I should start by saying that I have not fully fleshed out this stream of thought. It occurred to me this morning in the shower and it’s been knocking around my head all day (when I wasn’t trying to rebook a terrible day of traveling. Thanks snow!) So I decided to blog about it here and see if that helped me work through it.
I’ve been reading quite a bit about start-ups, venture capital, and most specifically venture capital returns in the last few months. Typically venture capitalists make their money when their investments “liquidate” through either an IPO or acquisition. Over the last 30 years there have been many hugely successful IPO’s including Google, Microsoft, Dell, Amazon, etc. This IPO’s are a huge engine of wealth creation and access to capital in our economy. Access to these capital markets can be critical to the success of business growth.
Recently, however, it’s become harder for startups to access these markets. The added regulatory requirements put in place by Sarbanes Oxley have made it significantly more expensive for young companies to launch an IPO (estimates put compliance costs at $2 Million or more). And, in addition to costs, SOx also introduces personal liability for the officers of the company. Increasingly these young companies are turning to M&A instead. They seek out larger players in the market and negotiate a sale.
So what does this mean? In the short term, probably not much. Venture capitalists and their investors may see somewhat smaller returns and company founders may not see the extreme paydays (though Mark Zuckerberg seems to be doing just fine and I don’t hear Ev Williams or Biz Stone complaining at all). Additionally there might be somewhat slower job creation. But overall the short term implications are probably pretty small. The long term implications could be much larger. What happens if the trend continues and we develop a lack of new public companies? What if all new tech startups sell to Microsoft or Google or Apple? Will we eventually have an economy dominated by a few mega-corporations similar to the financial industry today? What happens in the next recession? Do we have to bail out these tech giants? Do they become “too big to fail”?
Or am I over-extrapolating and over reacting?
Good Talk, Tom
Monday, December 21, 2009
Sunday, December 20, 2009
What's The Worst That Can Happen?
Every day we are faced with a multitude of decisions covering a broad spectrum of things; what tie should I wear today? Should I ask her out? Do I have time to stop for coffee? At what price point should I launch my product? Should I kill feature X or add feature Y? Can we afford to hire another person for this project? Can we afford not to? At times these decisions can pile up and become nearly crippling (the well used cliché analysis paralysis). We spend far too much time weighing options and worry about outcomes. Often it’s a better idea to just DO SOMETHING! Don’t spend all your time analyzing and modeling and worrying. Ask yourself what is the worst that can happen and then just try something and see if it works.
I should note that this method will work for all businesses. Even if you have a business with huge product development costs, long development times and where changes are going to be really expensive you can still use this method. What’s the worst than can happen? Well, the worst can be pretty bad, so make sure you diligently analyze options and weigh costs.
But for most of us there is an innate bias toward overestimating risk and underestimating gains. It can be extremely difficult to overcome this bias, but asking what’s the worst that can happen is a good method. (Suzy Welch recommends asking what are the implications 10 minutes from now, 10 months from now and 10 years from now. I think this achieves much the same goal.) The important thing is to realize that most decisions we make are not going to have huge implications. It’s usually better to make a decision, execute based on it, and then move onto the next thing. Because really, what’s the worst than can happen?
Good Talk, Tom
I should note that this method will work for all businesses. Even if you have a business with huge product development costs, long development times and where changes are going to be really expensive you can still use this method. What’s the worst than can happen? Well, the worst can be pretty bad, so make sure you diligently analyze options and weigh costs.
But for most of us there is an innate bias toward overestimating risk and underestimating gains. It can be extremely difficult to overcome this bias, but asking what’s the worst that can happen is a good method. (Suzy Welch recommends asking what are the implications 10 minutes from now, 10 months from now and 10 years from now. I think this achieves much the same goal.) The important thing is to realize that most decisions we make are not going to have huge implications. It’s usually better to make a decision, execute based on it, and then move onto the next thing. Because really, what’s the worst than can happen?
Good Talk, Tom
Monday, November 30, 2009
"The New Guy"
I recently started a new assignment with a new client in a new state and it got me thinking about what it means to be the new guy and how to make the most of a new situation. As a consultant it is a necessary and “normal” part of the job to often be “the new guy”. After a while we get pretty used to it.
