There are plenty of warnings about wanting too much in this world, whether it is in your personal life or as the CEO of a company.
Remember the dot-com bust? Prior to the technology market bubble bursting, tech companies could do no wrong. Investors were ignoring basic fundamentals because “this was a new era” and the old rules didn’t apply. Well, it turns out the rules did apply. As did one very old rule about “what goes up, must come down.”
Tech company valuations were slashed by billions, thousands were laid off and the ripple effect was felt throughout the economy.
More recently, we experienced the real estate bust. It was pretty much the same story — people ignored basic investing and common-sense rules and the prices for real estate went sky-high, and then the bubble burst. The results were also the same: billions in value lost, thousands of jobs affected and the ripple effect was felt throughout the economy.
There is plenty of blame to go around for these events, both by investors who got caught up on the hype and CEOs who were trying to get rich, or at least richer than they already were. It was a quest to have the biggest paycheck, the biggest yacht, the biggest plane and the biggest house. The reckless CEOs were trying to use get-rich-quick methods that are dangerous to everyone.
There are four common ways to grow a company:
- Going public through an IPO
- Mergers and acquisitions
- Debt financing
- Self-funded organic growth
IPOs cost a lot of money to launch and even more money to maintain. The second and third methods are all about leverage. Overvalued stocks and overleveraged companies were major contributors to the tech and real estate busts. Too many CEOs were borrowing more and more money to fund the next great merger or open more locations. When tough times hit and the money dried up, they had lived well beyond their means and a harsh reality set in.
Despite these recent economic failures, many companies are still playing with borrowed money, overleveraging themselves and putting their entire company at risk. You have to understand the leverage game and the risks that come with it. The best way to grow a company is to create an environment that fosters growth and to focus on building long-term relationships.
This isn’t to say that you won’t make a strategic acquisition here and there or occasionally borrow money to fund needed expansions. The key is to do it in moderation and understand how too much debt can hurt your ability to grow. Making a mistake with debt can spell doom for your company and everyone in it.
Your responsibility as CEO goes far beyond yourself. Investors obviously are counting on you, but so is everyone that works in your organization. For some of your vendors, you might be their largest account. If you suddenly went out of business, how would it affect them? Would you create your own mini “bust” that rippled through the local economy, even on a micro scale?
In today’s world, you need to take a hard look at how you are leading your company. One wrong move could cut you off from the credit you need to fund your leveraged growth. With no money, the organization often collapses under the weight of its own debt.
It’s OK to be satisfied with what you have and not play the high-risk game of leveraged growth. Growth is good but not when it requires an “all-in” risk that can ruin your organization and the lives of the people who work there. Remember, more often than not, slow and steady wins the race.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
So many companies treat human resources as an afterthought, or it’s only part of a staff member’s role. For example, the secretary has HR in addition to other duties.
The No. 1 priority
HR should be the No. 1 priority. A great culture can lead to great success (and higher profits).
Why is it that when a company needs to reduce staff, generally, the first place it makes a cut is within the HR department?
In my view, HR is the single most important department in your company and is a direct reflection of how you value your employees.
If your company has a part-time HR person, that tells me a lot about how you are going to treat your employees and their concerns. HR is a full-time job and an integral part of your team.
How you manage your people is a top priority. Not only should HR be the last to go, HR absolutely should be represented at the executive level.
Employees spend an incredible amount of time and emotion working to gain your approval. Whether they were deprived of it by their parents or need approval to bolster their adult confidence, it’s a powerful force in the workplace.
As a leader, you should tap into this.
Recognize the importance your approval plays with your team: a few lines of praise in an e-mail; recognition for a job well done in a meeting; personal thanks for extra time on a project. It doesn’t have to be big. In fact, the simpler and more low-key, the better.
Do offer approval. Give it often.
The best places to work really do thrive on creativity, energy and a well-defined structure. You need all to keep a business grounded and sharp. It keeps the workplace balanced.
Hire creative people and make them part of top management. Encourage continuous improvement from everyone. (One large improvement is easy to copy; lots of little things make copying next to impossible.) Insist on short, five-minute daily huddles to promote effective communication, ideas, and employee accountability.
Every company’s culture is a mixture of differing attitudes, beliefs, backgrounds and behaviors. But it is your internal communication that speaks most clearly about your organization’s true social culture.
