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Archive for September, 2011

Motivated, Aligned, and Satisfied Employees are Differentiators

Thursday, September 29th, 2011

Demoralized workers do not do great work. Organizations do not become remarkable with demoralized staff. Customers do not love their experience with demoralized employees. Yet we find managers catalyzing demoralizing behavior every day.

In the last couple of weeks we saw:

  • Bank of America announce it will layoff 30,000 employees
  • The Chairman of the Board of Yahoo firing the CEO over the telephone
  • H-P firing it’s 3rd CEO – the latest one lasting 11 months

And what do workers do when faced with these issues?

  • They actively look to leave the company, and the best one’s do
  • They hunker down, stay out of the way, and just do what they are told to do – keeping as low a profile as possible
  • They become disruptive
  • They decide to look better than others and do whatever it takes to discredit their colleagues – and interject an “every person for themselves” mentality, which further deteriorates the culture

And the managers are greatly hindered in their ability to help, basically for two key reasons: 1- many of them are in exactly the same position as the workers, and/or 2- they tend to discount the good advice of others, meaning power can hinder willingness to listen. And regarding this point, the Wall Street Journal (9/19/11) reported that a recent study to be published in the November issue of journal Organizational Behavior and Human Decision Processes found:

“That the more power the employees (managers) had the less likely

they were to take co-workers advice. The reason: Powerful

individuals held inflated confidence in their own judgments,

which led them to discount even good advice from others.”

So we see poor leadership, demoralized workers and managers who discount good advice from others. Now the best way to look at this is – that’s your competition. Your competition has a reasonable probability of being a dysfunctional organization. And dysfunctional organizations are not – and cannot be remarkable.

So, do you know how your employees are doing; what they feel and believe about the organization and about their managers (including you)? If you don’t, you should! Don’t be one of those managers with an inflated confidence believing you have it all figured out. Motivated, aligned and satisfied employees represent a significant differentiator in the marketplace. How strong is your differentiation?

For more information on talent management, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

 

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Impact of Small Business Inflection Points

Monday, September 26th, 2011

In last Monday’s Blog we addressed job creation – or to be more specific, the lack of job creation in our economy. The issue we raised is the impact inflection points have on business survival and growth.

In March 2011 we dedicated a Blog to Inflection Points – http://www.kubicalaforestconsulting.com/blog/2011/03/beware-the-business-inflection-point/. In today’s Blog we expand on it and also place it in perspective as a cause of business failures.

But first, let’s review common reasons why businesses fail (the list below is adapted from an article by Jay Goltz on NYTImes.com) http://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/:

  • Not enough demand for the product or service
  • Poor management: inexperience, hubris
  • Growing too fast
  • Poor financial controls
  • Lack of capital
  • Operational inefficiencies
  • Dysfunctional management team
  • Lack of a succession plan
  • A changing/declining market

If you do not have a sellable product or service; if you do not have adequate capital; or if you are in a changing/declining market, you simply will not have a viable business.

The tragedy comes when you do have a sellable product or service; when you have adequate capital; and when you are in a growing market – yet still fail. This is where recognizing and managing through the inflection points become a critical issue for your business.

When you reach an inflection point, unattended issues such as, poor management poor financial controls, operational inefficiencies, a dysfunctional team, no succession plan become disproportionately large factors that contribute to business failure. Just like you cannot build a multi-story house without a solid foundation, you cannot build a successful business without the foundation (business basics) in place.

Business owners can easily get seduced into complacency in a growing market. The aphorism – a rising tide lifts all boats – is accurate. But when the rising tide is seen as operational brilliance in the mind of the business owner, it closes off all ability to receive input and to heed the warning signs.

This economy presents major challenges. Some businesses are truly in the rising tide lifts all boats phase – an example is healthcare information technology. Others are struggling to stay in business – an example is certain retail outlets. It’s becoming more of a challenge to navigate these changing waters of business growth, and good management is required. Yet this comes as a time when people who are out of work look to start a business.

If you haven’t yet, do so now: assess where you are in you business – what’s working (and why), what’s not working (and why). Be brutally honest with yourself. Are you reaching an inflection point? If so, what are you doing about it?

