This book is free for the next couple of days and is avialable here on Amazon.
If you’re involved in hiring people, I highly recommend this great book by Patrick Valtin, a good friend of mine who is one of the top HR consultants in the world.
This book is free for the next couple of days and is avialable here on Amazon.
If you’re involved in hiring people, I highly recommend this great book by Patrick Valtin, a good friend of mine who is one of the top HR consultants in the world.
Ok, I really had a hard time controlling myself on this one. This parody of bad stock photos by Vince Vaughn is classic.
If you’re heavily stressed as a business leader, the business is running you — not the other way around. Chances are you’re not prioritizing correctly, and you’re not delegating.
I’ve worked with CEOs who put in an insane amount of hours and don’t do any better than CEOs who work a fairly normal schedule (granted, usually 50–60 hours a week).
One could describe a leader as someone who establishes and communicates clear goals, gets the right people in place, gets everyone working toward these goals and focuses on what’s important.
Culture is an additional ability of leadership. Culture is less important, actually, than fanatical execution on a clear set of goals. Ping pong tables, beautiful offices — nice — but not vital.
The core is figuring out where you’re going, getting the right people going in the same direction, and focusing on what’s important.
Sounds easy, but it’s an art. It’s why great CEOs are paid a lot of money and are in high demand, because it doesn’t come intuitively or naturally to a lot of people. However, it can be learned.
Teaching leadership skills, however, isn’t the purpose of this blog post. I’m just going to tell you what’s important.
There are just a few things that you have to do really, really well in this business. If you do those well, everything else follows.
Many years ago, one of my early mentors told me, “if you just focus on creating a great product, support it well and do a good job on PR, you should do just fine.”
Not bad advice. I’ll expand on it with a bit of my own experience.
Here is the scale of importances in running a product or services business.
1. The product or service.
2. The quality of the product or service.
3. Support/customer service
4. PR and marketing
Assign KPIs to each area (you can’t manage what you can’t measure…). At the beginning of every week, go through each of these areas by yourself. And then go through these with your senior staff at your Monday morning staff meeting.
The funny thing is that as an executive, you may find yourself spending a tremendous amount of time keeping people focused on doing the important things. And, you may find yourself burdened down with things that aren’t that important. People add complexity to everything they do. It’s a natural tendency, but it generally means that they are not confronting what really needs to get done (either because they don’t know, or because they don’t understand something).
If you establish an organization with this set of importances, you’ll increase your chances of doing well.
The mistakes I’ve made are when I’ve reversed the priority — too much emphasis on finance, or sales, etc. The product (or service) is the most important thing to focus on (read my other post, The Product is All). Give the accountants the problem of worrying how to book the revenue. Give the sales and marketing guys the problem of actually getting the revenue. And get the product guys firmly lined up with what’s needed and wanted from the market, and delivering it.
And lead a less stressful life.
Net Neutrality is a Good Thing (what is pretty mindblowing is how thoroughly the entrenched and very powerful vested interests — the telecommunications and cable lobby — got their posteriors royally kicked).
How it happened I’m not too thrilled about. But the devil is in the details.
I think the best, most reasoned response comes from the EFF, an organization that you can put a high degree of trust in when it comes to internet policy.
I loved Bob Lutz’ book, Car Guys vs. Bean Counters. It is a virtual ode to product people. Lutz is one of the most important people in the history of the American car business, because the supremely ugly American cars we saw back in the 80s were made by committee, but the great cars that we’ve been seeing lately have come from product folks.
It brings to mind a memory as a young marketing manager starting out on my career. I was standing outside with an old geezer of a sales guy while he puffed away on his 50th cigarette of the day. “If the dogs won’t eat the dogfood, it won’t sell. I don’t care how many pretty pictures you put on the packaging”. Sage advice.
The product (or service) really is everything. It seems like an obvious statement, but it’s of such vast importance that if it’s not made a key importance, you’ll never succeed wildly.
People talk about the magic of Apple. Why? Because their products are incredible. Customers don’t know you through your income statement, nor your legal department. They know you through your products.
The worst sales team in the world is transformed into the “greatest” sales team with a good product. A weak marketing department is suddenly on fire with a great product. PR comes easy with a great product.
So what is your product or service? How do you make it?
Good product development starts with a something that is actually desired and in need. This does not come about through theorizing. It comes about through talking to customers and prospective customers. One of the most successful consumer products of all time came from an in-home visit.
