Tao of the Zentropist

October 30, 2011

Adventures in (Mis) Management

After a longer than intended absence from this blog, I find myself addressing a subject which has long been of personal interest, and which I believe is both fundamental to and essential for any meaningful semblance of government and commercial enterprise to exist, which is that of management and its practice. Now it is important to note that my own view on whether management and leadership are synonymous is clear-cut; I do not believe this to be the case. It is my own contention, albeit one shared by a number of acknowledged management and leadership gurus, that good (and consequently, excellent) leaders will invariably possess sound understanding and command of management skills and principles, yet it is possible to be a good manager (particularly within a bureaucratic and/or rigidly hierarchical structure), yet be a middling and ineffectual leader.

Image courtesy Dreamstime

Perhaps due to this bias, I personally place great stock in the need for those in leadership positions to be aware of how they are perceived as managers, and how they operate in this regard. And because we often tend to learn more from failures and negative examples, I will call attention to what I perceive as shortcomings or outright failings that I’ve observed thus far in my career. The first step towards resolution or addressing of a weakness is to recognize it for what it is, so perhaps this will prove beneficial. And for those wondering in advance, I have seen many of the behaviors recounted in what follows manifest in a single individual, and consequently, that individual (along with others demonstrating less than desirable management traits) were held in low regard by peers and subordinates, contrary to their own perceptions.

Self deception, it deserves stressing, is nearly always present in poor managers.

IS IT BETTER TO BE FEARED OR LOVED?

When one is placed in a position of authority and responsibility, whether by choice or not, the two default modes by which most people will operate is respect and fear. Those who choose the former path of respect will entrust that subordinates and those accountable to them will perform to the best of their ability because they do not wish to disappoint someone whose work, reputation, personality and/or some other attribute resonates with them. Those who follow out of respect seem to “rise to the occasion” or “bring their A-game” in order to match (or exceed) performance expectations in a very positive way.

On the other hand, those who rely on management through the negative emotion of fear, which may consist of overt or implied intimidation (i.e. “I have the power to fire you”), reliance on strict hierarchical chains of command, public dress-downs or humiliation of under-performers, etc. must understand that they are eliciting desired behaviors through forced compliance rather than voluntary compliance. In other words, they employ the “stick” rather than the “carrot” approach. While I certainly have a strong viewpoint on which approach I personally favor and default to, I will not deny that fear can be a powerful motivator and there are managers that achieve results largely based on fear. The greatest danger, in my opinion, is managers who confuse these two opposing motivational factors and do not clearly understand that which they are practicing. If you choose to employ a “management by fear” agenda, know that you are vulnerable the instant your power is perceived as waning or the fear among subordinates dissipates. Conversely, those who rely on respect to manage must understand that should that respect for some reason be shaken, unless it is restored one’s authority may very well diminish.

Another key component to management (which in turn promotes good leadership) is remaining authentic. Authenticity is a quality which can be at once elusive as well as self-evident; many people can instinctively sense when others are putting up a false front or are acting contrary to their actual nature. Thus, the admonition to “Know thyself” is critical to being able to find one’s true self, and to let this guide one’s decisions and behavior. Working both in and around an industry (Entertainment) notorious for attracting people predisposed towards creating illusions, fabrications and false projections in order to get what they want, it is still interesting to note that some of the most dysfunctional and toxic personalities drawn to show business do remain authentic in their own perverse way. These individuals see little value in conforming to what are otherwise more widely considered acceptable standards of behavior and conduct, as often enforced in other industries, and consequently pay no heed in doing so. Whether they are admired or reviled for such attitudes and behavior (which in turn is largely dependent upon their perceived success and whether they can benefit those expressing the opinion), they are authentic to their natures. Of course, dealing with those who display sociopathic or psychopathic behaviors can be difficult for others, particularly when these tendencies are readily concealed.

All other things being equal, good managers will align their own core values and the values of the organization that they serve (which ideally are not too far apart) so that the appearance of, or actual existence of, hypocrisy is minimized. It is important as a manager to communicate what is expected of an employee and how that employee will be measured and judged, failure to do so leads to confusion as well as expectations which having never been vocalized or expressed, will seldom be met.

REPUTATION TRUMPS SPIN AND WHY INTEGRITY MATTERS

Image courtesy Dreamstime

Another issue for managers to be conscious of is that reputation always trumps spin. While it is certainly possible to fool some people for an indefinite period of time, fooling everyone indefinitely is highly unlikely. Managers with poor inter-personal skills or who are clearly out of their depth may convince themselves that their “secret” is safe, and may actively work to tell others of their greatness and alleged accomplishments, but this illusion cannot be maintained in the long term. I have met people who have proudly proclaimed their own greatness and confidently boasted of how well regarded they are by their subordinates (who interestingly enough, they refer to as “minions” which even when said tongue-in-cheek, reveals a lot about the manager’s character), only to find out with minimal probing that they are tone deaf to how others really see them.

While there are times, as a manager, where you may have to take actions that are not particularly liked by subordinates, if undertaken fairly and with good cause, the dislike of the action will generally not carry over to personal dislike of the individual. Those who fail to understand and appreciate this distinction are the one whose reputations, invariably, are nowhere near as “rosy” as they may perceive.

While one would normally hope that the following would not need to be said, both publicly discussed cases and my own anecdotal experiences have identified the moral and legal imperative of maintaining integrity. Furthermore, the cautionary note that must be sounded is that those who preach most vociferously about integrity, yet conduct themselves in a manner contrary to what they preach, are most assuredly devoid of integrity and ought to be duly censored for this. A more recent example that I’ve personally witnessed in recent years is observing an individual publicly stress the importance of integrity and ethical behavior, yet then proceed to misrepresent material facts, allow “errors of omission” to creep into documentation utilized for evaluation of a company’s suitability to perform certain work, and otherwise twist, distort or recast events and behavioral patterns to rationalize actions which were of personal self-interest and benefit, but far removed from objective truth or even the interests of the organization.

Having integrity requires one to possess some framework for evaluating choices in a context of “right” versus “wrong” (in which there are some absolutes) and not engaging in ethical and mental gymnastics to justify one’s favored decision or position when it does not confirm to the criteria established via that framework.

