Why buy the Cadillac when the Chevy will do?

why buy the cadillac when the chevy will doTimes have changed since this saying came about, when the Cadillac was the gold standard. The point is still incredibly valid – why pay a lot of money when your needs are satisfied by less. I was reminded of this saying this weekend while looking for a barrier to keep my new dog from running up stairs. The pet stores had pet gates, and I was shocked by the sticker price. So, I looked at baby gates at Target. The price differential between a low end baby gate and a low end pet gate was 2-3 times, and nearly 15 times differential between a low end baby gate and a high end pet gate. I don’t need a bunch of bells and whistles, just a barrier to put on the stairs. So, the baby gate met my needs.

These types of situations arise all the time in business. Whether it is systems, equipment, design, space, or pick your project, too much money is spent regularly because the scope and outcomes are not clearly understood. Money is poured into bells and whistles that aren’t really needed. It is pretty amazing when you start focusing in on the actual scope – your time and money can be dramatically reduced. This is different from wanting a Cadillac, but only willing to pay for a Chevy. The difference is knowing your needs, the scope. How are you ensuring you are clear on your needs and not getting a bunch of bells and whistles that aren’t really needed?

How do you find your blind spots?

blind spotRecently, an out of town acquaintance was in Portland for the summer. Being from a major city, she never learned to drive. Not a big deal as she was staying close to downtown and could bike to work and around the area for fun. We were talking about how to get around and I suggested she be careful how she navigates the bike lanes. They are on the right hand side of the road and if a car needs to turn right, they would cross through the bike lane to turn, making it incredibly important to always watch for vehicle blind spots. Having never driven a car, she did not understand the concept of a blind spot, so I explained it to her.

Blind spots exist in business too. They are danger lurking in the wings that can’t be seen. And the only way to find those blind spots is through experience or, if it does not exist, help from someone who has the experience. Even if you think you have the experience, you may be too close to the situation to see the blind spots. How are you watching out for blind spots?

Circling the Drain

circling the drainHave you ever seen this? The economy, lack of desire for a product/service line or some other event causes a dramatic drop in revenue. As a result, staffing is cut. A few of the most talented people depart, leaving a weak team. A theoretical new revenue stream is discussed, but the specifics around how to make that happen never quite get there, making it difficult to attract the people that buy the goods or services. The ostrich approach moves into full gear as people discuss the plan (but don’t execute it), thinking the business has turned the corner, but miss the warning signs that things are not actually getting better. Lots of meetings happen, and people are focused on the activity rather than the results. Emails fly with large numbers of people being copied for no apparent reason and people feel better because there is activity. In the meantime, the business is circling the drain. The only question is, can someone put the plug in before all the water drains?

While it is difficult to turn a business around when it has gone too far down a path, the key is to have a flexible approach and ability to refocus as the markets change. Things to watch for include: dramatic changes in revenue, dramatic changes in the goods purchased or services provided, strength of the team in place, and a trajectory that is different than competitors or the market in general. To have forward momentum in a business, it is critical to have the right people in the right place focused on the right things. How are you having honest dialogue in your business to make sure that changes creeping in the business don’t cause you to circle the drain?

Are your metrics misleading?

time for factsA recent article in the paper was based on research published by a university. It was an interesting article that had a significant number of statistics. The results were counterintuitive to both the researcher and the writer of the article, both having indicated they expected the opposite of what actually happened. The results were listed in a table off to the side, showing the absolute occurrences in two different groups, along with the population size. The numbers became very small very quickly in the percentage of occurrences. The percentages in most cases between the groups were very close because there were few occurrences. But the article focused on the percentage change between the two groups, which became a big percentage and misleading as to how often the occurrence happened between the groups.

For example, in group one there is an occurrence 1 time in 10,000. In group 2, there is an occurrence 2 times in 10,000. In group one, the occurrence happens 0.01% of the time, and 0.02% of the time in group 2. In either case, it is negligible. But framed another way, it could be stated that occurrences happen twice as frequently in group 2. That seems like a lot more!

How information is presented can have a significant impact on perceptions and form the basis of how decisions are made. How are you making sure the data presented in your organization is fairly representing what is actually going on so appropriate decisions can be made?

Getting Panicked Can Result In Big Mistakes

Don't PanicYou know that momentary pang of panic when you look in your rearview mirror and there is a police officer behind you? Even if you are just moving along with the flow of traffic, it can be a bit nerve wracking. That was the case yesterday. After several stop lights and he was still behind me, it was time to move over. Traffic finally started flowing as the congested area was ending. Then it happened. The red jeep that was behind the UPS truck jumped out in front of the motorcycle officer, cutting him off. How could he not see him? No signal to move over, no clearance in front of the motorcycle. Yikes! Not good. The red jeep kept going with the officer on his bumper. Then to make matters worse, the red jeep tried to get back over, pushing the UPS truck onto the shoulder. The lights came on indicating the inevitable.