I rarely released a product without doing extensive surveys to understand customer needs and wants. Pragmatic Marketing, which runs product management and product marketing seminars, has an acronym – NIHITO. It stands for Nothing Important Happens In The Office. All this means is that a product manager who is sitting in his office, not talking to customers, is not getting the real story as to what’s actually needed by the customer.
It’s good advice.
Sometimes you have an absolute genius (or you are one yourself) who can think up the most amazing product ideas that are all wildly successful. Consider yourself lucky if you have a spare Steve Jobs lying around the office.
But the reality is, most companies don’t have geniuses like this. You need to work for it. You need to talk to the customer.
If you talk to the customer, the product ideas roll out naturally. If you don’t, you’ll find yourself arguing theoretics in meetings at the home office. I’ve been there too many times.
So talk to the customer and figure out what they want. Then document it and use the information when you talk to the people who make the product (the engineers, the developers, whomever is making the product in your company).
In an online world, you can do surveys for nothing. We used to run surveys for $20k-$30k just per product. Now, services like Surveymonkey.com or Google’s consumer survey service make the cost negligible. Give survey respondents a chance to win a gift card, keep the survey short and sweet (longer surveys lose respondents), create questions that have meaning (don’t ask stupid questions because some guy in the office insisted – ask questions that will give you a real answer) and most importantly, get it out and use the data. There are also tricks, like using Google’s keyword finder to locate what people are looking for online right now.
It sometimes occurs that product developers (or others) don’t believe survey results. This is normal and I’ve had this problem. You don’t need to be combative (“I have the survey and you are an idiot for not believing it” doesn’t always work). Developers really do have good ideas, but the broader point is that the customer cannot be ignored in the process.
There are examples when surveys were a bust. However, on further analysis, it was because the surveys didn’t get the right answer. A famous example is the battle between Steve Jobs and the marketing department at Apple. The marketing folks had surveyed customers about what type of printer they wanted. They asked for a daisy-wheel printer (for those of you who weren’t around back then, this was basically a typewriter attached to a computer). Jobs, in his typical fashion, refused to agree and argued that customers would want a laser printer. He won the argument, and there was the birth of desktop publishing and so much more.
However, the problem is fairly clear. Reading through the results, the customers were asking for a letter quality printer. They didn’t know about laser printers, they knew about daisy-wheel printers. The survey could have been done quite a bit differently with much different results.
Surveys can also take the form of surveying your competition or using secondary research (meaning, outside analysts firms that create research). Secondary research is often a bit dangerous. Whole fortunes have been lost following the lead of an outside analyst. You need to keep your wits about you and try to filter out what’s important. However, analysts do create a lot of noise and they are worth listening to. Just use your own common sense.
You can also just use a prototype or a beta to figure out if customers will like the product. A famous story is Dropbox. The creator, Drew Houston, created a YouTube video of the product, still in prototype form (this is the idea of a Minimally Viable Product). People loved it. The rest was history.
Doing surveys to define products is a bit of an art form and takes some practice. But the key point is – don’t design products in your own little bubble. Get the customer involved with the product creation process and you’ll win.
Good overview of dilution by my friends at Foley.
When negotiating valuation for a financing, an investor may conduct detailed due diligence and then present you with a term sheet that reflects multiples, discounts, comparables, and so forth. In the end, you are negotiating for percentage — how much of the company will the investor get, and how much will you keep? Your investor is focused on maximizing return on investment. You are focused on keeping meaningful upside for your innovation and hard work.
For example, if you raise $5 million on a $10 million pre-money valuation, you will be giving the investor 33 percent of your company. You keep 66 percent. But that 66 percent may not be really be 66 percent even before you take into account any later dilution by subsequent rounds of investors. There are at least three reasons why.
If you want to see a CEO experience a deer-in-the-headlights moment, watch this video of Tumblr CEO David Karp get killed by a sharp reporter on Squawk Box.
It’s painful. (And his mention of the Bill of Rights, while using wording of the Declaration of Independence… eeesh.)
The fault lay in his prep work, which was shoddy. Going on a show like Squawk Box is no light thing. This is a show whose whole premise is the art of the argument.
In other words, when you’re going to show up at a gunfight, don’t bring a knife. Bring a gun.