THE CARDINAL SIN OF MICRO-MANAGEMENT

Another pitfall which good managers must avoid is either the desire and/or tendency to micro-manage others. This is perhaps one of the most soul and morale killing activities that can be done, particularly when those subordinates are competent and experienced. It has been said that people less frequently quit companies than they do bosses, and micromanagement of tasks is often high on the list for why employees can no longer tolerate their direct managers. As a manager, if you feel the need to micromanage, this brings into question the competency of the person you are actively overseeing, and if this is indeed the issue, more appropriate remedies may exist. Perhaps the tasks or expectations are not clear, and further investigation and definition will solve the problem. Or, maybe the skills of the person are simply not up to the challenge, in which case the hiring process and decision-making broke down, or the job responsibilities have changed and the person’s skills have not kept pace with that change.

If as a manager, you are hiring people primarily because you do not feel threatened by them, and are loath to hire those who might one day rise to your own title and responsibilities, I would posit that the problem lies with you. The best leaders, and indeed managers, will hire people smarter and who potentially may be more accomplished than themselves precisely because they are not fearful of being replaced or overshadowed. What comes to mind for those who cannot bring themselves to embrace this approach is a timid, lazy and mindless bureaucrat more intent on job security than performing meaningful work.

NORTH VERSUS SOUTH KOREA IN A NUTSHELL

I will conclude with an incident that has stuck in my mind for years, which was a meeting that I attended with a notoriously bombastic and difficult literary manager/film producer and Jeff Berg, the chairman of the talent agency International Creative Management (ICM). During the course of the meeting, Berg posed the question, “What is the difference between North and South Korea?” His one word answer to his own question was, “Management.”

If you think about it, obvious oversimplifications aside, there still remains a lot of truth in that succinct response. Good management can lead to productivity fueled by heightened morale, collective belief in an organization’s mission and vision, and a desire on the part of individual workers to not be the weak link in the chain and to perform accordingly. Poor management kills employee morale and productivity, leads to unfocused decision-making, muddles or obscures any sense of mission/vision (if these existed to begin with), and creates a culture where employees may perform at some bare minimum level, but will not be self-motivated to push boundaries or to take unsolicited steps which might benefit the employer.

Most of us have no question as to which type of organization we’d like to belong or what kind of manager we’d like to either be or report to (or think we are), yet there is still sufficient evidence to suggest that mismanagement, rather than good management, is the order of the day within far too many businesses…

June 1, 2011

Storytelling and Commerce: When Art Meets Business

Fundamentally, humans seem hard-wired to appreciate and crave stories, and smart entrepreneurs and businesses instinctively understand this predisposition and will market themselves accordingly. In an age of 24/7 news cycles, the proliferation of media channels which didn’t exist a generation ago, and economic cycles which for many require constant reinvention and self-promotion to stand out from the competition, those who incorporate storytelling practices and techniques into their business are more apt to command the attention of both internal and external stakeholders, as well as customers.

THE ELEMENTS OF A SUCCESSFUL BUSINESS STORY

Well-told stories will always have certain traits in common, regardless of larger elements which are layered and woven in such as mythic structure, use of archetypal characters, genre conventions, cultural predispositions and the like. These traits ultimately come together to create a narrative that is:

  • Credible
  • Compelling
  • Consistent
  • Coherent
  • Character-Driven

So let’s dive deeper and define the above and provide some concrete, business-related examples to stir up some entrepreneurial juices.

CREDIBLE AND COMPELLING

Telling a story which is credible may on the surface seem odd from the point-of-view of the world of fiction, but actually, even fantasy and science-fiction must conform to rules established by the author through the conventions of the narrative. Unlike ancient Greek tragedy playwriting, the presence of deus ex machina plot devices is viewed by most as sloppy and/or lazy writing and is long out of fashion.

On the business front, maintaining credibility with customers, as well as employees and outside vendors, is critical for the fiscal health of the enterprise, and is vital whenever outside capital is being solicited. This credibility can not only pertain to the manner in which the business is presented and positioned in external facing collateral, but may extend to the behavior of key employees as well, including senior management. Once credibility is lost, whether due to incompetence, malfeasance, or simply failure to act in an appropriate and timely manner to a perceived problem, it can be extremely difficult to regain trust.

Determining what make a narrative compelling might seem like a tall order, but if one analyzes stories across various cultures and genres, it becomes very clear that at its heart, the answer is quite straightforward – the audience must be emotionally invested in the outcome of the story. If you fail to engage and hook the audience, you’ve lost them, their attention will wander, and your chance of regaining their interest will likely be compromised since they have already pre-judged your storytelling ability.

For a business to have a compelling story, it is essential that prospective customers understand the product and/or service offerings, and furthermore, that a Unique Selling Proposition (USP) exist. USP is fancy marketing speak for a succinct description of what differentiates your business from the competition, and potentially what benefits customers will derive from purchasing from you and not your competitors. It is essential that a business owner, as well as any staff who interacts with prospective customers (which if you get down to it, is actually everyone) clearly understand and be able to articulate your company’s USP.

CONSISTENT, COHERENT AND CHARACTER-DRIVEN

Consistency is another hallmark of a well-told story, and this is true in both the fiction and non-fiction realms. Most often, this is a reflection of the tone and style of the story, which in written form are conveyed in the use of language and point-of-view. In the fictional world, different genres over time have developed certain conventions, and while it is certainly possible to “break the rules” and even mix genres at times, the storyteller must be very careful in doing so, because when expectations are defied, a certain amount of risk is entailed. A similar restriction applies to non-fiction writing, such as reporting, memoirs, text books and the like. For example, fictional elements and personal opinion are never supposed to co-mingle with what is reported as “news” or represented as a “true life account.” To do so violates fundamental precepts of the form and undermines, if not outright destroys, credibility.

In business, it is just as important to remain consistent. This is true not only in the positioning of the company from a marketing and sales perspective, but also from an operational one as well. In order to develop efficient processes and economies of scale, companies need to create consistent means of performing tasks, with means to ensure quality, report results and address issues which arise during appropriate lifecycles. Successful national businesses with retail outlets, for example, spend considerable effort and capital ensuring that the customer experience at one location is replicated identically at another. If you’re a fan of the fast food burgers at a nationally known chain, you can rest assured that the meal you order at one location will more or less taste the same at another.  In the service world, it is important that methodologies and approaches which produce the best results are implemented consistently so that quality of the services delivered does not differ substantially depending on the resource(s) rendering the service.