How does your internal communication stack up? Think about how management gets important and casual information to employees.
• Is one-on-one discussion encouraged?
• Is internal communication casual or highly structured?
• Is most communication e-mail-driven?
• Are employees a part of the conversation, or “told” what to do?
• What‘s the typical location for company meetings?
• Are employees free to relax at company-sponsored events?
Observe the attitudes
Don’t tolerate bad attitudes. If a person isn’t happy, help them find it at another company.
A recent study at Baylor University published in the Journal of Organizational Behavior found that working with chronically rude, mean or bullying colleagues has far-reaching consequences. The study showed that this type of stress and tension often followed the employee home, causing unhappiness with a spouse or family and can even travel to the spouse’s workplace.
Bullying and mean-spirited behavior simply does not belong in the workplace. Whose job is it to make sure it doesn’t occur? Whoever is at the top. Leadership trickles down.
Make sure your leadership includes clear communication about behaviors that won’t be tolerated. Always live and breathe your workplace values.
Mistakes are OK
Allow staff to make mistakes. It’s how they learn.
“It was my idea, so I’ll ride it out until it works.” Recognize a little of yourself in there?
Thing is, there’s nothing better than making a mistake. It’s a great way to find a better way. To re-tool. To create understanding. To show your team you know when to say when, and head in a better direction.
It’s when you don’t realize your mistake — maybe letting your ego get in the way — that you lose. It’s the people that keep making the same mistakes that are the idiots.
Move forward. And eat a little humble pie in the process. It keeps you in shape.
Finally, and most importantly, give frequent performance reviews and schedule yearly wage reviews for everyone. Separate the wage reviews from performance reviews. If their performance doesn’t warrant an increase, tell them. Honesty is better than not letting them know.
David Harding is president and CEO of HardingPoorman Group, a locally owned and operated graphic communications firm in Indianapolis consisting of several integrated companies all under one roof. The company has been voted as one of the “Best Places to Work” in Indiana by the Indiana Chamber of Commerce. Harding can be reached at firstname.lastname@example.org. For more information, go to www.hardingpoorman.com
Congratulations to all of the nominees, finalists and winners in the 2012 Ernst & Young Entrepreneur of the Year Midwest Area program. For more than 25 years, Ernst & Young has celebrated the entrepreneurial spirit of men and women who make our economy vibrant. This has never been truer than it is today. The energy and passion from these entrepreneurs is being felt in a dramatic fashion throughout the Midwest right now. It is great to see!
Ernst & Young is the world leader in advising, guiding and recognizing entrepreneurs and founded the Entrepreneur Of The Year® Program to recognize those with a passion for “thinking big” and to bring together visionaries and leaders to inspire each other and our communities. We have gathered here and in 25 other cities across the United States to honor all of our regional finalists and welcome a new class of entrepreneurs into our Hall of Fame, recognizing their resilience, ingenuity and innovation.
We applaud them for overcoming challenges, inspiring others, opening new markets and, ultimately, fueling economic growth in the Midwest Area. Let’s celebrate their achievements, perseverance and tireless pursuit of business excellence.
Join us in congratulating the leaders of today — those innovators that have achieved their American dream right here in the Midwest. Ernst & Young along with our sponsors continue to be inspired by the entrepreneurial success of our nominees. The following list of stories highlight those individuals who pursued and obtained the coveted distinction of an Entrepreneur of the Year Finalist. Ernst & Young is proud to recognize and honor the accomplishments of these finalists.
Congratulations to all of the Midwest Area Finalists from Ernst & Young on your continued success.
RANDALL L. TAVIERNE is the Ernst & Young Entrepreneur of the Year Midwest Area director, Midwest Area Strategic Growth Markets leader and a partner with Ernst & Young LLP. Reach him at (312) 879-3695 or email@example.com or @RandallTavierne on Twitter.
Storch, AAR Corp.
Rabine, The Rabine Group
Wood, Sparton Corp.
PRIVATE EQUITY/ VENTURE CAPITAL
Maloney and Mike Evans, GrubHub Inc.
RETAIL AND CONSUMER PRODUCTS
McEnery, Cooper’s Hawk Winery & Restaurants
Schulman, Glentronics Inc.
Chalhoub, Heritage-Crystal Clean Inc.
