Erich Stauffer

Category: Management

  • 6 Ways to Save Your Business

    The American Conservative recently wrote an article about 10 Ways to Save Barnes & Noble, which caught my eye for a couple of reasons. For one, I’ve not only made a lot of money from supporting the Nook ereader both online at Nook Share and offline with Geek Hand, but I also made money from buying and selling books from Barnes & Noble. Second, as a business consultant, I have my own ideas about how Barne’s & Noble could adapt to the new environment they find themselves in. One idea I had that was not mentioned in the article involves Barnes & Noble creating a nationwide coworking facility that promotes the idea of entrepreneurs using their facility as office space. To bring this idea full circle, the original idea behind Nook Share was to build a coworking facility with that name, but after Barne’s and Noble, Inc. registered “Nook” as a trademark on June 4, 2009, the site pivoted to sell Nook covers and accessories. But this article isn’t about me or even about Barnes & Noble – it’s about you and your business. Gracy Howard, the author of the “10 Ways to Save Barnes & Noble” article, summarizes her thoughts in a way that I felt was beneficial to more than just Barnes & Noble:

    Maximize your strengths: build a comfortable, nostalgic ethos. Try making your stores more personalized and local—perhaps build a community library vibe with fun events. Hire people who actually read books, and who love talking about them.

    1. Maximize your Strengths – In the book, Now, Discover Your Strengths, authors Marcus Buckingham and Donald O. Clifton argue that instead of trying to repair our weaknesses, we should focus on improving our strengths. Unfortunately, not everyone knows what their strengths are so there is a Strengths Finder test to help you (or your business) with this. In 2009 I wrote about how to identify strengths and revenue streams, which has a mini-test of 10 questions that will help you find your strengths.
    2. Build a Comfortable, Nostalgic ethos – “Ethos” is a synonym of “character” and envokes, “the characteristic spirit of a culture, era, or community as seen in its beliefs and aspirations.” “Comfortable” is just another word for “familiar” – and since “consistency” breeds familiarity, one way to be more comfortable to customers is to be more consistent. Consistency is one of the 3 C’s of creating trust, which is the third leg in the buying cycle of “know, like, trust.” So the advice here is to have a consistent character to your company.
    3. Make your Business More Personalized – Personalization is changing the world and it’s one of the easiest ways to add margins to your bottom line and differentiate from the competition. When you can personalize a product, you make competition irrelevant. Even Nike and Lands End are getting in on this trend with “mass customization“, but there are other ways to personalize your business such as by remembering your customer’s name, asking them how they are doing, or just saying hello.
    4. Make your Business More Local – There are certainly SEO benefits to making your business more local, but the advice here is to tap into the advantages that a local, brick-and-mortar store has over a online presence. While Amazon has local distribution centers and Local Deals, they do not have local events. You cannot go have coffee at Amazon and you cannot use their bathroom.
    5. Host more Events – “Events” are one of the most underused, but most powerful ways to market your business. From hosting a local meetup to posting a party on Eventbrite, there is power in meeting people face-to-face as it builds the word-of-mouth marketing that is so powerful. On the flip side, going to conferences and trade shows is another great way to get in front of potential customers or to make relationships with other mutually-beneficial companies.
    6. Hire Good People – In the article they suggest hiring people who actually read books. What a novel idea. I have seen first hand how changes in the hiring process affects the overall success or failure of your business. It is a core part of everything you do. Almost every person in your organization has the ability to improve or decline your business so getting the right people on the bus is very important – and quite possibly the most important. It’s one that should be done before any process, technology, or marketing changes are done. Yes, it’s that important.

    Is your business on the brink of collapse? Focus on your strengths. Examine your people, processes, technology, and marketing. Create a list of next action steps and do one of them. As Terry Lin likes to say:

    One is better than none.

  • Dental Office Management Case Study

    How I helped an Indianapolis dental office through 100% turnover and go from their worst month ever to their best month ever in 2012.

    When I worked as a business analyst at First Merchants I would often be doing staffing models during the day and working on web sites and IT work at night. After I was went full-time as a business consultant I offered staffing model services to one of my web clients. They trusted me because I had already got them to be #1 on Google for the term “Indianapolis Dentist” and their site was listed as one of the best dental websites.

    Systems in Place

    Systems in Place

    The business owner wasn’t as interested in tracking what each individual staff member was doing as much as finding out what each staff member does, ensuring it’s documented, and making sure there were “systems in place”. At that point he had recently converted his practice management software from Practiceworks to Dentrix and two staff members had already quit. There was real fear of losing all “tribal knowledge” of how his business was ran.

    Observations

    One of the first things I do when I start a staffing model is to simply observe what is going on in the office. For the first two weeks I would ask questions, watch processes, and document as much as I could. If there was a name for a process I would use that – otherwise I would create a new name for it. I started identifying positions and roles (they can be different) and then placing the newly quantified tasks into ‘piles’ under each type.