Our final elements for inclusion are coherence and the importance of having memorable characters populate a story. Coherence might seem to some as a “no-brainer,” but poorly conceived, written and delivered stories can be found all around us without expending much effort to look. Sometimes coherence is sacrificed due to having too many people influencing the story, and in doing so, providing inconsistent guidance which creates a disjointed narrative. From the perspective of business, this is typically communicated through branding efforts and the development of vision, mission and positioning statements which communicate the company’s raison d’être. Businesses start to run into trouble when they cannot clearly define what it is they offer, what audience they serve, or why they are even in existence in the first place.

My final point regarding the creation (or featuring) of memorable characters highlights the fact that people tend to identify with or react emotionally to people (fictional or otherwise) who they aspire to be like, or someone they would like to befriend, or who represent a natural foe or adversary, or whose own story provides them with inspiration and meaning. As a business, talking about a corporate identity can seem rather cold and impersonal, and effective marketing often seeks to humanize the business by focusing on the personalities and achievements of management and staff, or at the very least, attractive spokespeople who will resonate with the target market. Some business leaders are naturally larger than life “characters” that the media quickly respond to, since writing stories about them is far easier than more bland or retiring personalities, while others will often invent or otherwise exaggerate certain qualities in order to draw attention and create publicity. There are certainly lessons to be learned from the colorful characters found throughout history as well as the present day, even if embellishments have invariably been added to those who really once existed, or walk the world today.

WHY STORIES MATTER

Stories, whether written down, acted out by performers, or delivered orally, form the backbone of any society. Stories communicate cultural values, important myths, and often convey history from the point of view of the story’s creator or communicator. They engage our interest on a visceral level and help us to make sense of not only what our senses tell us on an individual level, but to process the messages conveyed by our environment on a larger macro level as well.

Obviously, this article cannot possibly delve into the complexities of applying time-proven storytelling techniques within a business environment, but it hopefully does make the case that creative license, if not misapplied with the intent to deceive, should be part of every business toolbox.

Author’s Note: This posting originally ran on the blog Serial Startups on May 26, 2011…

January 8, 2010

Common Financial Modeling Pitfalls

Financial modeling is part art and part science, and in the hands of those inexperienced or deliberately seeking to obfuscate reality, potentially an exercise in wishful thinking if not outright deception. The truth is, nobody has a crystal ball that can unerringly predict future revenues, cash flows, expenses and other pro-forma information given the countless shifting variables which can influence these numbers, but with some foresight, analysis and careful planning, one can create a credible, defensible model that illustrates performance that is not “black swan” in nature and has a reasonable chance of being realized given the stated parameters.

We must also separate the mechanics of programming an Excel Workbook with inter-linked datasheets necessary to create desired pro-formas (e.g. the Income Statement / Profit & Loss, Cash Flow and Balance Sheets) with the planning necessary for information to logically flow throughout the model. This requires a certain amount of sophistication and understanding of how these items all relate to each other. As with any other programming, the mantra “garbage in, garbage out” is one to remember.

Following are some of the key pitfalls that I have observed in financial models, aside from incorrect calculations and formulas…

BEWARE PREDICTABLE “HOCKEY STICK” REVENUE GROWTH

It’s interesting to note the tendency that regardless of the business vertical or product or service offerings, so many revenue projections tend to follow an extremely predictable trend line; the first two to three years often show modest growth, but by Year Four revenues suddenly rocket upwards, buoyed no doubt by massive public recognition of the value of the company’s offerings and resulting in what analysts call a “hockey stick” profile.

This “default” profile more often than not reflects the need of a company seeking investment to demonstrate an attractive return on investment (ROI) within a time-frame that is not too long-term for most investment sources. Unfortunately, it is often arrived at by manipulating, consciously or sub-consciously, data in order to arrive at a desired result, rather than compiling data without regard to the desired result, and then following it to its conclusion. In other words, rather than letting the facts speak for themselves in order to form a theory, one arrives at the theory first and then cherry picks “facts” in order to prove the theory true.

To be sure, there are certainly legitimate circumstances for the “hockey stick” profile to emerge, but you must be confident that this is not the product of wishful thinking or the confluence of “perfect storm” conditions.

ASSUMPTIONS ARE NOT GROUNDED IN REALITY

More sophisticated reviewers of financial models understand that these exercises in analysis are not a Magic Eight-Ball but rather an artificial construct that is highly dependent upon the quality of data entered, the programming which drives the resulting pro-formas, and of course, the ability of the company to execute on the various aspects of the business plan which allegedly support the conclusions show in the financial projections.

All too often, those preparing the model will fail to cite sources from which data is extracted or will base projections on overly-optimistic third-party research which sometimes has an agenda of its own. While it is not always possible or practical for a company to conduct extensive primary research or have access to historical operational data to help support future projections of market conditions, customer behavior and trends, etc., it is vital for the sake of credibility in the due diligence process that the company err on the side of caution and present conservative projections which under-estimate revenues and over-estimate costs to provide more margin for error and adjustment to “reality on the ground” rather than pie-in-the-sky wishful thinking.

MISTAKING TAM FOR THE MARKET NICHE YOU ARE TARGETING

Another very common problem is that companies sometimes overstate the actual market their product(s) or service(s) are addressing, and paint an unrealistic picture of the actual market size. In marketing lingo, “total addressable market” (TAM) is a conclusion as to the size of a given market assuming no competition exists and the company can distribute its product/service without constraint. Of course, this is something of an artificial benchmark, because competition (even indirect) always exists, even for a brand new product/service, and achieving complete distribution is virtually impossible no matter the medium.

However, in reality most companies are targeting very specific niches within larger markets and when assessing market potential, they must recognize and acknowledge this. For example, if you are manufacturing men’s technical outdoor apparel, your TAM would have to be based on the industry’s definition of “technical” clothing, intended for the outdoors, and only for men. It would be irrelevant and erroneous to base your market size projections on total revenues realized from sales of newly manufactured clothing, which includes men, women, children and all of the various types of clothing within the broader category.