I should start by saying that everyone I work with has been great about welcoming me and getting me up to speed. We’ve tackled the paperwork to get me a badge; we’ve dealt with network access and a brief overview of policies the client expects us to follow. They were also very forthcoming with office “culture”; who the pranksters are, who to avoid before 10am, who to see when you need an answer 5 minutes ago, etc. The team has really been wonderful. And yet, despite the lunches and the dinners, the meetings, the late nights, it inevitably takes a while to completely fit in. You’re on the outside of inside jokes. You can’t relate to problems or successes from earlier. You don’t know colleagues who have already left the project. Eventually, obviously, this will all pass as you take part in new triumphs, develop your own jokes, and live your own stories. The time it takes to completely fit in (until people stop saying “have you met Tom”) varies from client to client and team to team, but there are concrete steps you can take to speed the process.
1) Engage: It is just my natural tendency to observe and study a new environment before engaging. This is a terrible idea! I have to constantly fight the urge to sit back and watch. You learn so much faster by engaging, talking, debating (politely – you are still “the new guy”) than you do by observing. Speak up in meetings, proactively engage people in the hallways and at around the coffee machine, leverage experiences from past projects, etc. It should be a goal to make a real impact on a decision within your first day. It doesn't need to be a earth shattering decision, but something. This helps you focus and get into the weeds.
2) Be on time and “Present”: Perhaps your last client had a habit of starting meeting 5 minutes later than scheduled or maybe it was the kind of company where meeting attendees spent the meeting buried in their laptops “multi-tasking”. When you’re new to a client or company be sure to show up on time (or, even better, a couple minutes early to meet new people). If, over time, you realize that meetings do, in fact, start late then feel free to fall in with the crowd if you so please (personally, I hate meetings that don’t start and end on time…but that’s for a different post). Also, leave your laptop at your desk (unless explicitly needed for the meeting), leave your blackberry or iPhone (or Droid) in your pocket and pay attention. Bring an old fashioned notebook (I use these) and take old fashioned notes. By being 100% focused on the current meeting you will more quickly learn the client’s business and your role in their success.
3) Ask Questions: This is sort of a corollary to numbers 1 and 2, but I think it is important enough to warrant its own bullet point. Ray Bradbury wrote in Fahrenheit 451, “If you hide your ignorance no one will hit you and you’ll never learn”. Often times consultants are reluctant to ask a lot of questions (after all, we are paid for what we know and to answer questions, not ask them). A much better approach is to ask as many questions as you have (luckily, in Corporate America, we are rarely hit for our ignorance…). It’s much better to ask questions in your first couple of weeks than it is to pretend you understand everything and then have to go back and ask basic questions. Keep in mind that the client will ALWAYS know their current business better than you will. Your job is to learn as much as you can and then implement solutions to improve the business going forward.
4) Have Fun: Yes, it’s a cliché. But why not have fun? You’re going to spend 60-80 hours a week with the people in your office. Take the opportunity to learn about them. Have conversations that extend beyond the walls of your cubicle or office. If you’re in a new city, explore local restaurants (not national chains, please). On my last project we regularly used this to blow off steam. You’ll be a lot more successful if you make it a point to have fun whenever possible, plus it never hurts to be known as someone who’s fun to be around. You never know when you’ll cross paths with these people again.
I'd love to hear additional suggestions. What other tips do you have?
I should start by saying that everyone I work with has been great about welcoming me and getting me up to speed. We’ve tackled the paperwork to get me a badge; we’ve dealt with network access and a brief overview of policies the client expects us to follow. They were also very forthcoming with office “culture”; who the pranksters are, who to avoid before 10am, who to see when you need an answer 5 minutes ago, etc. The team has really been wonderful. And yet, despite the lunches and the dinners, the meetings, the late nights, it inevitably takes a while to completely fit in. You’re on the outside of inside jokes. You can’t relate to problems or successes from earlier. You don’t know colleagues who have already left the project. Eventually, obviously, this will all pass as you take part in new triumphs, develop your own jokes, and live your own stories. The time it takes to completely fit in (until people stop saying “have you met Tom”) varies from client to client and team to team, but there are concrete steps you can take to speed the process.