For more information on business growth, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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Netflix Strategy: Brilliant or Devious

Thursday, September 22nd, 2011

You may recall Netflix’s disastrous price increase last July. To recap – Netflix was charging subscribers $9.99 for its DVD plus streaming video plan. Then they separated the plans and charged $7.99 each. For the subscriber who wanted to remain in their DVD plus streaming video plan, this amounted in about a 60% price increase. Whoa! by anyone’s standard. There was an internet backlash, they lost more subscribers than they anticipated, and their stock took a hit. In fact, their stock price has been on a downward trend since the announcement… A botched strategy and a costly one.

Netflix was initially staged and thought of as a business that cared about its customer; that wanted to get it right; and wanted to provide a very affordable value. And they were rewarded for it – in customer growth and in stock price growth. Yet, with this key change, a moment of hubris, and a large miscalculation –  the brand impression begins to unravel.

In his September 18th Blog, Reed Hastings, Co-Founder and CEO, attempts to “make things right” with the customers. He argues that companies such as AOL and Borders were afraid to hurt their initial business and thus failed to innovate. Hastings on the other hand, taking a page from Clayton M. Christensen’s Innovator’s Dilemma; chose to move forward with streaming video knowing it could have a negative impact on his DVD business. Actually, not a bad strategy – considering competitor threat, by services provided by Amazon and On Demand were nipping at his DVD and streaming video markets, and Red Box at his DVD market.

His approach was to “fall on his sword, admit he made a mistake, maintain and defend his price increase, and tell us he is separating the DVD service (and creating Qwikster to provide the DVD service) from the streaming video service (Netflix), and that the two websites will not be integrated. And, he further says that this will be good for the customer as they can focus on just one thing – DVDs or streaming. To us, it is more expensive, inconvenient and limits choice and flexibility.

A brilliant plan, a devious plan or a negligent one? Time will tell how well Netflix recovers from this debacle. It seems to us, however, like corporate spin right now: A strategy gone bad (the price increase) and an attempt at a recovery (the I’m sorry for the mess up blog and here’s how it will be better – yet it really isn’t).

As small business owners, your market is too small (and hence, volatile) to make mistakes such as Netflix did. Customer defection in the small business market can have disastrous consequences. As we frequently say, sometimes what big companies teach you and the most powerful learning is what NOT to do.

For more information on customer service and business growth, see our free articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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The Slow Leak in Job Creation by Small Business

Monday, September 19th, 2011

A palpable drag on the economy is high unemployment – still sitting above 9%.

Historically small businesses lead the way for job recovery. But that’s changing.

A new study by the Kauffman Foundation – Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation – is revealing.

The report reveals:

  • The number of new business formation is decreasing since 2006
  • The survival rate of new business is decreasing since 2006
  • The number of jobs new businesses create is decreasing
  • Average number of employees employed by start-ups is shrinking
  • Businesses that do survive their early years are adding jobs at a slower pace than the historic norm in recent years

And not included in the report, but another key issue for business growth is the gap between the education of the workforce and the skills needed to do the work. And in markets where the gap is larger than other markets, unemployment is also higher.

What we don’t have a good handle on is why these decreasing trends are happening. One reason, we believe, is the predominance of web-based services resulting in the need for less people to support a new business. In the 1990s, new businesses opened their doors with about 7.5 jobs on average; the current figure is now nearly half that — around 4.9 jobs on average.

As small business owners, entrepreneurs or if you are contemplating starting a new business, it is important to be aware of the trends we are now seeing in small business formation and survival. But even more important than knowing the trends is understanding what they mean for you, your business, and your proposed business model.

Fundamentally, it is critical to develop your business model and your growth objectives. Next, we find what many miss or overlook (and is a cause of new business failure) is preparing for the inflection points you are likely you hit along the way. An inflection point is where you need to change your operating model so as to sustain growth; and all businesses we know have them, including ourselves. An inflection point could be the need for a sales staff, more professional management, clear brand identity in the marketplace, a formalized HR process or other infrastructure, etc.

We have found that the first inflection point usually appears within the later part of the first two years of a firm’s existence – unless of course the firm is experiencing hype-growth then it will occur quicker. Next blog, we’ll discuss inflection points in more detail and the impact they have on small business early growth.