COSTS TO CAPTURE MARKET SHARE GROSSLY UNDERESTIMATED

Another error to avoid when projecting market share is the tendency to take “short-cuts” and make arbitrary decisions such as, “our company can capture 2% of the market by Year 3” simply because that seems like a modest slice of the pie and that 2% number nicely dovetails into sufficient revenues and net profits to make your model look attractive to investors.

Unfortunately, if you wish to be taken seriously and have a credible defense to skeptics and those playing devil’s advocate, you must work more granularly and outline the process by which you arrive at the projected market share. Even more importantly, you must be realistic about the costs involved to capture such share, which will involve marketing initiatives that cost very real dollars, even in a digital age. All too often, companies grossly underestimate the costs of marketing channels, the duration of campaigns, or assume that “word of mouth” and other free or low-cost solutions will provide the customer awareness, brand equity and penetration that they need.

CASH FLOW RELIES ON OPTIMUM PAYMENT CYCLES FOR A/R AND A/P

Another easy to overlook detail in a financial model is the assumption that is made regarding payment cycles for accounts receivable (A/R) and accounts payable (A/P) especially during challenging economic environments. There is a tendency to assume 30-day cycles for both, without taking into consideration industry practices, likely customer behavior, and the effect of tightened credit as a result of the global recession which began in 2008. Many companies naturally will be aggressive in seeking to collect on A/R, yet will drag out their A/P as long as possible to conserve cash. In order to maintain sufficient operating capital, it is critical when preparing a model that you assume that you will not be paid as quickly as you might like for your products/services, and you will still have to pay your bills in a relatively timely manner or face other consequences which may constrain operations.

CLOSING THOUGHTS ON FINANCIAL MODELING

While preparing a financial model can be daunting and time-consuming, when done properly it should provide a business with a useful tool for internal planning as well as raising outside capital, if that is the company’s intention. In my experience, financial models that project beyond 5 years out are unnecessary and so incredibly speculative as to be fairly worthless, and are usually discounted by reviewers anyway. While some modeling advocates like to provide a monthly breakdown over a 5-Year / 60-month period, this too is often unnecessary; many reviewers are happy with breaking out only Year 1 (and sometimes Year 2) by month, and some will settle for quarterly breakdowns in lieu of this.

Finally, since it is easy to make honest mistakes in constructing a model, even if operating from a template, having another knowledgeable party review the calculations and underlying assumptions is a great way to error-check and provide friendly challenges so the model can withstand less forgiving scrutiny.

If your business requires assistance in developing a financial model, or for other Business Plan development, strategic planning, marketing or project management needs, please visit Black Rock Consulting online or email us for a confidential discussion of your needs. Initial consultations are FREE OF CHARGE and WITHOUT FURTHER OBLIGATION.

December 29, 2009

The Zentropist Reflects: As Another Year Winds Down

Perhaps it is natural that as the calendar year draws to a close, we tend to look back in time and attempt to draw lessons, inspiration and even wisdom from our experiences, regardless of whether we deem them “good” or “bad.” As we close the books on a second year since the global financial recession gained steam and overtook both the guilty and innocent in its path, it is important to celebrate and acknowledge one’s survival, as dicey as circumstances may be.

The truth is, nobody can say for certain that we are in “recovery” or that future shocks won’t knock the U.S. or world economy off the precipice after years of irresponsible societal and individual actions, but understanding mistakes of the past means that we are not doomed to repeat them. There is no denying that many Americans are in serious financial pain, and following on the heels of fiscal stress are the deleterious effects on emotional, psychological and even physical health. Perhaps most ominously, some of these effects may not be immediately obvious but will manifest over time. Of course, this is not to dismiss the daily struggles of millions around the globe that continue to live in abject poverty, but we Americans, as a lot, have grown comfortable with our First World “Superpower” status and only now is the bloom off the rose, and the resulting fall more pronounced.

WHITE COLLAR WORKERS FACE “FUTURE SHOCK”

What’s truly terrifying, and the pink elephant in the room, is the possibility, which I suspect is very real for many, that barring significant changes in our own country and global trade, diminished standards of living and lifestyle expectations may prove permanent and not temporary. Previously in the Post World War II world, Americans in general have enjoyed a “rising tide” of prosperity and this is especially true of college-educated “white collar” workers. Many of us believed that if we pursued an education, learned some useful skills (or at least cultivated the capability to think, which is surprisingly lacking in many) and displayed a good work ethic, we’d reap the financial benefits accordingly.

Well, that assumption is as baseless as those made in creating CDO’s by the many charlatans of Wall Street.

WHEN THE WORLD FLATTENS, IT’S EASY TO BECOME ROADKILL

As Thomas Friedman famously observed, the “flattening” of the world is at this point a fait accompli and has brought many benefits to not only those in emerging or underdeveloped nations, but even those of us in America. After all, in a society where we generally want everything to cost as little as possible but we all tend to want to be well compensated for our work, a balance must be struck, and off-shoring (a sub-set of outsourcing) manufacturing  began in earnest during the 1990’s. However, as technological infrastructure improved globally, we began to see not only goods but services  sent overseas to lower-cost providers, perhaps most noticeably with customer service operations, although it wasn’t long before “higher horsepower” services such as financial and legal research, radiology (tele-medicine anyone?) and a host of other “professional class” offerings were sourced overseas. This in turn enabled better profit margins, especially if the cost of the services did not markedly change to the consumer.

While no one can fault the ranks of workers in developing nations from wanting to enjoy the material benefits and conveniences of the modern world, it is clear that this has placed enormous pressure on compensation, job security and stability in countries such as the United States, which increasingly cannot seem to compete with cut-rate prices, less litigious legal systems, lack of intellectual property protection safeguards, and more lax environmental regulation. For all the talk of creating a “knowledge based economy,” the U.S. educational system as a whole seems incapable of turning out an educated cadre of graduates up to the task, while many foreign nations, seeing education as vital to uplifting their populaces, are sending their best and brightest to learn the hard sciences, mathematics and engineering and then return home with that knowledge. To put things into perspective, realize that the middle class population of India exceeds the entire U.S. population, and those people will need jobs commensurate with their own rising expectations and consumption habits.