    Documentation

    To document the process I setup the office with Google Apps and used the Google Sites portion of it to create an Intranet for the company. Each staff member was given their own company email address which they could use to login to the site as well as share calendars, documents, and email each other. Distribution groups were setup for different team members including the front office, clinical team, and the “everyone” group.

    Employee Turnover

    After a short while, a clear picture began to emerge. There weren’t just issues with cr0ss-training, there were issues with the staff themselves. It wasn’t long before there was more staff turnover. It was like they were “jumping ship”. The decision was made to get some new leadership into the organization so the long-time manager was fired in June. I became the interim manager and began to re-build the new staff.

    Changes in Hiring Practices

    One of the first things I focused on was “getting the right people on the bus”. We sought after and hired people who cared about people first and had a great personality. We had learned that those are two things that can’t be taught so those were the most important things we sought after. We didn’t settle for a person just because they filled the position and at some times were working with a crew of as small as 3 people while we continued to look.

    Changes in Processes

    Once we had the right people in place we began working on the proper processes. We started using checklists to ensure the critical morning and nightly procedures were completed. There were many times when they were not and the staff did not like using the checklists at first, but over time they learned to first appreciate them and then not need them as it became second-nature. This helped a brand new staff have consistency and learn faster.

    Changes in Technology

    While the old staff did not understand technology innately, the new staff embraced it. They began using email to communicate, began referencing the Intranet for critical information (the previous staff kept an old Rolodex on the front desk that contained all of the information they’d ever reference – this was typed up into one page on the Intranet affectionately titled, “Rolodex”). And a new wireless camera system was setup to take patient photos.

    Changes in Marketing

    We signed up for Demandforce and Angies List. We began using Google Adwords and revamped the website. We added more social proof, more testimonials, more web pages, and more blog posts. We added more social networks, posted more often, and were more engaged with our patients online. As a result, referrals from the Internet went up along with web site visitors. We used Google Analytics to track the progress.

    The Result

    By first focusing on the staff, then the process, then the technology, and finally the marketing – we had the right people who were given the right instructions for the best technology, which was supported by the best marketing techniques. The result was an initial boost of 116% the first month, followed by an average increase of 72% for the next five months compared to the five months prior. How can I help you get similar results?

  • What Happened to the Color App?

    Why Did Instagram Succeed When the Color App Failed?

    We hope you’ve enjoyed sharing your stories via real-time video. Regretfully, the [Color] app will no longer be available after 12/31/2012.

    That was the message posted on Color.com [Update 7/15/2003: The site is no longer up.], the domain Color Labs paid $350,000 to acquire in 2011 almost a year after Instagram was founded. A year later their photo sharing app would be on the way out while Instagram was getting bought for a billion dollars. What went wrong? Why did Instagram succeed when Color failed?

    Color vs. Instagram

    What Happened to the Color AppColor Labs was a start-up based in Palo Alto, California whose main product was a social application for photos called Color. It allowed people to take and view photos matched to a location. Color grouped photos based on a user’s friends so that they are more likely to see those pictures that are most relevant. Like Color, Instagram is an online photo-sharing and social networking service that enables its users to take pictures and optionally tie them to a location. Unlike Color, users can apply digital filters to photos and share them on a variety of social networking services. It confines photos to a square shape, similar to Polaroid images, which along with the filters gave photos a retro look and feel.

    A Difference in Startup Methodologies

    Color Labs started after co-founders Bill Nguyen and Peter Pham received $41 million in funding between 2010 and 2011 from Sequoia Capital, Bain Capital, and Silicon Valley Bank before the app had a single user. Conversely, Instagram was started by Kevin Systrom and Mike Krieger in October 2010 with $500,000 and teams of just a few people. As Instagram introduced successful products and attracted users, they slowly raised more money and hired engineers. Meanwhile, Color Labs spent $350,000 to buy the domain color.com (and an additional $75,000 to buy colour.com), rents an office in downtown Palo Alto, California, where it employs 38 people to work in, according to the New York Times, “a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp.”

    Instagram’s $500,000 seed funding round came on March 5, 2010 from Baseline Ventures and Andreessen Horowitz while Systrom was still working on Burbn. By February 2, 2011, it was announced that Instagram raised $7 million in Series A funding from a variety of investors, including Benchmark Capital, Jack Dorsey, Chris Sacca (through Capital fund), and Adam D’Angelo. The deal valued Instagram at around $25 million and later that month, Facebook made an offer to purchase Instagram and its 13 employees for approximately $1 billion in cash and stock. By May of 2012, the number of photos has exceeded one billion. Google offered to buy Color for $200 million in July of 2011, but Color Labs turned down the deal. They were later acquired by Apple (mostly for their patents and talent) in October 2012 for an undisclosed sum.

