Being of Value

The only reason businesses exist is to be of value to its customers. The more value we can deliver, the more successful we will be.

How can we deliver MORE value to customers?  Since most companies spend less than 1% of time and resources on that question, we can start by asking that question more often, like once a day.

Here are some of the areas that I've seen the most value added:

1. Over-the-top customer service
2. Removing things that customers don't care about - (i.e. old-school holiday cards, pet projects that customers haven't used)
3. Eliminating positions that don't really pay for themselves that frees up resources to spend on things that really DO matter to customers (like great customer service)
4. Adding those little features that customers keep asking for
5. Eliminating confusion on our websites
6. Eliminating confusion within our products and pricing
7. Eliminating confusion in our pricing
8. Picking up the phone and talking to real customers regularly
9. Adding random acts of kindness to customer experiences
10. Doing meaningful things to take better care of  employees (which translates into them wanting to deliver more care/value to customers)
11. Fixing customer issues really fast for them
    
    Here's a list of things that suck our attention away from adding more value to our customers:

1. Raising money, updating investors, and pouring over financial projections and spreadsheets
2. Talking to potential suitors about selling all or part of our companies
3. Woo'ing pedigree mid-level management (who mostly, in the end, don't add value) 
4. Figuring out which pens, hats, and t-shirts to put our logo on next
5. Moving offices every year and putting too many time-wasting devices into our offices (big spaces, foosball & ping pong tables, cafe's, etc) 
6. Sending generic holiday cards, preprinted thank you cards, and anything else that smacks of generic "Thanks for being our customer" crap
7. Continuing to employ people who don't go the extra mile for/exude enthusiasm for customers or co-workers
8. Continuing to invent new roles for people who don't do well at their old roles.

Ownership Thinking

Over past couple months, I've had some MAJOR changes in my thinking about empowering and compensating employees. It's based in Open Book Management but with a lot of important twists to it.

My first inspiration, came from reading Ownership Thinking by Brad Hams (published last Fall). He worked with Jack Stack of The Great Game of Business and now has a consulting group that helps companies shift their whole organization with great results. I also heard Brad speak in Boston and then had lunch with him and my partners.

My next inspiration came from Zingerman's (again). While dropping Ari (co-founder) off at the Denver Airport I asked him where he thought my biggest opportunity for growth was, and he said open book management. A couple months later, me and my partners hopped on a plan back to Ann Arbor to spend two full days learning everything we could about how they do open book management and why it makes such a huge difference with employees, bottom-line results, and constantly delivering more value to customers (www.zingtrain.com).

In a nutshell (which will do no one any good, unless they really dive into each further):
1. Weekly meetings with dashboards (see above example)
2. 20% of meeting time spent talking about what happened, 80% on brainstorming improvement
3. Front-line employees "own" the lines on the dashboards - creating more involvement/engagement
4. Plan & Forecast the numbers as a group
5. If team exceeds plan, then a "gain share" on what's made above the plan is shared
6. Everyone learns about revenue, expenses, profits, inventory, and receivables.

Brad Ham's Ownership thinking takes it one step further with having Rapid Improvement Plans running every quarter, whereby the team picks something to improve. Calculates what the improvement is worth to the company and then financially shares part of those improvements with the employees. For example, if a $100k reduction of receivables or inventory is worth a $10k increase in profitability to the company, the employees will share 20% of that improvement or $2k. From a bonus compensation standpoint, what I like is that it is an EARNED bonus and NOT an entitlement that typical profit share or end-of-year bonuses tend to be. 

Having spent a couple months now across four different companies, the first benefit I've seen from this is it's a lot more fun for employees to be more involved and have more visibility into the details of how the business operates. Many comment on how they feel they are getting a free MBA. The second benefit is seeing employees start thinking/feeling like owners and operating with more can-do-it-ness. It takes the pressure off of management and is actually more effective at getting results than being a management dictated organization. The third benefit I've seen is seeing an increase in the level of value/satisfaction being delivered to customers. And lastly, seeing real results in the organizations operating more profitably (lower expenses AND higher revenues).

It's a deep lake that will take years to learn how to swim really well in. But for now, being waist deep and going deeper feels really good.

SnapEngage Joins The Felix Fun!

I'm excited to announce that SnapEngage, enterprise-level live chat, has joined The Felix Fun family of companies. Jerome Breche & Jerome Mouton bootstrapped their company out of the TechStars program in Boulder (where I originally met them). With no additional outside funding, they have grown to thousands of paid clients/raving fans and a great team of people with a lot of growth ahead of them.

What I love about the Jeromes is that when funding was not readily available to them, they rolled up their sleeves and scrambled like hell to create a product that companies were willing/wanting to pay for. From there, they've asked AND listened to ALL their customers and have iterated like crazy as they got feedback on how to improve. They've hired only as revenues could support, have kept overhead low, and openly share their (cupcake) love with their customers.

They've done an ingenius job of building SnapEngage so it serves the unmet needs of middle-market companies. It has more integrations and better API's than any enterprise-level system out there. It is more stable and reliable. And it's more customizable and easier to use than other enterprise-level systems. They've priced right as well in delivering WAY more bang for the buck too. All-in-all a winning combo in the SaaS world!

I look forward to being a part of their team and helping to grow a great "built-for-life" company with them!

Swimming in the Middle Market

I've had conversations with several different companies recently about expending resources to try to attract larger enterprise clients. What I've discovered (too many times) through experience is that it's a very expensive, time consuming, and extremely hard way to be profitable. It usual takes investment in more expensive outbound salespeople, MUCH longer sales cycle, and much lower probability of doing business together, along with a lot more internal resources to jump through the hoops that larger enterprise clients require. And seems to be a more cut-throat space amongst highly paid sales people.

But, that's also why I get so excited about the middle market business customers. Historically, they have been underserved by traditional services and software. Usually it's where the lion's share of the market actually exists. And they can now easily (and low cost to you) find you via the internet. They can self-serve (without needing full-service implementation teams to support them). AND the margins tend to be much better in the end because they don't demand volume discounts either. They also tend to be MUCH more appreciative of your service.

Middle market is really where all the fun is at. Which is why I love to swim there.

Built for Life

I believe we can bring a LOT more value to the world by building GREAT companies (for life) vs. being an investor or entrepreneur who aims to flip.

A couple things overlapped in the past month that made me think more about this.

1. A VC fund announced it raised $600 million and would have raised more but wanted to get its investment cycle down from 4 years to 3 years.

2. While washing my 13 year old golden retriever, a thought crossed my mind... the trend is to own companies for a third the time people would own a pet.

3. 60 Minutes did a segment on a 600 year-old family-owned wine business in Italy (view). Now run by the 26th generation!!

4. Mark Cuban's Rule's for Startups: 1. Don’t start a company unless its an obsession and something you love, 2. If you have an exit strategy, its not an obsession.

5. Jim Collins most recent book, Great by Choice, that profiles the incredible 10x success of longer-term-thinking, built-for-life companies like Southwest Airlines.

6. A book about Hobby Lobby, More than a Hobby (that my amazing wife, who is truly addicted to the place, bought me). It tells a story of organic, built-for-life growth, that's a similar story to how In-N-Out Burger, Trader Joes, Zingerman's, & Southwest airlines grew... one profitable store/business/route at a time.

7. This last one is the most disturbing, but makes a point. If we wouldn't sell our children, then why would we sell our companies, that we put just as much if not more of our care and energy into.

I'm gathering an exclusive group of successful entrepreneurs who are passionate about building their companies for life. If that is you, drop me a line.