COMMIT TO LIFELONG EDUCATION AND SKILLS UPGRADES (OR ELSE)

So what are we to do? Well, as I see it, much as with the development of nuclear weapons, the genie is out of the bottle and wishful thinking won’t be cramming it back in anytime soon. It seems that even well-educated Americans will need to prepare for constant reinvention, re-tooling and re-calibration of their skill sets and knowledge base to keep up with rapidly evolving developments.

For some the answer may be accumulating even more formal education, since even four-year undergraduate degrees seem to lack the prestige accorded to them even a generation ago, mandating some form of graduate or post-graduate study or industry specific certifications. Of course, educational institutions, being in the business of education, are only too happy to provide coursework to meet demand; for example, look at the proliferation of project management certification courses from both established and virtual institutions to meet alleged demand for what is now being billed as a profession in of itself (rather than a skill set that any competent executive or manager holding any position of real responsibility would be expected to have). Never mind that for all the alleged demand, the supply of talent looking to fill project management positions appears to exceed current hiring slots, and the Internet is filled with advice on how to create the appearance of having sufficient hours of professional experience to qualify for some popular certification. So long as HR departments in some private, public and governmental institutions feel that a credential somehow validates a candidate, to remain competitive it becomes another hoop (and expense) that the applicant must be willing to address.

BE ADAPTABLE OR FACE BEING MADE REDUNDANT OR PREMATURELY OBSOLESCENT

At the end of the day, events of the past two years simply illustrate just how important adaptability and willingness to continuously accumulate new knowledge are in our hyper-competitive and connected world. While we may long for a slower pace or simpler times, the current trajectory suggests this is unlikely to happen, and the further one falls behind, the more difficult it is to ever recover.

So like it or not, it’s time to “cowboy up” and evolve with the times, remaining true to one’s dreams and passions but acknowledging that our best laid plans sometimes require modification if we wish to reach our intended destination.

November 28, 2009

The Zentropist Now Appearing on Inqbation

Filed under: General Business,networking,Uncategorized,writing — zentropist @ 7:50 pm
Tags:

While we’re long overdue for some updates to the Tao of the Zentropist (which will be remedied soon), the first in my series of planned regular contributions to Blake Newman’s inQbation blog have been recently published. Feel free to check out the postings below:

“Learning from Failure”

“The Power of Imagination”

“How and When to Hire a Consultant”

As always, your comments are welcome…

September 22, 2009

The Zentropist Casebook: Ten Tips for Dealing with Difficult Clients

Anyone who has been in business for a meaningful length of time has encountered the “difficult client.” Of course, this moniker can be attached to a variety of individual habits and behavioral attributes, running the gamut from minor quirks and annoying predilections to full-blown pathologies. The reality is, if you want to stay in business, developing the skills and techniques to mitigate or otherwise counteract “difficult” behavior is vitally important and will affect your bottom line.

Following are 10 time-proven techniques and approaches that have passed muster with the Zentropist and provided some measure of succor when confronting less than cooperative yet paying clients:

  1. Set Expectations Early (And Often). This cannot be overstated. Even during the courtship phase, a service provider must be forthright and honest in what the client can expect in terms of resources, deliverables and energy expended in service of the project. And your word must be your bond. Individuals and companies that promise the moon to make the sale and then treat the fulfillment process as an afterthought are courting rancor and bad juju. And quite frankly, they deserve it.
  2. Define Your Deliverables. Attention to detail is extremely important at every stage of the process. It’s essential that you are very clear about what it is you (or your representatives) are selling and what you intend to deliver. I’ve seen numerous companies get themselves into hot water by failing to adequately utilize inclusionary and/or exclusionary language when listing a product they intend to create. For example, The Huffington Post is a blog. So is Tao of the Zentropist. You’ll brook no argument from me that the scale, scope and corresponding expenses of the two are radically different. And budgets aside, if a client expects to receive a deliverable listed as a “blog” with no further description of its functionality, there’s a good chance they’ll be looking for all of the bells and whistles that you failed to account for.
  3. Clear Communication Trumps Head in the Sand. We all know the adage about killing the messenger. Nobody likes to deliver anything but good news. Yet sometimes this is necessary. A large number of projects start to go downhill and coast rapidly towards failure due to the inability of stakeholders to openly communicate, address issues as they arise, and find solutions that are agreeable to all. Don’t make this mistake. Provide updates to your client in writing, at least on a weekly basis, and if need be, on a daily one. Problems generally don’t solve themselves or otherwise go away. Deal with them and move on.
  4. Report Progress and Impediments Equally. Consider this one a corollary to #3 above. While it’s important to acknowledge the success in achieving stated objectives and milestones, if a project is facing delays (regardless of the cause), figure out what can be done to get things back on track. This isn’t about assigning blame (at least not at the outset), but dealing with a factual reality (i.e. “We’re behind schedule”) and finding ways to correct course. Such proactive behavior helps negate the argument down the road that you were aware of things going sideways but failed to act in a timely manner or otherwise alert the client.
  5. Tie Payments to Progress Milestones and/or Hard Dates. Depending on the scope of the project, anticipated duration, risk assessments and other considerations, a service provider is likely to only secure a percentage advance on total fees due. While in some situations, “half up front and half upon delivery” may work from a cash flow and risk perspective to both parties, this is not always the case. If you are concerned about a client possibly unreasonably holding back fees or causing delays in delivery due to indecisiveness or failure to provide feedback in a timely fashion, you may want to consider developing a payment schedule which calls for more frequent payments tied to key milestones in the schedule, with a hard date attached as well. For example, “25 percent of fees are due upon delivery of preliminary draft of narrative or by [insert desired date], whichever comes first.”
  6. Put Yourself in the Client’s Shoes. When negotiating or even debating, it’s a recommended practice to look at the situation from the other party’s perspective, to understand what their concerns and agenda are likely to be and to place yourself in a position to counter these as necessary. Understand that as a service provider, you may be an unknown variable to the buyer, who may be risking substantial capital, time and opportunity in engaging your services. Showing some empathy can go a long way in earning trust and breaking down barriers, especially if the client has been burned before. And remember, if you walk a mile in someone’s shoes, at the end of it you’ve gone a mile and you’re wearing their shoes.
  7. Sometimes Listening Wins Converts. One of the hardest lessons for most of us to learn is the art of active listening. Actually paying attention to what another party is saying without interruption or immediate judgment. Try it sometime. Many people who are perceived as “difficult” may be that way because of insecurities or because they feel unheard. By listening to them, you will gain valuable insight, which may in turn provide leverage in managing them. The majority of people love to talk about themselves. Let them.
  8. The Customer is Always Right – Until They Are Not. It’s a delicate balancing act, when a client becomes demanding or feels entitled to things that were never part of the agreement. Sometimes in the spirit of goodwill and cooperation, you bend, as a willow does in a storm. But with that being said, if you allow yourself to be walked on and taken advantage of, invariably that’s exactly what will happen. It’s perfectly fine to give a client enough rope to hang themselves — and once they’ve done so, you can extricate them without gloating and educate them as to the error of their ways.  Your mileage may vary in the application of this axiom, so use it judiciously.
  9. Know Where “The Line” Is – And Have a Plan if Crossed. As service providers, we all have different thresholds for risk and pain. Make sure you understand where yours is for a particular project and have a contingency plan in place to deal with the situation if the Rubicon is crossed.
  10. Know When to Walk Away – And When to Run. While it’s debatable whether Kenny Rogers knows good chicken or not, he nailed this premise in his lyrics to “The Gambler.” Sometimes a client will simply prove to be impossible to deal with (see #9) and there’s simply no reasonable way of completing the project and retaining your sanity or any semblance of profit margin. It’s always a good idea to have a contract that provides language to allow both parties to give notice and walk away from the deal if necessary, and if there comes a time that you need to invoke this clause, that’s why it’s there.