1) Engage: It is just my natural tendency to observe and study a new environment before engaging. This is a terrible idea! I have to constantly fight the urge to sit back and watch. You learn so much faster by engaging, talking, debating (politely – you are still “the new guy”) than you do by observing. Speak up in meetings, proactively engage people in the hallways and at around the coffee machine, leverage experiences from past projects, etc. It should be a goal to make a real impact on a decision within your first day. It doesn't need to be a earth shattering decision, but something. This helps you focus and get into the weeds.
2) Be on time and “Present”: Perhaps your last client had a habit of starting meeting 5 minutes later than scheduled or maybe it was the kind of company where meeting attendees spent the meeting buried in their laptops “multi-tasking”. When you’re new to a client or company be sure to show up on time (or, even better, a couple minutes early to meet new people). If, over time, you realize that meetings do, in fact, start late then feel free to fall in with the crowd if you so please (personally, I hate meetings that don’t start and end on time…but that’s for a different post). Also, leave your laptop at your desk (unless explicitly needed for the meeting), leave your blackberry or iPhone (or Droid) in your pocket and pay attention. Bring an old fashioned notebook (I use these) and take old fashioned notes. By being 100% focused on the current meeting you will more quickly learn the client’s business and your role in their success.
3) Ask Questions: This is sort of a corollary to numbers 1 and 2, but I think it is important enough to warrant its own bullet point. Ray Bradbury wrote in Fahrenheit 451, “If you hide your ignorance no one will hit you and you’ll never learn”. Often times consultants are reluctant to ask a lot of questions (after all, we are paid for what we know and to answer questions, not ask them). A much better approach is to ask as many questions as you have (luckily, in Corporate America, we are rarely hit for our ignorance…). It’s much better to ask questions in your first couple of weeks than it is to pretend you understand everything and then have to go back and ask basic questions. Keep in mind that the client will ALWAYS know their current business better than you will. Your job is to learn as much as you can and then implement solutions to improve the business going forward.
4) Have Fun: Yes, it’s a cliché. But why not have fun? You’re going to spend 60-80 hours a week with the people in your office. Take the opportunity to learn about them. Have conversations that extend beyond the walls of your cubicle or office. If you’re in a new city, explore local restaurants (not national chains, please). On my last project we regularly used this to blow off steam. You’ll be a lot more successful if you make it a point to have fun whenever possible, plus it never hurts to be known as someone who’s fun to be around. You never know when you’ll cross paths with these people again.
I'd love to hear additional suggestions. What other tips do you have?
Sunday, November 1, 2009
Do Clients Know What They Want?
I was reading Ben Casnocha's excellent blog tonight when I stumbled upon the following:
Given that customers lie, sometimes we have to extract information indirectly. Instead of asking customers how much they would pay for a hypothetical product, ask them how much they're currently paying for however it is they're solving the problem that you are trying to solve. (Please read the full post here)
Ben was talking about product development and marketing for startups specifically, but it got me thinking: How often do my clients really know what they want? Are they capable of communicating that effectively? What processes must we use to extract that information?
I know I spend a good deal of my time in workshops, demos and interviews trying to determine exactly what the client is looking for. In the end, however, we make lots of changes toward the end as the system comes together and differences in understanding get resolved.
What processes/systems/tools do you use to get at exactly what your clients and customers want? I'd love to hear some ideas.
Good Talk,Tom
Given that customers lie, sometimes we have to extract information indirectly. Instead of asking customers how much they would pay for a hypothetical product, ask them how much they're currently paying for however it is they're solving the problem that you are trying to solve. (Please read the full post here)
Ben was talking about product development and marketing for startups specifically, but it got me thinking: How often do my clients really know what they want? Are they capable of communicating that effectively? What processes must we use to extract that information?
I know I spend a good deal of my time in workshops, demos and interviews trying to determine exactly what the client is looking for. In the end, however, we make lots of changes toward the end as the system comes together and differences in understanding get resolved.