Now, I empathize with him. Many years ago, I was one of a bunch of young VPs at a hot software company (Quarterdeck, now Symantec). Our PR exec was (understandably) very worried about our dealings with the press. One day, I remember her mentioning that we were going to get media coaching, but didn’t pay much attention to it.
A week later, I had just gotten into my office early in the morning, when the whole room exploded in light. There was a reporter with a cameraman barging into my office.
Now, if you haven’t experienced this kind of attack reporting, it’s very unnerving. So I was immediately on the defensive.
“Mr. Eckelberry,” the reporter said, aggressively. “What is your comment on the fact that your software is being used right now by the government of Bosnia to manage the ethinic killings of thousands of people?”
Totally taken by surprise, I gave some mumbled reply, something to the effect that “we can’t be responsible for how our software gets used.”
Then the PR exec walked in and told me I had failed the first part of media coaching. The reporter, who, it turned out, was actually one of the media coaches, was kind about it. But the rest of the day was spent getting drilled cold on handling the press. And I’ve been working with the press ever since, including stints on national television, radio and various print media. I’ve had varying degrees of success, but at least I know when I’ve made a mistake.
So I had my own “deer-in-the-headlights” moment.
But that doesn’t excuse what happened. His mistake was a) poor preparation and b) poor coaching (which would include heavy amounts of drilling for every type of question asked). In fact, I might look to his PR agency more than I’d blame him.
There are some pointers to remember to avoid getting caught like David Karp.
– Recognize that the normal rules of communication in a combative situation like this don’t apply. This is a fencing match, not a light dinner conversation with a group of friends in San Francisco.
– Always have an “island” you can retreat to. This is a safe place, that you know cold. It is a positive response crafted as a response to an uncomfortble situation or a negative attack. Reporter attacks, you don’t know what to do, retreat to the safe place. Great politicians are masters of this. You may disagree with the tactic, but when you’re under the hot lights and a camera, you’ll be grateful to have this advice.
Reporter: “Your product is used in destroying the internet!” Answer: “We condemn any practice that would affect the rights and freedoms of individuals…” and then pivot to the “island”: “Our software is used for productive purposes by millions of people all over the world to create online communities that foster a better life…”
– Use verbal pauses to give you time. When you’re under the spotlight, a second feels like an eternity. But a casual “umm” is not noticed by the viewer. It will give you time to craft your response. It will also make you feel a lot less nervous.
– Don’t get trapped in the reporter’s language. General Norman Schwarzkopf was brilliant with the press. When asked if he was a hawk or a dove, he answered “I am an owl”. Genius response, but then, he was a pro. It takes time to learn how to think on your feet like this.
– Nature abhors a vacuum, so you must have facts to fill the vacuum. This is one thing that is misunderstood by a lot of execs, but it’s incredibly important.
Have facts at your fingertips, and counter negativity with actual information. “I hear you’re working with the NSA to create a backdoor for them to eavesdrop on citizens”. Answer: “That is incorrect. Our software has gone through a rigorous audit by 17 different security organizations. In fact, there’s a letter I can point you to…”. You can’t just say “no”. You must fill the vacuum.
– Crises: If you screw up, take full responsibility, apologize, explain the steps you are doing to make sure it never happens again (and then do those steps).
I’ve had a few crises in my life. I had a news story blow up massively in my face once when it was found that our security software was mis-labeling an innocent component installed on Samsung laptops as malware. This blew up all over the internet, with claims that “Samsung was shipping malware”. Except: They were innocent. I did the only thing I could do — we found out it was a false positive, and I immediately issued a complete mea culpa with a plan on how to fix it.
And in a crisis, don’t ever say “no comment”. Say things like “We are aggressively reviewing the situation and will have a statement as soon as we have all of the facts”. Anything “no comment”.
Realize the court of public opinion is critical, and delays in response are deadly. The lawyers may be advising one thing, but lawyers aren’t trained in PR. Act fast, act decisively, act right, and the crisis will blow over.
Anyway, there is much more to be said about dealing with the media. The key thing to remember is preparation.
Most of the time, dealing with the press can be quite pleasant (especially trade press) and one doesn’t need to be in a hyper-defensive posture. But for those cases when you’re going to be attacked, be ready. As we used to say in the Boy Scouts, “Prepare for the worst, hope for the best”.
David, are you listening?