While we all hope to have long, financially lucrative careers that avoid the necessity of interacting with troublesome personalities, it’s best to be prepared for the latter, especially in pursuit of the former. Understanding what makes a client difficult and how to manage them is an art in of itself, and one worth mastering in the course of business.

September 16, 2009

Seven Core Elements of Successful Business Planning

Working with start-ups and other early-stage ventures, as well as even more established entities, reveals the undeniable truth that planning is often relegated to the realm of theory or executed as part of an initial checklist to secure outside funding, then promptly forgotten. This is a mistake which can haunt or even cripple a business, and is one that is best avoided by keeping a handful of axioms in mind.

The following list of “Seven Core Elements of Successful Business Planning” is intended to serve as a guide for both enthusiastic (i.e. by choice) as well as reluctant (i.e. forced by circumstance) entrepreneurial souls to help maintain your focus and gain traction in the market as your business matures.

  • “Know Yourself.” It is vital, whether you are a lone individual selling a product or service or a corporation of any size to be able to dispassionately assess both your strengths and weaknesses, so you can capitalize on the former and minimize the latter. While this may seem self-evident, many businesses fail to thoroughly undertake this exercise or make the mistake of treating it as a one-time thing, when in reality, circumstances change over time and what were once strengths may no longer be so, while conversely, weaknesses may have dissipated, multiplied or otherwise shifted. It’s a good practice at least once per year to undertake a SWOT analysis to see if changes in strategy are necessary.
  • “Find Your Market Niche.” All too often, it’s human nature to want to be universally liked or otherwise in demand. However, for most brands, this is a tall order, and in the effort to accommodate and please everyone, the product or service invariably winds up diluted and really pleases no one to any great extent. This phenomenon is often witnessed when committees or other forms of bureaucracy get involved in the process, and is all too often exacerbated in government. Fundamentally, it is essential that you find a way to be valuable to a targeted niche, ideally one that can meet the prices that you anticipate charging for your solutions.
  • “Know the Competition.” As obvious as this may sound, many businesses blithely commence operations with little understanding of what makes the competition tick, or worse, assumes or states that it has no competition, which is the mark of either an arrogant fool or an incompetent. There’s always competition, at the very least indirect, for any product or service with a definable consumer. Don’t make the mistake of believing it hasn’t been done before, because chances are, it has, and if it is no longer in existence, there may be good cause for this. Of course, this doesn’t mean that you may not improve upon another’s offering, but that’s a different story altogether.
  • “Decide What Metrics Are Important – And Measure Your Progress Regularly.” This is crucial in understanding whether or not your business is succeeding under its current strategy, or requires a course correction to avert disaster or to capitalize on shifting market trends or emerging opportunities. Anything that is quantifiable can be measured, and as a business owner, executive or stakeholder, or even just an employee hoping to remain gainfully employed in uncertain times, it’s vital that you optimize your performance. While the metrics which are used may vary widely depending on the nature of the business, these should be identified from Day One and monitored closely, and if circumstances change and necessitate the inclusion of new metrics, be proactive and do so. As a final note, don’t be willing to discard or exclude metrics simply because they do not cast the business in a favorable light – that is not a legitimate reason to bury one’s head in the sand.
  • “You Can Never Have Too Much Capital.” Two of the leading causes for business failure are under-capitalization (especially at inception) and issues managing cash flow. While it’s true that money can be easily squandered or flitted away on ill-conceived projects and initiatives, this does not negate the reality that having ready access to money (i.e. liquidity), especially cash, is an enormous competitive advantage. If you are raising money, be sure to challenge your own assumptions as to the pace at which revenues, never mind profits, will flow, and always assume that your expenses will be higher than initially projected and revenues lower. Failure to do so tends to have adverse consequences down the line.
  • “Have a Strategy (Preferably a Good One).” If you’ve been around business long enough, you come to realize that a surprisingly large percentage lack any form of coherent strategy that can be easily articulated internally, let alone to outsiders. Many businesses are reactive rather than proactive, blindly groping their way through the darkness, hoping to stumble upon an acorn every now and again. This isn’t a strategy, and it isn’t viable for very long. While strategies may evolve or change over time (and correspondingly, impact tactics), they need to be aligned with clearly specified goals. If you don’t know where you want to be, you’ll have a devil of a time getting there.
  • “Be Unique (And if You’re Not, Give the Impression You are Anyway).” It’s common parlance among marketers to speak of “unique selling propositions” (USP’s) which make one business different from another. Sometimes these are actually true, but more often than not, they speak to the need to position your business to meet the psychological needs of your target customer. Fundamentally, there is nothing wrong with this, as nothing in business actually happens until someone makes a sale, and part of the process of engaging with a prospective client or customer is convincing the party that you have something worth offering to them that they can’t find anywhere else. They may find something similar (perhaps even strikingly so) to your product or service, but they’ll miss out on the benefits (both tangible and intangible) that you bring to the table if they opt to go with another option. So it’s your responsibility to make sure this doesn’t happen.