It seemed that the jeep driver hadn’t realized what happened until looking in the rearview mirror to see the cop. Panic set in and that was when the near accident happened. The driver must have known the UPS truck was there as he was following it and was now beside it. But that panic in the gut caused focus to go elsewhere, nearly causing the accident.

That feeling of panic can cause devastating results in business as well, and it can have many causes. The key is to recognize when the panic hits and then not lose focus on running the business. Being calm and keeping the objectives in mind can help. So can having thought through various scenarios and how to handle them. How are you ensuring you stay focused on your objectives and are not focusing on distractions that cause panic and lead to disastrous results?

Have you really thought about all of the options?

Have you considered all the optionsPigs and goats. It was the solution to a problem that many face, the need to clear brush. I have to admit that it is not a solution that would have ever crossed my mind. For the manager of a farm program at a local winery, it was the solution that made the most sense. The goats were quickly and effectively able to clear the brush. The pigs were unleashed next to address the roots. They quickly and effectively cleared the root structure and completed the removal of the blackberries, leaving land that was cleared and ready to utilize.

There are always many options to resolve problems or grasp opportunities. To some the options may be obvious, to others they may not be known. Getting the right people around the table that have the skills and background, that are aligned with the organizations values can help get you there. In the case above, there was no time pressure and the values include sustainability and organic farming. By including the right people, they were able to utilize an option that fit with their purpose and values. How are you making sure you include the right people and get all of the options on the table?

Momentum vs. Technique

momentum vs techniqueSaturday morning starts with a tough workout with Babs, my personal trainer. Over the years, she has taught me a lot about the proper technique. When we first started, she would almost always tell me to stop and start over. After a reprimand for using momentum, she would instruct on the proper technique.

This week, she was reflecting that her regular group of people know the connection between mind and body, enabling utilization of the proper technique. Momentum is easier as the motion propels the weights or the body in a direction. With momentum, and not having proper technique, it is possible to get hurt or create an out of balance in the body.

Business is the same way. Getting momentum can be a little tough at first. But once things start moving, the momentum can propel the business forward. And while having momentum is critically important, it should never be at the sacrifice of technique. Without proper technique (skills, capabilities and focus), the business may veer off course, having a negative impact that may be detrimental long-term. How are you differentiating between momentum and technique in your business? What can you do to refocus on technique?

The market always turns

the market turnsThere aren’t too many industries that have no market cycles. Some are more significant than others. Over time, as business grows and changes, some companies lose sight of the market, how they are positioned and their cost structure. As a result, erosion starts to occur in the profitability of the business.

This is the point when many companies are bought. But even if a sales transaction doesn’t take place, it’s time to put some tension back into the business. Why? Because the market always turns at some point and if not addressed, the business may go out of business due to high fixed costs and lack of market insight.

What does this mean? With lack of market insight, the company will miss the market signals that indicate it is time to adjust the business as the market demand starts to drop. With a high cost structure, the company may not have enough time to adjust before it runs out of cash. Thus becoming another company that doesn’t make it through a market cycle.

This is where it is critical to have a focused management team that has a strong sense of urgency. You never know when the market is going to turn, so acting with a sense of urgency as if the market turn is today or tomorrow, will position the company well for when it actually does turn. How are you positioning your company for market turns?

You don’t have to have the whole answer – just start

don't wait - just startI was recently speaking with someone about an effort that is getting underway that can have a transformational impact on their business over the longer term. But, there isn’t a long-term owner at this point. The short-term perspective is a couple of discrete actions that can get the ball rolling and ultimately support the longer term. The company will make some progress if it only does the short tem work, but the impact of the work will diminish over time without the longer term. The question: do something or do nothing?

It is funny how many times over the last few months I’ve come across this exact dilemma in one form or another. My advice is always to start. By getting the ball rolling, progress starts. It ultimately allows for further critical thinking that creates better focus, revisions and course corrections. It may not always work, but insights will be gained along the way. In the case above, the work started and internal support started to build, even without a long-term owner. The key was to just get started. How are you starting things without having the 100% solution?

Don’t let a good crisis go to waste

Don't let a good crisis go to wasteThere is always a point in time in business where market forces create tension in the business. It may be the loss of a significant customer, a cyclical downturn, or maybe the introduction of a new competitor or product. The point is – you now have something putting pressure on your business demanding immediate attention. It is a reason to come together as a company and do something different. It is the case for change.

Making change happen is one of the toughest things you can do in business. People want a reason to do something different – a case for change or a burning platform. It is comfortable to do the same thing – call it routine or habit. And doing something different takes a lot of effort.

Have you had a crisis recently? A big one doesn’t come around every day. So leverage it while it is there. It can make the difference in your organization surviving.