    A Difference in Responses to the App

    On March 24, 2011, Color Labs launched its first application “Color for Facebook” in Apple’s App Store and within a week released an update allowing users to see photos from events “Nearby”, a “Feed” of relevant photos, and a “History” of groups that users can participate in. In June 2011, less than three months after the company officially launched, Peter Pham left Color. When it first launched, the application had around 1 million downloads, but as of September 2011, the service had a little under 100,000 active users. The app was poorly recieved, attracting few users and many who did not understand what it was supposed to do. One reviewer in the Apple App Store wrote, “It would be pointless even if I managed to understand how it works.” Users were confused with the application’s user interface and purpose. Its initial rating in the App Store was 2 out of 5 stars.

    For Instagram, the response was much different. It rapidly gained popularity, with over 100 million registered users as of January 2013. Support was originally available for only the iPhone, iPad, and iPod Touch, but on April 3, 2012, support was added for Android phones. Instagram for Android was released[18] and it was downloaded more than one million times in less than one day. An app rating under 3.5 stars makes users considerably more reluctant to download the app. With an app rating of 2 out of 5 stars, the Color app was doomed. Once entered into the cycle of bad reviews it was nearly impossible to break out as there were wasn’t enough new downloads or positive press to bring the average back up and over the 3.5 stars mark. Meanwhile, as of this writing, Instagram has 4.5 stars ouf of 4 on the Apple App Store with over 62,000 reviews.

    A Difference in Purpose

    Color was first meant to help you find and share pictures related to your location, but Instagram was solving a different problem. They were making mobile camera photos look better. The Color app only worked if other people were using it (a chicken and egg problem), while Instagram solved a problem people had right away. This could have been because Kevin Systrom had already developed a check-in app called Burbn. Josh Williams of competitor check-in app, Gowalla, said, “Early user feedback, coupled with a desire to avoid the check-in battle…led them to drop everything to focus on one simple feature: photos. They made the act of taking and sharing photos (many of which just happened to be location-tagged) fast, simple, and fun.”

    In Summary

    Color was a company in search of a product. They didn’t have much more than a mountain of cash when they started, but it was spent on things like numerous employees, fancy offices, and marketing rather than product development, user feedback, and customer interviews. Color may become a PR lesson for the future as they may become legends for squandering one of the biggest and most covered product launches in app history. On the flip side, Instagram already had a product they were trying out, were listening to their users, and created a new company based on the results. They continued to listen to their users and made their product even better. They didn’t hire a bunch of people or spend a lot of time talking about their company. Their product solved a problem, people liked it, and they used it. Each company had a runaway effect, albeit in different directions. Once those directions were set in motion, it was hard to change them.

    In closing, I’d like to quote from Color’s about page, which says a lot about how the company thought. If you have a different opinion about why Color app failed and Instagram succeeded, please let me and other readers know in the comments.

    At Color, we believe in the opportunity that the new mobile era presents and are excited about developing products that transform the way people share the stories of their lives. We work collaboratively, iterate often, and enjoy problem solving. Color is a company of entrepreneurs and innovators, highly skilled in their respective specialties, constantly striving to learn and grow. We’ve cultivated a very relaxed and informal culture and enjoy our extra curricular activities, which include but are not limited to: ping pong tournaments, ball pit acrobatics and impromptu poker nights.

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  • Organizational Habits

    The Power of HabitI recently read The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg after Zac said, “I have a book recommendation for you, and I won’t take ‘No’ for answer.” It came out in February of 2012 and is both timely and historical in it’s references. There seems to be a bit of bias towards events of the 1980’s, which leads me to believe the author was probably born in the 1960’s. In fact Charles Duhigg was born in 1974 and is a reporter for The New York Times who studied history at Yale and received an MBA from Harvard Business School. The core ideas in this book center around the habit loop, which contains a “cue”, “process”, and “reward.” The scary part is that no one ever really loses a habit – they can be re-instituted at any time with the right cue. The hope is that the middle process can be reprogrammed to take advantage of an existing habit.

    Habits are good. We need them to free up our thinking so we’re not always having to figure out how to put our shoes on or brush our teeth. But most of the time you hear about habits is when they refer to something bad. Obviously not all habits are bad and in an organization, they can help employees to do their jobs faster or be used to get along in the “secret hierarchy” that often exists within an organization. When an employee is first hired, their brain hurts because they are having to learn so much information so quickly. This is because nothing they are doing has become a habit yet. This startup area of work has been a focus of mine for a while and so learning more about this process helps me to understand how better to create employee manuals, corporate intranets, and business process design.