For more information on customer service and business growth, see our free articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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How Not To Run a Company – The Case of Yahoo

Thursday, September 15th, 2011

You would think that as a company gets bigger and more sophisticated, we can learn something positive from them. Well that is not the case with Yahoo. Yahoo has been in the news for: firing its CEO (via a phone call), having a major investor, Third Point LLC, call for the ouster of the Board Chairman and some board members, trying to decide if they want to sell the company, what strategy would be best, and how they will replace the CEO.

So in summary: little to no clear strategy, no succession plan, and a poor example of how to fire an employee – to name only three issues.

Companies can delude themselves into thinking they are doing better than they are. They can flit from one strategy to another in an attempt to recover a sub-performing company. But how could Yahoo’s Board do this when the facts show they had 4 CEOs in 4 years, they lost 7 out of their top 10 display ad sales people, they failed to “jump-start its core display advertising business”, weren’t aggressive in dealing with the explosive growth of social networks, and opted out of the search advertising market.

Why do we go into this detail? Because none of it should have been a surprise to the Board. Problems like this don’t suddenly appear; they have an annoying way of meandering their way along. Perhaps a good description is the story of the frog that is placed in a pot of water. The heat is turned up slowly, but tolerated, until finally the water starts to boil and the frog dies. The water meandered its way to boiling, and the frog never noticed.

Jim Collins wrote and excellent book on How the Mighty Fall (2009) that provides insight on how a Yahoo event could happen.

As a business owner, this is an important learning moment. What you are learning, however, is what not to do. And it reinforces why it’s so important to have a strategic direction, why a succession plan makes sense, why analytics are important. It’s all about the basics – something Yahoo apparently forgot.

For more information on business growth see our articles, white papers and videos at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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Voice of Your Customer

Monday, September 12th, 2011

Do you really know what your customers think of you/your business? We ask this question to our clients, to prospects, and when we meet business owners. The answers are revealing.

Here’s what we hear:

  • Our customers love us
  • They’re great people
  • I think they like us; they continue to do business with us
  • You know, I have no idea

We hear a lot about customer service. About how important it is; how it’s a key to building business; and about how the customer comes first. Yet widespread evidence is very hard to find. Sure we find pockets of outstanding customer service, but we also find a plethora of customer insensitivity or downright neglect.

Take for example an actual experience one of us had with USAirways. We needed to contact them about a discrepancy we found. We got the call center, and they couldn’t help. So the call center representative said he needed to call USAirways for the answer. A few minutes later he came back on the line and said USAirways was not answering his call – so no resolution. It finally got resolved to our satisfaction at the airport after yet another long wait.

It’s unrealistic to say you have great customer service or that the customers love doing business with you if you haven’t asked them – if you haven’t asked them about your service, what works for them, what doesn’t, and how you can get better. Most business people we talk to assume they know, and the assumptions are masked with positive generalities. If you haven’t made a serious and focused effort to ask, listen and learn, then you are missing a significant opportunity for growth and innovation.

One of the biggest advantages small businesses have is to differentiate on customer service. Too often, however, we hear that business interventions should be “new”, exciting, cutting edge, something different. Or we hear “tell me something I don’t know… Of course customer service is important” Our response: if it’s that important and so obvious, then why is it not done well by so many companies? And more specifically, what is your company doing to address it?

Knowing what to do and doing it are two very different things. How is your customer service? And more importantly, what are your customers saying about you? What do they want that may help you grow your business? You’ll never know if you don’t ask and sincerely listen. And what you think just doesn’t matter –it’s only what they think that matters. Listen to them; you may be surprised by what you hear.

For more information on customer service and business growth, see our free articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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Protecting Your Brand When Strategy Changes

Thursday, September 8th, 2011

In Monday’s Blog we talked about H-P’s strategy change and the impact on their brand. We also mentioned Research in Motion and their move to a new operating system for the Blackberry next year.

Changing strategy in and of itself is not a bad thing to do. In fact, it can be critical and necessary for the continued growth of the business. So the question for the business owner is not should we change our strategy, but why is change necessary and how do we protect our brand and use the change as a growth initiative?

Why would you change your strategy? Some reasons include:

  • The business is no longer growing
  • Market is changing making your product or service less relevant or irrelevant
  • New market opportunities are opening that could be more lucrative

Before you change your strategy, it is important to follow these five steps:

1)    Understand the market, what’s changing, why it’s changing and the impact it has on you. This is the analytics part.