The phrase “line extension trap” was coined many years ago by marketing gurus Al Ries and Jack Trout to describe the disaster that occurs when a company extends its brand into an unrelated field.
And now, reportedly, Apple plans on doing just that, which is… a terrible idea.
When Steve Jobs returned to Apple in the 90s, he spent an enormous amount of time just focusing the company back on its core products. It was a company with so many models, no one could figure out what was wwhat.
And now… it’s exploding outward again. Unfortunately, without a strong central guiding personality, these things typically happen.
One thing I can assure you: If this is true and Apple launches a car, it’s time to sell your Apple stock. It will not go well.
(And in case you’re hopeful, the photo in this blog is actually just a concept by Liviu Tudoran.)
If you’re a marketer, understanding design trends is vital. That’s why I like this post by on the online design trends for 2015, here.
One thing is clear: It’s all about the imagary.
Leads, leads, leads!
Ask a sales person what they want, and the answer is simple: Leads. And not just any leads – qualified leads.
And so we have the classic sales funnel or the “waterfall”. Raw leads come into the organization, and through a process of attrition, a smaller and smaller number of them become more and more qualified until a percentage of the leads close.
Nothing new here: This is a standard report available on every major CRM program. And much thought is given to the problem of how to get these leads into the funnel.
However, in my experience, the only way to guarantee a successful stream of leads is to develop what I call a fat funnel. A fat funnel is a massive group of people who aren’t even close to being buyers, but who, one day, may convert.
The fat funnel is way up on the “top” of the sales funnel.
You want a really, really fat funnel.
Think of a fat funnel as the top of a large “Y” shaped funnel. The top is really broad, and represents leads that have possibly very little understanding of your value proposition. As the leads flow further down, the understanding (and possible interest in your product) increases. By the time the lead gets far further down the funnel, they’ve moved from being suspects to prospects.
A funnel is a representation of both time, and knowledge. The higher up the funnel, the longer it will take the person to convert to a lead. And, as a corollary, the higher up in the funnel, the less that person knows about you.
The secret to great lead generation is understanding how to develop this fat funnel. If you’ve done your job well, selling becomes a process of picking up the phone with a qualified buyer. What more could a sales person want?
Therein lies the reason why some sales executives are terrible marketers. And why some marketers are terrible sales people.
The reality is that marketing is a totally different skillset to selling; and selling is a totally different skill set to marketing.
Sales deals more in the now. Marketing deals more in a future now. And PR (typically viewed as a subset of marketing, but in reality, its own science) is way, way higher up strategically.
Marketers who are impatient, and want all of their sales right now, don’t make great marketers. Yes, they can be responsible for leads right now, but what I often see is marketers, under the hectic whip of sales, becoming simply demand generation specialists. In other words, focusing all of their day tweaking Google Adwords (I exaggerate… but only a little).
If marketers know their jobs, they know that their view is much broader, and a broader view means a longer cycle of time.
To rephrase my friend the great Al Ries, “PR lights the fire, marketing fans the flames… and sales people cook their daily bread on the flame”.
Again, sales people deal want prospects. Marketers deal with suspects, understanding that all prospects were once suspects. A great marketer is developing a plan to generate that future “now” today.
So what does this all mean in a practical sense?
Build really big lists of people to talk to. And talk to them.
That sounds utterly oversimplified, right? However, it’s a point that is missed in so many companies I work with, I’m often surprised.
I once worked with a company that had a bizarre policy of deleting leads after 90 days if they didn’t buy. And, in one instance of “list cleanup”, they arbitrarily deleted 200,000 names from their database, because the people in the database hadn’t purchased recently. This was a WTF! moment for me. It takes people sometimes years to come around to even thinking of your solution.
Another company I worked with would just get lead-sign ups and then blast the poor leads with weekly “hot deals”. No communication, just yelling in their face with bright red, boldface “50% off today only!”
Let’s get back to first principles: People out in the world are either in your target market, or they aren’t. Those who are in your target market need to be communicated to.
And if you’re not communicating to your target market, something terrible will happen: Nothing.
It starts with awareness of your product. This can be through PR, social media, adwords, SEO, advertising, direct mail, whatever. There’s a vast toolbox of “awareness builders” that is not the topic of this post. A good marketer understands that there is a precise tool needed for any task, and the toolbox also includes, even before awareness building, basics such as branding, positioning, customer research, and so on.