What processes/systems/tools do you use to get at exactly what your clients and customers want? I'd love to hear some ideas.
Good Talk,Tom
Saturday, October 31, 2009
The Importance Managing Expectations
One of the most important things we can do at work is to manage the expectations of those around us. If you're a manager, make sure that your direct reports know what to expect from you and what you expect from them. If you are individual contributor, make sure to find out what your boss expects and that it matches what you expect to contribute. If you work in a client facing role, be sure that expectations are clear between your team and the client team - this means more than just writing and signing a contract. Nothing will derail a project or career faster than mismatched expectations.
As IT consultants one of our standard deliverables is a demonstration of the system we are implementing. This deliverable is the single hardest piece of the project to manage as far as expectations are concerned. Some clients expect a fully developed system with client data updated to the minute. Others are happy with nothing more than a few process flows and a discussion of the new system. Some clients want to schedule a full week of demos while others look for only a few hours. Some clients want demonstrations at every milestone, some clients want a demo before signing the contract and some want a demo just before go-live.
I have seen far too many of these demonstrations turn successfully, on-time, under-budget projects into disasters because suddenly the client loses all faith in the consultants. The only way to ensure these demonstrations are successful is to over-communicate what you (as a consultant) are expecting to demonstrate. If the system is not 100% configured, make sure the client project team knows in advance. If the data will not be ready, make sure the client project team knows in advance. Most clients are flexible and understand that issues arise, problems happen and schedules sometimes need to move. What most clients will not accept, however, is being surprised. Sometimes it may be necessary to lower these expectations. For example, if the system is not ready (or the environment is not stable) make sure the client only expects screen shots and a PowerPoint. Additionally be sure that the client project manager is properly communicating this to the rest of the team.
Managing expectations goes way beyond just product or system demonstrations. With every meeting and every deliverable it’s important to ensure that you are meeting or exceeding expectations. You should constantly communicate your plans and solicit feedback on your work. All of this goes toward being an effective manager/employee/consultant.
Always ensure that you and those around you are the same page. It's as simple as that.
Good Talk,Tom
As IT consultants one of our standard deliverables is a demonstration of the system we are implementing. This deliverable is the single hardest piece of the project to manage as far as expectations are concerned. Some clients expect a fully developed system with client data updated to the minute. Others are happy with nothing more than a few process flows and a discussion of the new system. Some clients want to schedule a full week of demos while others look for only a few hours. Some clients want demonstrations at every milestone, some clients want a demo before signing the contract and some want a demo just before go-live.
I have seen far too many of these demonstrations turn successfully, on-time, under-budget projects into disasters because suddenly the client loses all faith in the consultants. The only way to ensure these demonstrations are successful is to over-communicate what you (as a consultant) are expecting to demonstrate. If the system is not 100% configured, make sure the client project team knows in advance. If the data will not be ready, make sure the client project team knows in advance. Most clients are flexible and understand that issues arise, problems happen and schedules sometimes need to move. What most clients will not accept, however, is being surprised. Sometimes it may be necessary to lower these expectations. For example, if the system is not ready (or the environment is not stable) make sure the client only expects screen shots and a PowerPoint. Additionally be sure that the client project manager is properly communicating this to the rest of the team.
Managing expectations goes way beyond just product or system demonstrations. With every meeting and every deliverable it’s important to ensure that you are meeting or exceeding expectations. You should constantly communicate your plans and solicit feedback on your work. All of this goes toward being an effective manager/employee/consultant.
Always ensure that you and those around you are the same page. It's as simple as that.