By implementing the above list, and regularly revisiting the issues raised, you will give your business an increased chance of successfully weathering economic storms when times are tough and thriving when optimism returns to the market.

Have a business question or want to learn more about business planning and other related services? Black Rock Consulting is available to assist you with solutions that meet your needs and achieve results.

July 8, 2009

On the Nature of Energy

While it may seem esoteric at first, when you think about it, we spend our lives dealing with the “energy” present in both living and inanimate objects. Since interpersonal and communication skills are vital in business, understanding how we can address energy when we encounter it is crucial to identifying the appropriate response to a given situation.

Essentially, we have four choices available to us when we encounter an opposing energy: we can seek to absorb it; we can meet it with force and seek to block it; we can deflect/redirect and release it; or we can “go with the flow” and not resist the opposing energy, but simply channel it to create a favorable outcome.

Those with a martial arts background may appreciate the physical expression of this “energy channeling,” although in our verbal and written dealings with others we must ultimately be conscious of the energy that we are facing and can apply the same basic principles that we would “out on the mat,” in the training hall, or “in the street.” So let’s briefly examine the options that we have and translate these to common business dealings to understand the ramifications of our actions.

Oftentimes, “absorbing” energy is a byproduct of being caught unawares, or having our first option fail. While it is possible to train the body, for example, to physically absorb to one extent or another various strikes delivered by an unarmed opponent, most would agree that the notion of deliberately “absorbing” the energy of a projectile (i.e. bullet, arrow, dart, etc.) or an edged or blunt trauma weapon is an awful idea. The same is often true in our dealings with others, which even if not physically violent or threatening to our person, can have detrimental effect to our emotional and psychological state.

Clients, customers or vendors that attempt to get their way through verbal bullying and other tactics may very well expect you to simply “roll with the punches” and concede to their demands, no matter how unreasonable or outlandish, especially if they feel that they have significant leverage over you. Such leverage may take the form of threats of non-payment (or delayed payment of bills), taking their business elsewhere, or trying to wrangle additional work or products without having to pay for them. The obvious downside in “absorbing” such energy as expressed in these examples is that you run the risk of being made a doormat, and always “giving away the store” in business dealings. While compromise is a necessity in business, and we need to be flexible and allow a certain amount of “give and take,” it’s simply bad business to allow yourself to be outmaneuvered.

Meeting force with opposing force can be a viable strategy as well as a tactic, but suffers from one serious weakness; if the energy which you project is not stronger than the opposing force, your defense will be compromised and you may very well wind up absorbing the energy that you had initially hoped to block. Within the world of martial arts, many systems rely on hard blocks with arms and legs to meet incoming strikes, which leads to a tremendous “clashing” of energies and perhaps some physical pain as well to both attacker and defender. In social dealings, an example of this might be raising one’s voice and verbally escalating a heated conversation, attempting to shout down, drown out or intimidate the other party. Again, this carries certain risks, because it can add “fuel to the fire” in an already tense situation and may backfire if the other party refuses to back down.

Many traditional “internal arts” such as Tai Chi Chuan, Ba Gua, and Aikido, along with a number of others which blend both internal and external responses (such as a number of Chinese styles including Wing Chun) understand that a more sophisticated approach to managing energy is to deflect or redirect incoming energy so it is safely released, which in turn sets up an appropriate counter, which often has the added desirable effect of leaving the opponent off balance or vulnerable. In business, this can be an excellent response for dealing with an opposing party that is seeking to be confrontational or uncooperative; by carefully channeling their focus to other things, or finding common ground or deal points that both parties can agree upon, a tense situation can be defused and a more equitable compromise or solution may be found. This might involve psychological ploys such as using flattery or otherwise stroking the other party’s ego, but does not have to involve outright fabrication or even “lies of omission.”

Our final option is one that Aikido practitioners refer to as “blending,” or channeling the energy of the opposing force by flowing with it, and simply allowing it to travel in the direction that it is heading, albeit perhaps with some additional assistance in the form of joint locks or throws. By yielding to the energy that is projected, yet guiding it in a manner which is conducive to one’s own objectives, there is no need to expend much energy in the defense. From a social standpoint, this approach can be employed by making concessions on issues which are of lesser importance, making the other party feel that it has won a victory, in order to secure concessions or favorable terms on the issues which really matter.

Learning how to direct energy, both one’s own as well as that of another party, using the appropriate method at the appropriate time, is a skill that is innate in some, and requires focused work for many. Yet it is a skill that once developed, can make one’s relationships on a business, social and personal level far more rewarding and even less stressful.

Why not give it a try?

May 28, 2009

When You Meet a Swordsman…

In Thomas Cleary’s translation of several lesser known (at least in the West) Chinese classics compiled within the book “Thunder in the Sky” he references a Ch’an (Zen) Buddhist aphorism which deserves some attention:

“When you meet a swordsman, draw your sword: do not recite poetry to one who is not a poet.”

This lesson is apropos in both one’s personal and professional dealings. The ability to quickly size people up, either as allies, adversaries, or something not quite either is a skill that under some circumstances can mean the difference between life and death. In business, it could carry serious financial and even legal implications when taking the measure of a prospective business partner, competitor, creditor or debtor, among others.

Those versed in theories of warfare both Eastern and Western have realized that war, when practiced shrewdly, is based on deception, and convincing the opponent of “truths” that are anything but; in concealing one’s strengths (and intentions) until the last possible moment; and to borrow a turn of phrase from Winston Churchill, surrounding one’s weakness(es) “with a bodyguard of illusion” which downplays or otherwise mitigates pragmatic evaluation of reality.

As with many others, the Zentropist feels strongly that parallels can be drawn between conduct in business and prosecution of warfare (which in itself is an extension of politics and statecraft, as Von Clausewitz observed), although rather than seeking the annihilation of one’s opponents / business rivals, it is better to subscribe to victory through superior performance in terms of products and services, marketing, and customer service and support (and for some businesses, pricing is certainly part of this matrix as well).  In “meeting a swordsman,” it is vital that one seeks to uncover the motivations and intentions that underlie the other entity’s behavior, to provide insight into character and likely reactions to circumstances that may present themselves.