Golden and Thaddeus Wong, @properties
Small and Jack Blumenstein, Gogo LLC
Sieja, kCura Corp.
Maling and Geoff Cubitt, Roundarch Isobar
Knock Knock! Who’s there? Iowa. Iowa who? Iowa lot of money for my marketing programs. Okay, so that might not be the funniest joke ever but it serves well for exploring humor as an effective business tool.
As people communicate more individually in areas of presentation and electronic media, many focus on creating a “professional” image, which simply means making it look like what’s expected. Sadly this often results in boring and forgettable websites, PowerPoint and videos. It doesn’t help the presenter connect emotionally nor differentiate from the other “professional” offerings.
Rarely do you hear people coming out of a business presentation saying: “That person was hysterical!” More often presenters attempt connection by tugging emotional heartstrings creating small trauma. In most film festivals, dramas outnumber, comedies by 20 to 1. Why? The great 18th century actor Edmund Kean answered us as he lay dying: “Death is easy, comedy is hard.”
Still, humor is a worthy aspiration, accomplishing tasks seldom achieved by serious approach.
- Humor establishes rapport – Almost all people love to laugh. Non-offensive jokes can easily establish likeability and trust. A joke related to a difficult situation can disarm a prospect or client when delivering “tough medicine.” Relationships are often built on experiences of shared humor. People do business with people they like, and if they smile and laugh every time you are near they associate you with happiness. Combined with knowledge, humor enhances expertise, demonstrating confidence and strength.
- Humor triggers memorability – Many strive to create “AHA! moments” in customer’s minds. This occurs when one is thinking one way and you turn their head to think another. Those are the very mechanics of a joke punch-line. In our example I suggest a Midwestern state and quickly turn it to a statement of finances. The unexpected wordplay registers in the brain as humor, which triggers endorphins that encode for memory. This is why a childhood joke exists in our repertoire decades after introduction.
- Humor creates alignment – A joke is based upon shared experience. Humor works well when there is communal understanding of the issues at hand. By identifying a common problem and creating a punch-line around it, insiders will adopt the punch-line as a trigger representing the issue. So when no one remembers to turn off the lights when leaving, a giant light switch painted on the wall makes people laugh and remember their responsibility without embarrassment.
Exploring humor research can be beneficial to creating memorable marketing, particularly in video. But suffice it to say if you just want people to like and remember you in a consistent and productive manner, simply follow the words of the late, great Donald Oconnor and “Make ‘em laugh! Make ‘em laugh! Make ‘em laugh!”
An Inc. 500 entrepreneur with a more than $1 billion sales and marketing track record, Kevin Daum is the best selling author of Video Marketing For Dummies. and ROAR! Get Heard in the Sales and Marketing Jungle. Visit him at KevinDaum.com or @awesomeroar
How often do CEOs need to talk to their accountants in order to effectively manage their company’s finances? Obviously, this question can’t be answered with a simple blanket statement: “X times a year for a total of Y hours should do the trick.” There are too many different types of businesses, each with different amounts of expertise and unique needs of their own.
But if you talk to even a small number experts in the accounting field, a couple of themes emerge. One is that when CEOs are contemplating unusual transactions, it’s always better to err on the side of having too much contact with their accountant than not enough. Another refrain is that any time a CEO has any doubts or unease about an upcoming transaction, it’s definitely time to call your accountant to let him or her know you have something you need to talk about.
“Typically, in a larger company, the CFO would take on that role,” says Mark Koziel, vice president of firm services and global alliances for the American Institute of Certified Public Accountants. “But what about the CEO who doesn’t have the C-suite and the finance function inside their organization? That’s where, in particular, we talk a lot about being the trusted business adviser for that CEO. Especially in family-owned businesses, you see this a lot. You need that financial adviser, but you may not need them full time, so you can lean on your CPA on a regular basis throughout the year.
“They should be there for part of the strategic planning sessions. If the CPA knows what’s going on throughout the year and is present for discussions about important things like expansion, employment and succession, then they can be better informed for when they do the year-end planning and consulting.”
The benefits of touching base periodically with clients throughout the year, not just at year end, is a common theme among those with experience in the accounting field.
“When you meet with clients during the year, you can go over their financial statements, among many other things,” says Sharon Cook, president of the National Society of Accountants. “You can make sure they are doing everything properly. And you can make suggestions about some of the other things they need to do, for taxes and for other financial purposes.”