    Organizational Habits

    One term used over and over again in the book is “organizational habits”, which are like unwritten business processes. My twitter bio says I’m, “an IT business analyst in Indianapolis..I’m a Organizational Development and Leadership Consultant,” and I’m currently working on developing a new company centered around how people and technology work together. The socioeconomic effects of people and technology in business is really my core focus and so this book really intrigued me in several ways. As I learn more about Business Process Management and it’s subsequent tools of business process mapping, monitoring, and engineering, I can’t help but think how to integrate this new type of organizational hierarchy that exists in the form of organizational habits into my field of study.

    An Evolutionary Theory of Economic ChangeThe Power of Habit references a book called An Evolutionary Theory of Economic Change (1982) by Richard Nelson and Sidney Winter where their central conclusion was that, “Much of firm behavior is best understood as a reflection of general habits and strategic orientations coming from the firm’s past rather than the result of a detailed survey of the remote twigs of the decision tree.” In other words, it may seem like most organizations make rational choices based on deliberate decision making, but that’s not how most companies actually operate. Instead, companies are guided by organizational habits, patterns that emerge from employee’s independent decisions.

    Duhigg goes on to give examples of how companies do not act as a single organization moving towards a singular goal of ever-increasing profit, but are more like a group of internally-fighting factions all vying for more power and responsibility. I have seen this with my own eyes while working at two large, regional banks. At each bank, I was not allowed to talk to another department unless I first talked to my supervisor and then the other department’s supervisor. The trouble was hardly ever worth it even though the knowledge transfer may have helped the company as a whole. Although no one died as a result of the lack of internal communication, Duhigg cites examples from Alcoa to a Rhode Island hospital to a London subway where lack of internal communication between workers resulted in deaths. More recently I have witnessed, at one of our biggest clients, people moving offices simply because a bigger one becomes available. What does the size of an office have to do with that employee making the company more money? It has only to do with power and prominence.

    Probably the most well known example of failures in intercommunication between departments was highlighted in the aftermath of September 11, 2001. Government agencies were not able to communicate with each other because they either didn’t have the same radios or access to the same databases. They couldn’t talk to each other because before then, they weren’t supposed to. That was the primary reason behind the creation of the Department of Homeland Security and the reason you see new radio towers all over the Interstate System in the United States. But one other suggestion came about after 9/11 that hasn’t came to fruition – at least not how it was proposed. The thought was that maybe big cities were a bad idea and that maybe we should have several smaller cities separated by distinguished, un-populated areas. The idea was that maybe bigger isn’t better.

    ReworkI would argue that companies may be better off to not grow, but to peel off, keeping the groups small, like the smaller, walled off cities suggested after 9/11. Jason Fried and David Heinemeier Hansson certainly argue for this in their book, Rework, which I also recently read and may write about in the future. they believe smaller companies can be better companies because they are more nimble and responsive. It has nothing to do with profitability as a small company can be as profitable or more profitable than a bigger company. Instagram had 13 employees when it was acquired by Facebook for 1 billion dollars. However, even in groups as small as 12, there are still those looking to be the greatest. In the Bible, at the Last Supper when Jesus was telling his 12 disciples that he was about to die, “A dispute also started among them over which of them was to be regarded as the greatest” Luke 22:24.

    Successful Organizations

    As I learn more about human behavior I get discouraged that there may not be anything that can be done to change things – for people to think less of themselves and more about each other for everyone’s benefit – but Duhigg offers a possible solution. He states, “Creating successful organizations isn’t just a matter of balancing authority. For an organization to work, leaders must cultivate habits that both create a real and balanced peace and, paradoxically, make it absolutely clear who’s in charge.” The “peace” alluded to here is in response to an earlier claim that businesses act more like they are at civil war with themselves – each division vying for more power and responsibility. And it’s from this truce that is part of the solution as well as making sure that when someone needs to be in charge, there will be someone. In this way, it’s more like business continuity planning where you have event-based hierarchy established before things go wrong so that when they do, everyone knows who is in charge. Daily habits get us by and can help us along, but when the cue, reward, or circumstances change, habits break down and so a clear path to leadership helps at these times. The key is that when the leaders are established for the one-off event, there are trickle-down effects that ripple throughout the whole organization, causing them to be more successful all of the time, not just during special or hectic events. Duhigg calls these “keystone habits”.

    Keystone Habits

    In Success by Management I share that The E-Myth Revisited and Good to Great are both excellent books for those wanting to grow or manage large companies, which you can read more information about in 13 Books for Every Entrepreneur. In Goals as a Function of Success, I wrote, “All team members must buy into the goal. If they don’t then they shouldn’t be a team member.” In other words, the company must have a central goal, like Alcoa had when Paul O’Neill championed “SAFETY”, and those that don’t buy into this goal get fired, like the Alcoa executive in Mexico who didn’t report the safety incident. Once a company has a central goal, the processes inside existing habits are changed. The cues and rewards stay the same – only the middle process is changed. You cannot change a habit, you can only change the process inside it. You cannot change a company, you can only change the people inside it. That is because companies are not whole, they are made up of parts – human and technological – and they all have habits and routines. A strong leader + a strong cause + changed processes = a successful organization.

