The Secret to Making Good Decisions in Business

Someone recently asked me “Are you scared your going to make a bad decision and the company will suffer?”

Of course I’m scared. I make bad decisions all the time but when it’s time to make a big decision I almost always get it right.

Here’s the trick – an incredibly important concept discussed by Jim Collins in his book Great by Choice : Bullets Before Cannonballs – first “firing bullets” to gain empirical validation before making a big bet (firing a cannonball).

We shoot lots of bullets before we launch cannonballs. You can consider these “bullets” as low-cost, low risk tests or experiments. Your missed shots are quick and have minimal impact on the company. When bullets hit the mark your load your cannonballs and unleash everything you’ve got.  Successful companies find ways to test the waters before investing large resources into a project or making a critical business decision.

 

 

 

The Power of Positive Reinforcement

A close friend and mentor once told me, “young strong leaders typically aren’t good at positive reinforcement because they don’t need it themselves.” He was right, I was awful at giving positive reinforcement. In fact, I don’t think I gave any of my employees positive feedback or encouragement when they did something right, but I could quickly point out when they did something wrong.  I never quite understood the value of positive reinforcement until it came together for me while reading an excerpt out of the book 212 Degree Leadership.

Imagine you are sitting blindfolded with a tinker toy model on a table in front of you, just out of reach. Your task is to reproduce the model in less than two minutes. You cannot touch the model, but you do have a supervisor who can provide you with limited feedback and you have all the supplies you need. Unfortunately, your supervisor has been instructed to provide you with negative feedback only!

Can you imagine how you might feel? You do not know exactly what to make and every time you grab the wrong part you are told “no” or “wrong.” If you happen to grab the right part, you hear nothing at all. Not very inspiring, is it? Yet the simple demonstration represents the disconnect people all over the world frequently feel when the vision is not clear and they are not supported with positive direction and feedback.

Frustration. Anger. Anxiety. Depression. At that very moment I understood how detrimental and demotivating only giving negative feedback was to my employees. Not an ideal working environment for anyone. Plus, it’s exhausting and stressful for the person delivering the feedback.

Now let’s try another round of the exercise. This time, imagine you are still blindfolded with two minutes to reproduce the model, but your supervisor can now provide you with positive feedback. In other words, if you grab a part you need, your supervisor will say “yes” or “right.”

Self-Esteem. Motivation. Confidence. These are the feelings that come to mind when I’m receiving positive reinforcement, giving me the physiological freedom to be creative and do great things.

We all know that positive reinforcement makes it more likely that the behavior will occur again in the future but we often focus our time on what employees are doing wrong versus reinforcing what they are doing right. As I change and grow, I’m learning the value of giving much more positive than negative feedback. Making this shift in my approach was transformational to the culture of my organization, my employees well being and attitudes, and my own personal development and well being.

Try it for a week. I started small by creating two reminders each day in my Google Calendar reminding me to give positive feedback to an employee that is deserving of the praise.

You can also use the five to one method;  for every time you offer corrective action or constructive criticism to an employee, make sure you acknowledge them for five things they’ve done right.

Just remember to keep it authentic though. Too much positive reinforcement can lead to praise overload, diminishing the value.

Managing Business Growth Stages- A Diagnostic Chart

This diagnostic chart by PricewaterhouseCoopers is a fantastic tool that helps identify your company’s stage of growth as well as the management concerns within those stages. It’s something I have referenced back to throughout the years and gives valuable insight into what you may face at the next stage of your business. Planning is one of the most important parts of running a business, and when you know what to expect you’ll dramatically boosts the odds of your success.

We’ve been online since 2001 with annual revenues of $15 million and 34 employees. Our business currently has the characteristics of survival, growth, and expansion with the majority falling in in the growth stage. I give copies of this diagnostic chart to members of my management team and we compare our assessments. It not only gives my team a road map of things to expect as the business matures but also promotes a healthy dialogue between the group.

Here’s a link to the chart: PWC Diagnostic Chart

How Do You Spend Your Time at Work?

Mastering the art of getting shit done takes discipline and lots of planning. As the CEO of a $15 million online business I often get asked how I allocate my time during the working day. Well, here it is:

Employee development – 50%

This  is the most critical part of my job and the one that I allocate the most time resources toward. Investing in employee training and development strategies is critical for the success of any business. It’s the only way to create sustainable and managed growth. As an entrepreneur who’s bootstrapped a business from $0 to $15 Million, there was a time that I did it all; janitor, shipping clerk, customer service, order entry, human resources, purchasing, accounting. It’s debilitating and exhausting, and will only lead to burn out. As a leader, you’ve got to leverage yourself through employees.

Tactical – 20%

This is the day to day, answering emails, talking with employees, putting out fires. Emails usually take up a majority of this time and I try to limit the email to less than 10% but after all, email ” is a game of tetris. ”

Process Improvement – 10%

I focus on two things here: How can I simplify the process and how can I make the process run better? Typically I will either work directly in the process or scan through email correspondence in my teams email queues or Gmail groups (we have email groups for sales, product team, customer service, products, purchasing, warehouse, and technical support.)  I’ll find the bottlenecks and discuss with the department leads how we can simplify and improve.

Thinking & Strategy – 10%

This is my quiet time which is usually on my commute home. I reflect on the day and assess my performance; did I make improvements to the organization? Did I stay focused on what I set out to do in the morning? Did I get caught up in day to day (tactical) issues that prevented me from allocating my time appropriate? What do I want to accomplish tomorrow?