Good Talk,Tom
Thursday, October 29, 2009
Highlighting Crises: The Burning Platform vs Chicken Little
Anyone who has ever studied business or management should be familiar with the concept of “The Burning Platform”. It’s a management theory/technique based of the story of a man working on an oil platform who is suddenly awakened one night by an explosion. He rises from his bed to find the platform engulfed in flames and amidst the chaos decides to jump from the platform to the ice-cold water 100 feet below. Upon being rescued and questioned about the rationality of jumping, the man states, "I would rather face a probable death than a certain death". The story is meant to illustrate a situation where a "choice" is really no choice at all; face certain death by burning or take your chances swimming in cold water. It very clearly highlights a crisis and leaves the character only one choice. In management burning platforms are metaphors used much the same way. The surrounding issues (cultural, economic, strategic, etc) are the burning oil platform and a corporation or project is the oil worker. Managers will generally highlight crucial issues, heighten the sense of urgency among their staff and then lay out a plan of action to move the company forward. This can be a very effective management method, especially for organizations undergoing considerable change. Focusing on a crisis and a plan of attack, the organization can take the necessary action to survive and ultimately excel.
There is another style of management that also focuses on managing crises. This style manifests when the burning platform style goes wrong. I call it the Chicken Little style of management. This theory is based on of the story of Chicken Little who, while eating lunch one day, gets struck on the head by a falling acorn. Immediately Chicken Little determines that the sky is falling and sets out to alert everyone. Of course, the sky is not actually falling and the moral here is not to believe every crisis you hear. It’s important in business to maintain a rational outlook and always look at the bigger picture. While urgency can motivate your employees, panic will surely make them less productive.
All too often I see companies incapable of looking beyond the current crisis. At every meeting and in every email, employees and managers are screaming about the end of the world if XYZ problem is not resolved today and right now! The Chicken Little management theory relies on all out panic about each and every “crisis”. Burning Platform thinking allows a company to coerce employees into action by replacing “learning anxiety” with “survival anxiety”[1]. It focuses time, energy and resources toward resolving crucial issues. The difference is rational, big picture thinking, clearly articulated plans and a willingness to act versus blind panic and no plan of action.
Next time you are in the midst of a crisis at work and you feel like the sky is falling make sure to take a step back and evaluate the big picture. And if you are a CEO or manager be sure to create urgency in a responsible way that focuses your staff and your team on the truly critical issues.
Good Talk, Tom
[1] (Note: I first read the terms learning anxiety and survival anxiety an interview of Edgar Schein of MIT’s Sloan School of Management. I do not know who originally coined them).
There is another style of management that also focuses on managing crises. This style manifests when the burning platform style goes wrong. I call it the Chicken Little style of management. This theory is based on of the story of Chicken Little who, while eating lunch one day, gets struck on the head by a falling acorn. Immediately Chicken Little determines that the sky is falling and sets out to alert everyone. Of course, the sky is not actually falling and the moral here is not to believe every crisis you hear. It’s important in business to maintain a rational outlook and always look at the bigger picture. While urgency can motivate your employees, panic will surely make them less productive.
All too often I see companies incapable of looking beyond the current crisis. At every meeting and in every email, employees and managers are screaming about the end of the world if XYZ problem is not resolved today and right now! The Chicken Little management theory relies on all out panic about each and every “crisis”. Burning Platform thinking allows a company to coerce employees into action by replacing “learning anxiety” with “survival anxiety”[1]. It focuses time, energy and resources toward resolving crucial issues. The difference is rational, big picture thinking, clearly articulated plans and a willingness to act versus blind panic and no plan of action.
Next time you are in the midst of a crisis at work and you feel like the sky is falling make sure to take a step back and evaluate the big picture. And if you are a CEO or manager be sure to create urgency in a responsible way that focuses your staff and your team on the truly critical issues.
Good Talk, Tom
[1] (Note: I first read the terms learning anxiety and survival anxiety an interview of Edgar Schein of MIT’s Sloan School of Management. I do not know who originally coined them).
Saturday, October 24, 2009
Communication in an Organization Undergoing Massive Change
I was reminded this week of the critical importance of communicating within a corporation. I'm working right now for a client who is implementing a new financial planning, forecasting and budgeting tool at a company currently in bankruptcy. The new financial system is designed to help with top down budgeting and improve cost management once the client emerges from bankruptcy protection. As with any project of this type there are good days and bad and things that go well along with things that could go better. There are always problems and always room for improvement.
