At our last bi-weekly partner meeting, Jerome, co-founder/CEO of SnapEngage, mentioned that several investors had emailed him to see if he’d be interested in talking. When I asked how he responded, his reply was beautiful…
Every other Thursday my operating partners/founders and I meet to share challenges and best practices across our different businesses. It’s a cool little peer brain trust that helps us over businesses’ little challenges. We celebrate and remind ourselves we’ve accomplished good things. We offload emotional burdens and remind each other we are human. We help each other with best practices. We share experiences of how we overcame similar challenges. It’s a pressure release valve, gas tank filler, and route map all-in-one many weeks.
I describe “bureaucracy” as any system that doesn’t add value and as a result wastes and sometimes enslaves people’s time. The word itself is overly complicated to spell and therefore use. It’s actually a perfect name for itself. Unfortunately there’s a lot of it in the World. One of my personal missions in life is to help eliminate as much of it as possible. Why? Because we are here for a short time, and who wants to waste it on stuff that doesn’t make a difference?
In business, here’s what it looks like. Two of my companies’ support teams were documenting every customer support request. Sometimes in several systems. Using up 70% of their time. Leaving only 30% of their time to actually help customers. As we weren’t able to respond to customers fast enough, we kept hiring more people, which required even more systems to keep track of everything and all the people we were hiring. We lost track of the end goal… happy well-served customers.
At RegOnline, we discovered we could eliminate the need for support if we just simplified the systems our customers interacted with… clearer wording, hide advanced options, better self-service online help. We then simplified the tracking systems our support team dealt with to free up their time. The result… less confusion, less busy work, more free time and value for everyone. The best part was how much easier we made it for customers.
This month at SurveyGizmo, SnapEngage, and PosterBrain we added something new to discuss at our weekly all-company meetings… “What are the most common questions our prospects and customers have asked us in the past week?” We started doing this because we realized that our weekly meetings were focusing on US (revenue, customer count, expenses, profit) and not enough on our CUSTOMERS.
At PosterBrain today, the most common questions customers asked in the past week were…. How will my picture look?, Where are you located/shipping from?, Do you dry mount?, etc.. I suggested rather than making people contact us to get those answers, how about we put a FAQ on our homepage? Our customer service superstar laughed and said “Then what will I do with all my time?!” 🙂 I said how about those outreach emails you’ve been wanting to make for weeks to attract new customers!
“Anything that won’t sell, I don’t want to invent.
Its sale is proof of utility, and utility is success.”
– Thomas Edison
I’ve seen hundreds of entrepreneurs spend more of their valuable time raising money than they do focusing on the true reality of what customers REALLY want to pay for. No matter how much funding goes into an organization, it’s not a truly sustainable business until the revenues from it’s customers cover all the expenses of the business. The only way I know of generating sustainable revenue FROM customers is to generate real value FOR them. Customer proof is the ultimate product proof.
Which is why I decided to get behind a new crowd-funding/pre-tailing site for software startups called Ramen. Where the “crowd” FUNDING the software are the potential users OF the software… they help fund (no equity involved) the software they would want and use. I love the idea of getting real customers to fund our businesses.
Thank you Niel & Ryan for making Ramen an option for startups! Which by the way, they are crowd-funding their own startup with their own potential customers (it’s kind of like Being John Malkovich). I’m doing a matching sponsorship, so if you have a software idea that you’d like to test your CUSTOMER traction on as you build/design it and would like their help, well then help back Ramen too!… ANNOUNCING PROJECT MATCHING SPONSORS IN RAMEN TO THE TUNE OF $5000
1/22/14 PS – In full disclosure, Niel and Ryan choose to do an angel round prior to launching. Stay tuned for their follow-on “customer-funding” round.
I’ve been fascinated by business turnarounds since college… take an ailing company that’s losing money and turn it into a profitable, sustainable company. I’ve been fortunate to help a few companies turn around and also love hearing other’s stories. They all share these themes:
- Revenue is flat or declining
- Expenses exceed revenues
- Additional capital is either non-existent or extremely expensive
- Management and employees are scared or checking out
The key steps to turnarounds are: 1. Cut everything that isn’t producing revenue/real value for the customer – until expenses are below revenues, including: expensive executive management, excessive product development, unprofitable biz dev or sales teams, product lines, office space, discounting, unprofitable marketing and advertising, commissions, ceremonial account managers, employee perks, charitable contributions, etc. 2. Focus intensely on the real value/products that customers want to buy by eliminating distracting non-core products and services 3. Renegotiate debt/payables to pay-out over time. Show an ongoing commitment to lenders and vendors by paying something every month. But, don’t pay more than what the company can reasonably afford. 4. Go Open Book with employees and management. Show everyone exactly where the company was, is, and will be. Let them be a part of the turnaround. Meet weekly to review progress. 5. Bootstrap exciting new products that customers really want (Ford Mustang revival, Apple Ipod) 6. Enjoy the profitable fruits of having a leaner organization that delivers more value to customers. Turnarounds are really hard for most to envision/lead because it takes a fairly rare leader who can see through to where the waste is in the organization (i.e. not delivering value to the customer), has the courage to actually trim to the core, the ability to instill confidence and ownership in those remaining, and the awareness to listen and drive the leaner organization to what their market/customers really want next. I find it thrilling to uncover value and add life to old things, unlike most of my entrepreneur friends who get more excited about starting things from scratch. Two turnaround books/stories that I LOVE are: The Second Coming of Steve Jobs (turnaround of Apple) and American Icon (turnaround of Ford)
Over the years I have seen over a hundred sales/reseller/biz dev partnerships come and go. Some were seemingly huge, with big brands behind them. Most were small-to-medium. But ALL felt like very promising ways to grow the business. I’ve spent and watched gobs of money and energy on customizing our products, taking valuable time away from core products, and even hiring extra folks to staff the waves of new customers that would soon come.
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:
- Over-the-top customer service
- Removing things that customers don’t care about – (i.e. old-school holiday cards, pet projects that customers haven’t used)
- 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)
- Adding those little features that customers keep asking for
- Eliminating confusion on our websites
- Eliminating confusion within our products and pricing
- Eliminating confusion in our pricing
- Picking up the phone and talking to real customers regularly
- Adding random acts of kindness to customer experiences
- Doing meaningful things to take better care of employees (which translates into them wanting to deliver more care/value to customers)
- 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:
- Raising money, updating investors, and pouring over financial projections and spreadsheets
- Talking to potential suitors about selling all or part of our companies
- Woo’ing pedigree mid-level management (who mostly, in the end, don’t add value)
- Figuring out which pens, hats, and t-shirts to put our logo on next
- Moving offices every year and putting too many time-wasting devices into our offices (big spaces, foosball & ping pong tables, cafe’s, etc)
- Sending generic holiday cards, preprinted thank you cards, and anything else that smacks of generic “Thanks for being our customer” crap
- Continuing to employ people who don’t go the extra mile for/exude enthusiasm for customers or co-workers
- Continuing to invent new roles for people who don’t do well at their old roles.
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.