Think, talk, transact
Talking to your financial team throughout the year enables your experts to make suggestions in advance of key transactions that can greatly alter the tax and financial impact of those decisions.
“When you get to year end, depending on what the CPA is doing for you — if it’s a compiled financial statement, an audited financial statement, a tax return — there are definite tax implications that could be affected,” Koziel says. “And maybe some decisions would have been made another way if the CEO had considered the tax implications of what they were about to do.”
Making assumptions on your own rather than asking professionals for guidance can lead to unpleasant surprises. Accountants come across these types of situations frequently in their daily interactions with clients.
“A situation that I find clients often have problems with is, for example, in a year in which they’re expecting a large profit, they want to be able to reduce that,” Cook says. “So one of the first things they think about buying is a car, because they think they’re going to be able to write that car off in full in the first year. Then, by the time you get the books and you’re ready to do the tax return, you have to tell them, ‘Guess what — you’re not going to be able to do that. You’re going to have some limits in terms of what you can deduct this year.’”
For many types of nonroutine transactions, getting advice beforehand from your accountant or finance team is almost always the wisest course for business executives to follow.
“Some of the types of transactions that should be discussed ahead of time would be, for instance, any type of big-dollar purchases that they’re looking at,” Koziel says. “Buying versus leasing is one that needs to be looked at carefully, such as whether you want to buy or lease a building. Another important one is business expansion: If they’re looking to buy a business or even sell their business, the whole M&A transaction and how that will take place is a very important thing to consider.
“Major investment decisions along the way could have significant impact. And succession of the business — that’s another huge issue. You should be having big-time conversations about that early on.”
Other nonroutine transactions that should be reviewed carefully ahead of time include borrowing money, major equipment purchases and like-kind exchanges.
“Before you do a like-kind exchange, you should definitely talk to your accountant to make sure it’s done properly so it won’t be disallowed somewhere down the line,” says Cook. “There are many types of like-kind exchanges. It could involve property that they own. A lot of times, especially in smaller businesses, it may involve cars or equipment that they have around, where they can exchange it and therefore not pay the tax that they would have had to pay if they had sold it directly to someone else.
“Any time a CEO wants to make a big expenditure on any kind of equipment, they need to talk to their accountant to make sure they’re getting the benefit of everything they have, especially if they want to borrow money to pay for it. Because if they want to borrow money, they’ve got to figure out, ‘What is that going to do to my bottom line? Is this something I really need to do, and is it right for me?’”
An accountant’s value to a CEO or a client company isn’t limited to figuring out the tax effects of transactions before they’re entered into. There are many other types of general business issues for which an accountant can provide valuable advice.
“Strategic planning is a big one,” Koziel says. “One of the best services a CPA can provide to a CEO is to just get them in a room for a day and sit down and talk about the business. Do a strategic planning session. Make it formal, kind of like a board of directors meeting.
“Having frequent conversations throughout the year is useful in many ways. The beauty of the CPA environment is you gain a lot of knowledge about particular industries. Take construction, for example. Typically, the CPA has more than one construction contractor client, so they see good habits and bad habits that are out there, based on other businesses in that market. And they also can sometimes translate things to other types of businesses. Maybe it’s a customer service strategy in a certain retail business that could be replicated in, let’s say, a not-for-profit that you might have as a client.
“The ability to observe how a variety of different businesses operate and being able to assess the good habits from the bad habits and recommending the good habits to other types of businesses that are in their client base — these are valuable services that CPAs are in a position to offer.”
Another important service that accountants can provide is keeping tabs on key financial line items to watch for significant changes, then investigating those changes to determine the factors that are causing them, and, if needed, recommending ways to counteract the changes.
“If you keep in close contact with your clients, especially if they’re doing their own accounting in-house, one of the things you can do is review their gross profit percentages,” Cook says. “Are they staying consistent? Are they changing dramatically from one period to another? What’s the cause of that? And you can sit down and go over that with them and see if there’s a problem. It may be in their inventory control, if they have inventory. Or is the cost of their regular purchases going up? And if so, what do they need to do to offset that? Does that mean that they need to find a way to increase sales? Or do they need to have better controls on what’s in inventory and how it’s coming out of inventory?”
The definition of trust
One of the accountant’s main goals is to achieve trusted business adviser status with his or her clients. It’s a prestigious standing, and it must be earned over time.