    More to the Book

    The Power of Habit BookThere is much more to this book than business topics and if you are interested in learning about how to lose weight or stop smoking, this book may be beneficial for you too. I took from it what I wanted based on my experiences and my topic of interest, which is human behavior in business and how technology can be used by these people to make more successful organizations. It also talks about how habits are used in advertising, which helped me learn things like how suds are not really necessary in toothpaste, shampoo, or laundry detergent, but they are the “reward” people are looking for in a habit and if you don’t learn anything else, just remember that all habits have a cue, process, and reward and that you can’t change the habit, but you can change the process in the middle by hijacking either the cue or the reward.

  • How I Use Evernote

    I’ve recently started using Evernote as an experiment on how it might improve my workflow and as a way to keep up to date as a technology consultant. I knew kind of what it was, but had no idea what I would use it for. I didn’t know why you would use Evernote instead of Notes on your iPhone. It seemed that everything Evernote did, there was already something out there that already did that, albeit separately.

    I admit I am late to the game as its been around for a while. Evernote was launched in June of 2008 and was made famous by Tim Ferriss in 2011 when he famously told CBS “I couldn’t do my job without it.” My friend, Jason, uses Evernote fanatically and his incessant pitch of the product eventually led me to see what all the hype was about.

    If It Aint Broke

    EvernoteI was used to emailing myself to take notes or storing ideas in Google Sites via Google Apps or creating Google Docs or by creating Word or Excel documents on my computer that I would then sync using Dropbox. It is/was a mess of a system, but I wasn’t really looking for a better way. You could say I was perfectly content in my mess, but I guess I just didn’t know any better. Consultants like David Allen’s Getting Things Done don’t require a specific set of tools like a Franklin Covey Planner or a Moleskine, but that you use a particular method of location-based activities; sorting; decision making; and action. Evernote can help with all of that, and here is how it is different than using separate apps on your iPhone.

    How I Use Evernote

    I am by no means an Evernote expert. I don’t even know everything there is to do with Evernote, but here is how I’ve been using it. I’ve started replacing emailing myself notes to making notes in Evernote. I didn’t know how this would benefit me, but I just did it anyway (asah shamah) and the immediate benefit was a cleaner inbox. All I was really doing by emailing myself was creating subsequent cleanup and organizational work later when I would have to reparse the information into either a document or a Google Site. By storing the notes in Evernote I was skipping a step because the note and the repository of the notes were one in the same.

    The second benefit of using Evernote was also discovered by accident. I wasn’t sure how Evernote was that much different than making notes on the iPhone Note app. On the surface it is not. Both take text and allow you to send it out. Technically both are available online if you have iCloud enabled and enabled to sync your notes, but here’s how Evernote is different: Evernote allows you to put more than just text into a note and it allows groups of notes to be stored in “Notebooks”. It’s an undercover project management tool that’s accessible from any device. You can put images, files, and even voice recordings all inside one note. That’s pretty different than iPhone’s Note app.

    Summary

    While I haven’t yet figured out how to share notebooks with other people, I have had them shared with me and I have shared individual notes with other people using text message and email. There is a paid version, which may be required to do more sharing, I’m not sure. A quick browse of their website indicates Premium is required for allowing others to edit notes and for storing larger files within notes. While on the site I also noticed Evernote has more products so that might be worth exploring too. For right now I have more than enough to explore and use in the free app, which is available for iPhone, Android, PC, and Mac. You can use it to take notes on any device, which means that your notes are available almost anywhere you go. That’s powerful and that’s how I use Evernote.

    Update 8/30/2013

    I’ve been throwing everything into Evernote lately because ‘it’s better than having it sit in my inbox’, but what it’s now starting to feel like is that ‘the action of putting things into Evernote’ is starting to replace actually doing something with the information.

    To come at this topic from another perspective: I hardly ever use my Evernote as a reference – I still just go out and Google again or wait for things to come to me. Maybe this will change over time, but I have to keep in mind the main thing, which is:

    I’m not using Evernote to store information, I’m using it to help me get stuff done better because of it’s organizational power. If I’m not actually getting any more done because of it, I might as well be printing out the web and storing it in a file cabinet.

    I sent this to a friend who said, “I tend to find Evernote is best at info you can’t find anywhere else again. So, paper receipts, bills, work orders, or logs of conversations with vendors all go great in Evernote particularly with OCR.”