This is especially important when evaluating strategic or business partnerships and alliances, since those that seek harmonious and mutually beneficial relations understand that a “win/win” scenario must be the end goal which the parties pursue, yet some individuals and companies simply cannot do anything but pay lip service to this notion. For some, business, as with other aspects of life, is a zero-sum game in which the advancement of one’s aims is automatically at the expense of another’s. Those that subscribe to such theory will tend to be highly deceptive and sometimes amoral agents that only serve themselves and cannot be relied upon to uphold their end of any deal. You must be prepared to deal with such treachery, and one of the best means to do so is to limit your interactions wherever possible to avoid those that would employ the ancient strategy of, “To hold a sword behind the smile.”

A final take-away from this lesson is that the Zentropist does not suggest that deception or obfuscation has no legitimate role in business or personal affairs, nor is it inherently “dishonorable” behavior. To a certain degree in this instance, the ends can justify the means, and it is certainly one thing to mislead a competitor or business rival, for example, and another to betray a business partner, vendor, supplier or affiliate, especially for one’s financial gain. Ultimately, in one form or another, we must all answer for our actions and those that can operate with clean conscience due to the rightness of their actions will always be better served than those that seek to rationalize their self-serving or otherwise malevolent behavior.

And we all would do well to remember that, when confronting a swordsman, our own blade must be fast and true and without hesitation, for the “fluent blade cuts cleanly…”

To learn more about the author, please visit Black Rock Consulting or drop us an email

May 17, 2009

Writers Facing the Double-Edged Blade of Technology

It’s hardly an original observation to acknowledge that technology is a double-edged blade, capable of delivering enormous benefits to users when properly employed, yet also facilitating the destruction of careers, professions, cultures and even economies as either an intended or unintended consequence of its utilization. Certainly, the “flattening” of the world which Thomas Friedman has persuasively written about for several years now could not have happened without the build-out of technological infrastructure during the 1990’s, which has in turn facilitated the off-shoring (a sub-set of traditional “outsourcing” to freelancers) of many jobs which were once performed domestically.

This off-shoring trend has been great for low-cost nations such as India and China and parts of Eastern and Central Europe, but not so great for developed nations such as the United States, where for better or worse, many of us have grown accustomed to a certain standard of living. Some might call it opulent, some might call it irresponsible (and in hindsight, clearly unsustainable), and arguments about carbon footprints aside, many Americans, irrespective of educational levels or actual skills, have come to feel entitled to a rather free-wheeling approach to spending money and accumulating material goods and comforts.

Like many others, I’m a member of the business social network LinkedIn, and belong to a number of “special interest” groups. While the global recession is hurting a lot of people in a lot of nations, there’s a lot of bewilderment and pain evident among white-collar professionals, many of them well-educated, suddenly realizing that somewhere offshore, there is a counterpart willing to do the same work for less money. Sometimes for far less money. This has impacted the professional writing and communications/media community (i.e. journalists, copywriters, marketers, consultants, authors of fiction and non-fiction alike) especially hard from what I can see. For anyone dealing primarily in intellectual property or work that does not depend upon a physical component necessitating locality (such as one form or another of manual labor or public/private service), the Internet is at once both a channel and tool to cultivate new opportunities once ignored due to distance, yet also increases competition exponentially.

Understand that capital, like energy, follows the path of least resistance. Those who grew comfortable pulling in solidly middle class, if not upper tier incomes, and more often than not assumed debt loads to finance these lifestyles, have been completely sand-bagged upon learning that they are indeed replaceable. Such knowledge ranks right up there with the realization of one’s mortality and seems to carry the same intensity of emotional baggage.

Writing has always been a profession that many people devalue and largely dismiss, since after all, anyone that has any degree of literacy “can write,” so those that earn a living doing this are not typically viewed as performing a service which is magical or mysterious. Brain surgery is mysterious. Building a bridge or building is mysterious. Even composing a symphony is mysterious. Writing a script or novel? Hah. Swing a dead cat in Los Angeles or New York and you’ll take out an aspiring screenwriter and/or novelist without doubt.

Blogging and “Internet journalism” are rapidly displacing traditional media in terms of audience reach and relevancy, and with the apparent decline in journalistic standards and integrity, the line between professional and amateur journalist is increasingly blurred.  Journalists and other writers accustomed to being paid by the word for print publication are now horrified to discover that rates that in some instances could formerly exceed $1.00 per word for a particular piece of work are now dropping to mere pennies per word, since in a universe where one’s work is now simply “content” and SEO (search engine optimization) is more important than a clever turn of phrase or providing the reader with insightful analysis or thought-provoking ideas, most publishers don’t correlate high quality output with traffic. Rather than pursue or encourage excellence (and pay rates in accord with this outcome), there’s a marked tendency to settle for “good enough,” which is a rather low-lying bar these days.

Writers that wish to “fight back” face an uphill battle, but not one which is unwinnable. Creating and marketing the writer “as a brand” is an absolute necessity, and using digital media to find and connect with an audience is vital to the successful prosecution of this strategy. The plethora of digital channels for delivery of one’s work has lowered the barriers to entry, and is likely going to make many traditional publishers largely irrelevant in the coming years. To be sure, there is still prestige associated with having one’s work published in print by a major name (be it a newspaper, book publisher, etc.), but as more consumers turn to digital channels to consume “content,” I suspect the distinction will fade. Portents of this are already appearing. For example, Amazon’s popular Kindle book-reader will allow bloggers to post their work directly to the unit, which in turn gives equal weight (in terms of presentation) to an undiscovered writer working in obscurity as it does to a best-selling author with a major publishing deal. The difference between them (which is clearly not insignificant) is audience reach, and the willingness of readers to pay for the enjoyment of accessing that writer’s work.

If this global recession teaches us anything, the lesson that we can take nothing for granted must be first and foremost. For those that use the written word to connect with others, whether through articles or columns appearing in traditional print media, advertising, film and television, or digital media, we must be cognizant that if we wish to earn a living from our work, we had better deliver a meaningful or otherwise valuable experience to the end user/consumer, or we will quickly be rendered irrelevant.  After all, plenty of others are more than willing to take up the mantle, and far too many will happily do so for free…

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