This time also includes working directly with my leadership team in achieving organizational alignment.  It usually consists of a 2 hour offsite each week.

Professional Development 10%

This includes listening to podcasts and audiobooks, or reading articles and blogs. My commute to work is 45 minutes so it’s perfect amount of time to get into a chapter of an audio book or two 20 minute podcasts.

How do you spend your time at work?

Can You Start an Online Business With Little or No Money?

Yes, you can. In fact you should stop procrastinating and start right now.

We started our business initially with only $9,000 equity.  With that said, you don’t much money, if any at all, to start a business. We turned $9k into $15 million all through reinvestment of profits and a small bank credit facility. We haven’t had to raise any equity from private equity or venture capital and we have no plans to in the future.

So how do you start a business with little or no money? Just start selling, anything.

You can find products through a domestic wholesale marketplace or distributor or international marketplace like Alibaba. Spend a couple hundred bucks on products you think you may be able to resell for a small profit (if you’re lucky, a decent profit). Can’t afford a couple hundred bucks, find something in your closet, garage, or attic you don’t need.

Start selling the product through a site like Ebay, or Amazon that requires no website startup costs but has a large, global reach. Learn how to ship through the US Post Office both domestically and internationally.

Every dollar you make for the first year, plow right back into buying more products to sell. You’ve got to be committed to putting everything back into the company and making little or no money. The primary focus should be growing your customer base at all costs. After a year, you should be at a point where there may be a little profit showing that you can start investing into growing the business.

How Do You Balance The Needs of Employee Welfare and the Financial Needs of the Company?

“People before profits”

If you want to build a company of substantial value you need to always put “people before profits.” Culture is ultimately what differentiates successful businesses from failures, and you can only build a strong culture by putting your employees first.

In extreme circumstances when the welfare of the company is at jeopardy you make personal sacrifices before you cut into the muscle or bone of your organization. Don’t be a fool when you your company get’s into a jam by slashing payroll or your marketing spend. Ultimately the leadership is responsible for the direction of the company and any trouble it may get itself into, and this is where the sacrifices need to be made. Defer salary or guaranteed payments and put them on the balance sheet, or reevaluate the executive comp structure.

When all of the employees and bills are paid, and long term investments are made, the very little that’s left over goes to the owners. Often that’s nothing. It’s a small return for a large risk but that’s the chance you take and sacrifices you make, but things of substantial value rarely involve little risk.

Managing is Like Coaching

Management is like coaching. Coaches do many things, but let’s focus on a few key elements of coaching that parallels managing. These should sound very familiar to us as managers.

  • The coach defines what success means for the team. Individuals contribute to that team success. Winning the world championship is likely not appropriate for every team. Different teams and players are at different stages. But, it is critically important to focus the team on the overall goal.
  • The coach recruits and selects the best team personnel possible.
  • The coach understands the strengths and weaknesses of each player and the team overall. He communicates that information to each player and focuses them on where they need to improve to help the team. And, he articulates each player’s role in the overall success of the team. It’s an honest, two-way discussion. The element of listening is key piece of generating buy-in. The discussions can be difficult. But, a good coach knows his success is dependent on the team’s success, so he has the tough conversations. Likewise, the coach acknowledges and rewards both the team and the players when they’ve done well together and achieved a tough goal.
  • The coach prepares the practice plan that will help develop the players and team. And, that plan is repeated day after day to ingrain the competency into their natural reactions. The players don’t need to think about what they need to do on game-day, it’s instinctive. They already know what to do.
  • Leading up to game-day, the coach tailors the practice sessions for the upcoming competitor – taking advantage of his team’s strengths and his competitor’s weaknesses.
  • On game-day, the coach puts the best team on the field – not necessarily the best players.

REMEMBER: The coach does is not on the field themselves playing – the players are. Are you PLAYING or COACHING?

As managers, our success is wholly dependent on the success of our team. We are coaches and it is in our best interest to learn coaching techniques to improve our performance.

How to Deal With Stress at Work

As a business owner I deal with a lot of stress and frustration. If I’m not careful it can easily get the best of me.

Issues ranging from implementing something simple but it unexpectedly doesn’t work, employee relations or management issues, general anxiety or worry about the performance or future of the company, flawed processes or cultural bottlenecks within the organization, or just people that do stupid things because they lack common sense.  Depending on the level of the frustration or problems I encounter, I have to keep reminding myself to put things in perspective. I’ve trained my brain to do this.

Here’s how I deal with stress during the workday:

Minor Frustrations/Problems:  I tell myself that businesses exist to solve problems. If there were no problems to solve, there would be no need for businesses. I’ve learned to welcome problems as challenges, realizing it’s the only way for my business to grow and evolve. Learning strategies and developing skills to manage problems also helps me grow personally and professionally, just like developing muscles working out. Come at me.

Moderate Frustrations/Problems:  I reflect back and think about similar past challenges that were easily overcome, reminding myself that issues like these had no real threat to me or the organization. I separate the fear from anxiety. Why waste time and energy causing myself excessive amounts of stress when I’ve dealt with these types of issues before? I’ve got this.

Major Frustrations/Problems:  I remind myself that building a business isn’t easy, and most people won’t ever attempt the things that I have. I step back and think about what I’ve accomplished and overcome, reflecting on everything that’s good in my life; my wonderful family, good supportive friends, and my own health and well-being. Wasting energy on and anxiety and worry is an exercise in futility. Life is good.

How do you deal with stress at work?