The unique challenge of this client is not the number of problems or their severity, but rather it is the absolutely unpredictability of them. After having worked on projects like this one for years you start to anticipate problems along the way and it's possible (sometimes easy) to plan for them. However this client has been blindsided (and blind sided the consultants) at least half a dozen times with things that should not really be problems. After giving it lots of thought and analysis I've decided that the root cause of the problems is the sheer scale of change happening and the failure of upper management to communicate this change to the rest of the company.
In order for any large-scale change to be effective management needs to ensure that everyone is in the loop, on the same page, and driving toward the same goal. Often times, you need to communicate vastly more than you think is necessary. My current client has a monthly update meeting for the staff and a weekly email that consists of an excel spreadsheet detailing milestones and complications. Think about that for a second: 1 email a week that speaks to the minutiae of the project and one meeting per month. We are talking about communicating to a group of people who just underwent a 30% reduction in staff, are currently undergoing a massive reorganization of the people who are left and are implementing completely new financials systems and processes. Departments are changing, responsibilities are being added and removed, people have new bosses and new direct reports and at the end of the day, everyone seems afraid to act. The people who work here are smart, talented and well-intentioned. Unfortunately none of them have any clear set of expectations.
The executives of this company need to be shouting from the rooftops about the importance of this project. They need to take every opportunity to engage their people in as many forums as possible. They need to explain what is happening, why it is happening, how it is happening and what each and every person can do to ensure that it happens successfully. They need to explain to middle management so that middle management can pass the information on to their staff. Middle management has taken no ownership of the project and most of this is because upper management has not explained why it's important and how it will help.
This should be an exciting time for the employees, customers and stakeholders. I truly believe that this company can emerge successfully from bankruptcy and return to profitability. But that will only happen if the broken communication model is fixed.
Always over-communicate.
Always.
Good Talk, Tom
The unique challenge of this client is not the number of problems or their severity, but rather it is the absolutely unpredictability of them. After having worked on projects like this one for years you start to anticipate problems along the way and it's possible (sometimes easy) to plan for them. However this client has been blindsided (and blind sided the consultants) at least half a dozen times with things that should not really be problems. After giving it lots of thought and analysis I've decided that the root cause of the problems is the sheer scale of change happening and the failure of upper management to communicate this change to the rest of the company.
In order for any large-scale change to be effective management needs to ensure that everyone is in the loop, on the same page, and driving toward the same goal. Often times, you need to communicate vastly more than you think is necessary. My current client has a monthly update meeting for the staff and a weekly email that consists of an excel spreadsheet detailing milestones and complications. Think about that for a second: 1 email a week that speaks to the minutiae of the project and one meeting per month. We are talking about communicating to a group of people who just underwent a 30% reduction in staff, are currently undergoing a massive reorganization of the people who are left and are implementing completely new financials systems and processes. Departments are changing, responsibilities are being added and removed, people have new bosses and new direct reports and at the end of the day, everyone seems afraid to act. The people who work here are smart, talented and well-intentioned. Unfortunately none of them have any clear set of expectations.
The executives of this company need to be shouting from the rooftops about the importance of this project. They need to take every opportunity to engage their people in as many forums as possible. They need to explain what is happening, why it is happening, how it is happening and what each and every person can do to ensure that it happens successfully. They need to explain to middle management so that middle management can pass the information on to their staff. Middle management has taken no ownership of the project and most of this is because upper management has not explained why it's important and how it will help.
This should be an exciting time for the employees, customers and stakeholders. I truly believe that this company can emerge successfully from bankruptcy and return to profitability. But that will only happen if the broken communication model is fixed.
Always over-communicate.
Always.
Good Talk, Tom
I'm Giving Blogging a Try
I've been reading blogs for quite some time now, but I've never really felt the need to have my own blog. Now, however, I find myself frequently with more and more to say. I started on Twitter (a service I absolutely love) but distilling my thoughts to 140 characters is often not possible. Thus I'm creating a new outlet. I have no expectations about how often I'll post or what topics I'll choose to write about. In fact, I have no expectations for this blog whatsoever.
I can be reached at tom@tomarmstrongonline.com or leave a note in the comments.
Good Talk, Tom
I can be reached at tom@tomarmstrongonline.com or leave a note in the comments.
Good Talk, Tom
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