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  • E-Commerce Blueprint

    While this isn’t a technical ‘how-to’ list on how to start an ecommerce company, it’s the top 10 list I’ve developed on how to start an ecommerce company in 2013:

    • Give back – be a socially conscious company with a cause
    • Use keywords in your titles (the most impactful part of SEO)
    • Make it shareable and shareworthy (Gamification/viralness)
    • Write about peoples problems (and how to solve/escape them)
    • Go small within a niche first – build up a “beachhead” then expand
    • Repurpose your content (ex. record you reading a blog post)
    • Build a platform for marketing (ex. a website + social media)
    • Be a real, transparent person (as a opposed to just a company)
    • Don’t worry about anything you can pay for (ex. design elements)
    • Start with the product first, then build out from there #sellfirst

    As I wrote on my Twitter profile, I am “an IT business analyst in Indianapolis specializing in WordPress web design & technology consulting & I’m now building an ecommerce business.” I have decided to document the building of this ecommerce business on this blog and a lot of these ideas have to do with content development, which I have talked about in customer development and how to get more customers. It’s really about creating systems for ecommerce and developing success by management. According to Steve Blank, startups are simply a, “organization formed to search for a repeatable and scalable business model.” An e-commerce business is not a startup because it is already a well-defined business model that is proven and repeatable. The only question is to how you will run your e-commerce business. This is not a search for a new way of making money, but of your way of making money. Essentially it’s a question of how you will run, or manage your business. In other words, it’s a search for your internal business model, or management style, that can be repeated and replicated within your own company (or e-commerce business). This above list on how I choose to run my e-ecommerce business is a glimpse into the how I think an ecommerce business should be ran.

  • Success by Management

    I believe the most important factor in success is management

    I am well aware of the downsides of management, or “over-management” as there is a point where all you are doing is managing. At some point this breaks down because someone has to do the work. Levels of bureaucracy that have built up over the last century have recently started to collapse, but management is still important. I don’t refer to management only as “supervision” or even as “leadership” but as “resource allocater”. By that I mean that management is more about measuring and reacting. In practice that means collecting information, understanding vision from leaders, crafting a plan of action, and then ensuring supervisors and production workers act appropriately. This method of management is at its very core what separates a hobby from a business. Happy is a plan implemented – a plan brought about and executed through great management.

    Take two business owners as an example: the first business owner keeps mostly to himself, but expects his workers to know exactly what he wants and how to do it. When things go wrong he has no idea why and so his only response is to fire and replace staff who in his mind will do a better job. The second manager leads his staff with a clear vision, meets with them regularly, and makes small, iterative changes to craft his organization into the company he wants it to be. When his staff aren’t operating by his standards, they are given helpful feedback and training. At the end of the year, he’s got a loyal, well-trained staff all moving in the direction he set forth. Meanwhile the first manager is now contemplating more turnover to ‘finally’ get the staff he needs to do the job the way he wants it done. Which type of manager are you? Which type would you like to be?

    While these traits and outcomes may seem obvious to the observer, they an be less so when the owner, manager, supervisor, and production worker are you or when all of them are the same person. How many solopreneurs do you think take the time to ‘meet with themselves’ to go over strategy and vision? How many take time to stop and review reports and other insightful information? And how many just spend their time working without any real sense of direction? What you’ll most likely find is that most people in this position pick one of those things to do 80% of the time. This means that roughly a third of business owners spend so much time thinking about their business that they hardly ever do any ‘work’. On the other hand, a third are people stuck in ‘analysis paralysis’ going over the data without a clear direction. It’s important to set your direction early on, do the work, then use the reporting time to periodically check to see how effective your work is moving you towards the goal. All three parts are necessary, but don’t let anyone go too long without doing the other. This is just good management.

    How important is management, really?

    Recently Steven Van Zandt from Bruce Springsteen’s East Street Band was on NPR’s Fresh Air and he stated that management was more important than talent. He said that his band was not the best musicians even on his block, but because of their management team they were able to become a commercial success. Now it is one thing to base a statement off your own experiences, but there is music manager named Lou Pearlman who had an uncanny ability to turn musical acts into cash cows. Regardless of how you feel about New Kids on the Block, N’SYNC, or the Backstreet Boys, their ability to make money seems to have more to do with Lou’s management formula than with available talent. In other words, those who know how to make money will continue to make money because they are active and intentional about their process. This is another way to describe management.

    Take Donald Trump for example. One could easily argue that he is a great manager. Regardless of what you knew about his personal management style, you would intrinsically know that in order to keep an empire of hotels, resorts, and casinos in daily operation one would have to at the very least be an adequate manager. But consider the fact that Trump has made a fortune and ‘lost it all’ – only to turn around and build it right back up again, you begin to wonder if its not the man, but the system the man employs. It’s more than mindset, it’s a business model. Donald Trump knows how to make money a certain way. Think of this “way” as a function. If you knew that by simply putting time, money, and dedication into a validated function that the return would always be greater than the input, would you keep doing it? That’s what great managers do. They don’t spend time re-inventing new functions.