2)    Define your approach to changing market conditions and design a response – your new strategy

  1. Be sure to clearly define your new target customer base and how you will reach them

3)    Understand the impact your new strategy will have on your current customers

  1. Will revenue be negatively impacted? – not only in direct sales but indirect business you get from the customer being your customer
  2. What will it do to your reputation in the market?

4)    Understand how the strategy change will impact your brand

  1. Will it reinforce your current brand?
  2. Will you need to re-brand?

5)    Explain, Explain, Explain – talk to your customers

Your brand is your promise to the market. It’s how customers (and prospects) see you and know you. If your brand is highly personalized customer service, rapid response, attentiveness, your brand will likely still apply as you change your strategy. If your brand is very specific to your current strategy (i.e. we provide computers, and we are moving away from providing computers) then you will need to re-brand along with developing your new strategy. And you need to do it at the same time.

We mentioned the importance of knowing the customer and the impact any change you make may have on your customer. We believe that customer focus and customer knowledge is critically important to your business. In next Monday’s Blog we will discuss – the voice of the customer.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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Protecting Your Brand – What Not To Do

Monday, September 5th, 2011

H-P announced recently that it was getting out of the PC, TouchPad and Smartphone business to focus on software. And their foray into the software business is a $10.2 billion deal to buy Autonomy Corp.

So what happened? The investors are getting nervous and many customers are confused. H-P, in announcing a major shift in strategy, has left the marketplace uncertain (which has been reflected on their share price). Never a good thing to do with your business and to your customers.

And it’s not only H-P leaving the market confused. Research in Motion (maker of the Blackberry), recently introduced their upgraded operating system – BB OS7. It’s faster and getting some good reviews. But wait, next year they are upgrading their operating system to QNX – the operating system they use on the PlayBook.

Two large companies leaving the market wondering – where do we go from here? Time will tell if H-P’s strategy is good or bad. But one thing we do know – their strategy was poorly communicated and created brand confusion. Who is H-P now? What does it mean to the services I am buying from them? Are they now a different company, what does this mean to me? Will we have to look elsewhere for support for the current H-P computers, smartphones and TouchPads we own?

Should we buy a Blackberry now or wait for the new operating system? Will it come out on time; will be work well?

A good brand creates clarity – it creates a promise that you the customer can count on.

As a small business, you need to work diligently not to do this in you market and to your customers. You need to think through your brand (your promise), establish it and protect it. It’s your greatest asset – your differentiator.

In this week’s Quick Tips, we will discuss how to protect your brand if you decide to change strategy.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

 

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Insuring Business Growth

Thursday, September 1st, 2011

In Monday’s Blog we wrote about evidence-based management and the four areas every business needs to focus on to succeed (http://www.kubicalaforestconsulting.com/blog/?p=590).

Realistically, and through our experience working with businesses, far too few actually concentrate on ensuring each of these four areas are addressed. Why you may wonder, as do we, considering that the evidence on successful business start-ups is clear. The answer is embarrassingly simple: some people starting new business are unaware of the evidence or are aware of it but feel they are different. Well we have unfortunately news for you – your business will fail. It’s like when a Hurricane hits, which it did in the northeast this past weekend; if you are unprepared, bad things are likely to happen to you and/or your property. The Hurricane doesn’t care who you are or how confident you are that you will escape harm. Hurricanes do what they do.

Markets are much the same. Your market doesn’t care who you are or how confident you are of success. If you’re unprepared, harm will come to your business.

Whether you are just starting your business, or have recently started it and want to be sure it’s on the right track toward growth, we suggest you take these Four Steps:

1) Conduct an in-depth strategic vision/planning session that includes:

a. Identify the market need for your product or service

b. How you will fund your business

c. Sales strategy: Define your market and how you will sell into that market (your branding strategy is a key component of this step)

d. Understand how you will deliver on your sales promise (this is defined as fulfillment and fulfillment is driven by your culture)

e. Define a clear “ideal scene” for what your successful business will be like. Cameron Herald, in his book Double Double, explains this as painting a three year picture to help you build instinct for your successful business.

2) Focus – on a few actions initially and do them well

3) Look at the evidence – keep an open mind

4) Implement – do what you say you are going to do – take action, monitor and course correct according to evidence.

When starting or growing a business, differentiate yourself, and the best way to initially differentiate yourself is by using evidence-based management to start you strong.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

Copyright 2011 Kubica LaForest Consulting

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