Through these awareness campaigns, accumulate names. Now, some of these names will buy right away, and that’s fine. It’s those that don’t buy that need to be placed into a mechanism for regular communication.
The regular communication is just that – communication. If you’re selling lawn mowers, give tips on how to have a greener lawn, interviews and videos with lawn care experts. Become an authority. Be authentic. Don’t be a spammy “buy now” type. Talk to the suspects, not at them. And talk to them regularly.
The conversation should be 90% real content, and 10% promotional. You have every right to ask someone to buy (and you should). But do it in the context of a relationship.
How do you communicate with your customers? It can newsletters (if you’re using newsletters, read “How to Write Good Newsletters that Don’t Suck.”). It can be inclusion on your own forum, or social media site (building communities is a fantastic tool). It can be a webinar, a free trial, or a freemium model. It can even be regular postcards. Whatever. The way in which you communicate to your suspects is largely a function of the style of your organization. In any event, you want to get that line in with the customer and then develop it patiently over time.
My friend Lincoln Murphy has a good webinar on the subject of long-term conversion, here.
Again, sometimes people will buy immediately or very soon after learning of your company. But looking at actual conversion rates of search engine marketing, it’s very low. However, you would still treat every lead that wanders over to your site like gold (assuming they are in your target market, of course). They may not buy today, but they may very well buy tomorrow.
The key is to realize that a suspect becomes a prospect by percolating over time.
Build big lists. Talk to them often. And the qualified leads will come.
(A guest post by Jill Chiappe, in my opinion, the best executive coach in the business.)
The most common question I get as an executive coach is, “Can you fix him?” (or her), usually pointing to some other executive. It’s an interesting question, as it tells me immediately that the person believes that something “over there” is causing his or her problem. Interestingly, the problem never is “over there.”
A perfect example: A CEO of a mid-sized SaaS company hired me to review his executive team and give an assessment of strengths and weaknesses of each person and the whole team. He was interested in growing the company by 25% in the upcoming year to prepare it for sale and wanted to make sure he had the right team in place. I asked if he would also be getting a review himself and he looked surprised. I explained that any direction-setting or leadership initiatives would begin with him. He agreed. I asked him if he felt he had any blind spots in achieving his goals. He answered, wisely, ‘If I knew about them, they wouldn’t be blind spots.’ Exactly. He ended up getting a review, and he also sold the company a year and a half later for his expected price.
That’s the problem with blind spots—by definition we can’t see them. And in leadership, they can be fatal. At times, it is just those things we don’t want to see that we stumble over later. It’s why executive coaching and external reviews have become so popular over the years. (According to the Center for Creative Leadership, the number of companies using executive coaches has grown by 2000% since 1996.) Sometimes you need an outside look to uncover the most important issues, obstacles or opportunities. It used to be that coaching was viewed as a way to improve “problem” people. Today, coaching is a perk for senior executives. 94% of Fortune 500 companies provide some kind of executive coaching at their highest levels*.
But what about that “problem person” on the executive team? Can coaching “fix” him or her? In about 80% of cases, the answer is yes. In the other 20%, the person is simply not coachable. That is a determination that a good executive coach can give you. I have had to deliver the news of an “uncoachable” executive more than a few times. But it’s better to know up front rather than wonder and wander. For a longer answer about whether someone is coachable, I’ve devoted an entire chapter (Chapter 4) to it in my book Be Coachable which is available here.
In short, about the best advice I can give any executive is to first get a good assessment of himself and his team. I recommend a 360° assessment as the best way to uncover blind spots. Read more about that here. A good assessment will so accurately target blind spots that the road to improvement becomes plain as day. That’s the beauty of uncovering a blind spot—no more tripping over the things you can’t see.
Still one of the best overviews of the startup sales curve is Mark Leslie’s piece in the Harvard Business Review. Leslie founded Veritas and so he’s got the chops to prove his points.
When a company launches a new product, the temptation is to immediately ramp up sales force capacity to acquire customers as quickly as possible. Yet in our 25 years of experience with start-ups and new-product introductions, we’ve found that hiring a full sales force too fast just leads the company to burn through cash and fail to meet revenue expectations. Before it can sell the product efficiently, the entire organization needs to learn how customers will acquire and use it, a process we call the sales learning curve.
Worth a read, here.