    Consider the man who discovered a great treasure in a field and sold everything he had to buy this field. He didn’t say to himself, “If I sell everything I have I will use it to think of a way to turn it into a great treasure.” No! The great treasure already existed, it only required changing the way in which he managed his personal finances in order to obtain that great fortune. One might say that his greatest fortune was discovering the treasure in the first place, and I would say that this was but the first step in the three-step management process. If the man had not taken the time to set a direction and been walking that path (doing the work) he would have never been able to report the findings he had. You see, all three steps of management are necessary and useful for success. No one is more important than the other, but they are all required.

    There is another story about a man who found a rather peculiar rock in his back stream and although it was slightly ugly, he thought it unique enough to place on his fireplace mantle. One day a visitor with some geology experience noticed the rock on his mantle and realized the true value of this find. It was in fact the largest diamond ever to be found in North America and that’s where we get the expression, “diamonds in your own backyard” (a variation of the Acres of Diamonds story). The moral of the story is that nearly everyone has something within their skill set, background, or location that will lead them to their own success. Most people are simply ‘diamonds in the rough’, but with the discipline of management to their own lives, they could be more successful.

    Success itself is hard to define because of its relative nature. For example, you could decide success as where you are right now, but most people define it as something more or something better than where they currently are now. Management can help you achieve success (however that looks to you) because it will help you define what success looks like, ensure you do the work, and measure and monitor the results. However, the biggest obstacles when attempting to meet your goals are self-doubt, lack of accountability, and limited resources. This is why it’s so hard for solopreneurs to achieve success. When there is no one to report to, it’s easy to let yourself down. Realizing this is an issue is the first step, but ultimately you have to just do the work.

    You may have heard that “No man is an island” or “behind every great man is a woman” or that most big companies were the result of two-man teams as co-founders (1,2,3), but why? What does a partner have to do with becoming a great company? It doesn’t take a great leap to realize that successful business owners have to have someone to bounce ideas off of, to keep themselves from veering off the initial path, to keep them accountable, and to share their achievements with. Even single founders have strong “number 2’s” or life partners to play the role of co-founder. Regardless, role of the owner(s) is to execute the strategy and ensure it stays on track. They are the ultimate managers of their business and their ability to manage effectively has more to do with the success of their business than their product, their location, or their customers.

    Do not be afraid to manage yourself, your company, or your product lines. You are not wasting time or ‘building a bureaucracy’. You are building an internal business model for the success of the-way-you-do-business and only you can be the one to do it. You are the only one with your unique ‘backyard’. In that stream or in that field lies your treasure. It will not come easy, but the rewards will be great if you can learn to manage your business in a definable, repeatable way. For more ideas on how to do this, consider reading The E-Myth Revisited or Good to Great. Both are excellent books for those wanting to grow it manage large companies, but for solopreneurs, I recommend reading The 4-Hour Workweek. You might also like reading my post on customer development.

  • Forex Tips for Beginners

    Top 15 Forex Terms

    Forex TermsIf you are new to forex trading, check out this forex glossary of terms. Here you will find all the definitions you will hear/see while trading in the forex market. You might also check out Investopedia’s Top 300 Forex Terms [PDF]. If these are too much for you all at once, focus on learning these top 15 Forex terms:

    Ask Price – the price using of which trader can purchase the base currency.

    Base Currency – the first currency which is listed in any currency pair used for trading in the forex (FX) market.

    Bear Market – a market with pessimistic diagnoses and declining prices.

    Bull Market – a market with rising prices and more optimistic trends.

    Bid Price – usually displayed as the ‘left quote’ stands for the price traders may use in order to sell any base currency

    Counter Currency – the second currency in a pair and usually its value is predetermined by the opposite base currency’s value

    Cross Rate – a price quote composed of any currency which is quoted against any other currency which can’t be related to USD. This quote is the combination of the individual rates for exchange 2 currencies against USD.

    Day Trading – intra-day trades based on opening and closing his trading positions during one trading day and to the end of this day a trader has no any position open.

    Fed – short for Federal Reserve which in its turn denotes the central banking system effecting significantly on the trends of the Forex market.

    Leverage – the loan a trader takes for the FX broker which allows trading only having a small capital. In such way one can increase his profits but the risks get higher as well.

    Margin – another term every trader should understand and it denotes the minimal amount of cash deposit a trader can put up for a certain transaction.

    Pip – the smallest price which can be found in the last number of the currency pair rate. Commonly it is the 4th digit located after the decimal point.

    Price Trend – a stable movement of the currency prices with a certain direction. Spotting trends can capitalize the potential.

