at their phones because they are anxious or bad at being alone,” he says, “The phone-hooked need to figure out why they are so uncomfortable waiting in line without their screen and what they fear around them.”
This mental contrasting ability to hold two narratives in your mind is extremely productive and serves as a great tool in running your business.
- When an employee is consistently late to work, is the narrative in your mind that he’s a bad employee or can you accept that your policies and procedures have been unclear and perhaps you’ve been a bad manager of time in the past, setting an example for others to follow?
- When a referral source goes dry, have you blindly accepted in your mind that the referrals are going somewhere cheaper and more convenient or can you challenge that narrative and ask how you might reclaim personal responsibility and put more wheels in motion to regain the trust of that referral source?
- If a new competitor opens up across the street and starts poaching your employees, do you cry foul and play the victim or do you double down on making your office not only the best place for patients but also for employees?
In every corner of life and business, you’ll find those who cling to one narrative and those who can mentally contrast, play devil’s advocate, hold strong opinions loosely and let the best idea win. One road leads to success, fulfillment and happiness. The other leads to stagnation, frustration and peril. Here’s to taking the path less-traveled. Here’s to understanding all narratives and the power they have, for good or for ill, to help you or cause you to fail.
Three months after its public debut, Uber posted a $5.2 billion loss that’s “impressively vast” even for a company whose business model is based on outspending the competition, said The Economist. Since its inception, Uber has lost a total of $14 billion. A few weeks ago it laid off 400 people from its marketing department, representing a third of the entire division, and has placed a hiring feeze on new engineers.
Uber’s stock is down 20 percent since their IPO in May. It’s expensive to recruit drivers, there’s more competition and consumers are very price-sensitive. Even the most-promising startups, with billions of dollars in venture capital, must answer to the laws of gravity.
Last Wednesday was a private coaching call day. I started early in the morning and took call after call, in 45 minute increments, until late afternoon. In many of the calls, there was a common theme of growth via attempt to ignore gravity. Doubling the size of your business is not as simple as doing twice as much of what you’re doing right now. Growth creates complexity and complexity kills growth. New employees, hours, locations, additional doctors and strategic partners – all of this is complex and it can strangle the very thing you want to achieve.
As a recovering stubborn-headed know-it-all who used to do all of this the wrong way, please learn from my mistakes and understand what I get to see working all over the world and also what doesn’t work.
Understand the laws of gravity in your business. Attempt to defy them and you will eventually be pulled back down to earth.
First, decide how big you want to get and why. Aimless growth is like a mapless journey. It might turn out great, but the odds are not in your favor. If you can’t write down a revenue goal, you’re highly unlikely to achieve it by accident.
Second, determine how much profit you must derive from each unit of time, service or product. Do not violate it. Cut costs at every turn.
Third, know your “enough is enough” number and have people in your life that can hold you accountable to not only achieve it, but also to enjoy the life you’ve created around you before you’re dead and gone.
Fourth, realize every successful business is really a marketing and sales business. If you don’t know the money math inside these core competencies, you will never achieve significant growth.*
Take total collections and divide it by the number of new patients, clients or total products sold last year. Do the same with total collections and number of full time employees. Know your most-productive hours in the business and your least-productive hours. Set the minimum required revenue per hour or per product line and task managers to maintain or exceed those metrics.
Failing to acknowledge the gravity in your business is like ignoring a bad joint sprain and attempting to run a marathon. Most of your peers operate blindly and big dumb companies behave badly all the time, but this is no reason for you to follow in their path.
* You and 39 other clients can join me in 2020, where I will show you best-of-class statistics for each of the metrics (i.e., gravity) in your industry and help you perform in the top 1-5% of your market and field. You can request details for an upcoming discovery call where you will see details of the program. Make your interest known by going to MyCoachingApplication.