    Spreads – the differences between the ask and the bid prices.

    Stop Loss – the trade order which closes an open trading position in automatic way for preventing losses if the FX market fluctuates against this chosen position.

    Practice on a Demo Account

    For every new forex beginner, besides learning forex basic knowledge, practice on demo account is very important. They can gain real trading experiences from this process. Most forex brokers offer a practice account or demo account these days. Try trading on a few different ones and see which platform you prefer. The modern day demo account is akin to what is referred to as “paper trading”. It is always wise to gain some familiarity with the investments you want to trade, and nowadays, with with the trading platforms available. All the platforms function differently so if you have chosen one, stick with it, you will only confuse yourself if you keep changing.

    If you are considering moving on to the real thing, choose a platform that offers good support. If you are in doubt you could always research the reviews on a company but typing the ‘name of company’ followed by ‘review’. It is very important to choose a demo account provided by forex broker that is very similar to the real account. When you practice on demo account a while, it will be easier for you to switch to trade on real account. PROFIFOREX is a good broker which provides good demo account for beginners. Demo account is exactly the same as real one and they provide good services.

    Read a Good Forex Trading Book

    I have mentioned several forex trading books on this site, but one of the best is The 10 Essentials of Forex Trading: The Rules for Turning Trading Patterns Into Profit by Jared Martinez who is known as the “FX-Chief”. He is the founder of the Market Traders Institute, the worldwide leader in Forex education and frequently blogs on JaredMartinez.com. According to the book description, “No matter your level of trading experience, you can develop the skills you need to become a consistently successful foreign currency trader-from using the right trading tools and balancing equity management to trading in buy and sell zones and identifying trends and trendlines. You’ll discover what drives the Forex market and how to navigate the three stages of Forex trading: acquiring new trading rules, controlling disciplined thought, and implementing disciplined action.” One reviewer said, “This book encourages you to have a trading plan; using a selected number of indicators looking for a convergence between them. It also focuses very heavily on your mindset which is paramount for success. Irrespective of your level of knowledge and trading experience in Forex…this book is great value for all traders.”

    Top 5 Common Mistakes Forex Traders Make

    If you’ve ever heard the quote, “Smart people learn from their mistakes, geniuses learn from the mistakes of others,” you’ll pay attention to the mistakes forex traders have made before you so you don’t have to make them yourself. Here is a list of the top 5 most common mistakes forex traders make:

    • Inconsistent Trade Strategy
    • Lack of Knowledge
    • Lack of Discipline
    • Not Using a Demo Account First
    • Analysis Paralysis

    In other words, educate yourself as much as possible. Read everything you can get your hands on and practice with demo account. The more knowledge you have, the more confident you will become in making trade decisions. Education is the best investment you can make before leaping in at the deep end. You might also want to check out forex forums like Forex Tips.

  • Why Google and Facebook Might Not Completely Disappear in the Next 5 Years

    Forbes recently wrote an article about Why Google and Facebook Might Completely Disappear in the Next 5 Years, which had echoes what Malcolm Gladwell wrote about in Outliers, when it said, “Your long-term viability as a company is dependent on when you were born.”

    The author (and Forbes) were getting ripped on this article on Hacker News – but no one can predict the future – we can only look at the past – and even though the timeline is short (15 years), history says Facebook and Google will fail unless they [can] pivot. The gist is that they can’t pivot. It’s not in their paradigm to accept what’s next. Can you?

    But the statement, “X will fail unless they can pivot” is true for every company. The companies that make up the Fortune 500 don’t have a long life on the fortune 500. To say that the web will die out and vanish is reaching, and to say that it will in the next five years is really reaching.

    Does the author (or any analysts) really expect mobile usage to dry up the well of search advert dollars or that mobile apps will eliminate the public/customer need for search?

    The anti-trust lawsuit that is being dredged up against Google will do more to slow them than anything else in the next five years.

    And, to say that Facebook can’t have staying power because MySpace didn’t is far from an analysis.

    I do agree that the web is not dying – all apps need a website even if they think they don’t. Facebook will do (and has done) better than Myspace because they are a software company first, ran by programmers who have kept Facebook constrained, which has helped it grow.

    The problem is that Google only got into social because they were chasing Facebook, just like Microsoft went to the cloud to chase Google. And Facebook only got into mobile because the people demanded it – but they were (and are) late to the game. They are buying Instagram because they are scared of it – not because it will help them grow.

    I read something from Seth Godin today that said basically that not all companies can grow. Some do better when their small and can’t scale across that middle “dead zone” to be a big company. Some companies don’t work as a big company either (like web or graphic designers – at least not using the business models in place now).

    “Perhaps getting a little bigger isn’t what you want, and it might not even be possible.” -Seth Godin