“It’s about giving your clients the absolute best service you can provide,” Cook says. “To be able to review and make sure they’re handling their affairs properly, to produce good financial statements, to have the best possible relationship between the accountant and the CEO, and ultimately, to make sure that their business prospers. That’s the key. That’s what you aim for.”
Koziel concluded by telling a story — “the ultimate story of a CPA as a trusted adviser,” as he calls it.
“I was at lunch with a CPA friend of mine about a month ago, and he says to me — because he’s heard me say time and again: ‘Trusted adviser, trusted adviser’ — he says, ‘You know, I never really understood the meaning of “trusted adviser” until just this past weekend. I got a call from the wife of a client of mine. The client is a construction contractor; he owns a construction business.’
“This guy was a huge car buff and had a warehouse full of antique cars. He was in the warehouse tinkering one day, and he fell to his death off of a ladder — changing a light bulb, of all things. So he says to me, ‘I’m sitting there last weekend, and this client’s wife calls me. … A little while later, I’m in her living room. It’s the wife, the two daughters, the two son-in-laws and me.’ He says, ‘That is the trusted adviser relationship. That’s exactly what you’ve been talking about. The only one that they felt comfortable enough with — the only one they felt confident enough with as the outside consultant to the family — was me. It’s almost like I was part of the family.’
“That’s the type of relationship that you start to see in these businesses with their CPAs,” Koziel says. “And as a CEO, if you don’t have that trusted adviser relationship now — well, we’re talking about your life’s savings. Whether it’s invested all in the business or whether it’s held in other types of assets — these are your life’s savings. Who are you going to trust with those types of decisions? And you’d better have that person with you year-round, to help you make better decisions all along the way.”
HOW TO REACH: American Institute of Certified Public Accountants, www.aicpa.org; National Society of Accountants, www.nsacct.org
As an executive, your overall well-being consists of your effectiveness combined with your happiness. Effectiveness means that you are able to produce desired results; happiness means that you are in a state of well-being and contentment.
Most executives spend a good amount of their time worrying about effectiveness. They set tough goals and push hard each day to achieve them in the most effective manner. They are results driven, and any thought of happiness comes only after the results are achieved.
This begs the question: Can a busy, hardworking executive be both effective and happy?
I believe the answer is yes. In fact, I am convinced that better results stem from increased happiness. With this in mind, here are some tips to consider that will increase your happiness as an executive:
Start with a happiness exercise
Take out a piece of paper right now and list all the things in life that make you happy. DO NOT censor them. List them as they come to mind. Let it free flow from your mind and heart. List as many people, places, situations, causes, activities, feelings and opportunities as you can possibly dream up.
Now, get in touch with your mind and heart and begin to narrow the list down. In the end, you want to have a list of no more than four things that make you happy.
You now have within your grasp the areas where you should focus your energy, time and resources. The items on the list are at the very core of your personal happiness.
Happiness in all areas of your life is the key that unlocks great measures of effectiveness. Once discovered, your personal happiness will have a direct effect on your business effectiveness.
Take this exercise seriously. Be open, honest and determined. You will be surprised at the results.
Stay happy through ongoing education
Never stop learning.
We must be surrounded with people who know more than we do. They must be a part of what we do with our life and business.
Successful, effective executives know that education does not have an expiration date.
When was the last time you put a teacher or coach into your business goals and plans?
What new thing have you learned lately? Are you willing to stretch your mind to consider more than you already know?
Happiness can be found in a good teacher, trainer or mentor. Look for someone who helps you develop new skill sets and fosters your growth. Allow them to push you to consider new ideas, thoughts and ways of working, acting and leading.
I know this is easier said than done, but consider the fact that stress is the #1 killer of a healthy body and mind. Stress eats away at the foundation of your happiness. It distracts you, wears on you and drags you down.
Meditation, yoga, hiking, exercise and deep breathing exercises help reduce and even eliminate stress. Each of these has been shown to reduce the risk of heart disease, diabetes and other ailments.
Do not overwhelm yourself with the thought of adding each of these to your life. Pick one that interests you and do it. Make a deliberate choice to incorporate a stress reducing activity into your daily life.
Consider this: The absence of stress brings on the presence of happiness.
Have an attitude of gratitude
Our attitude of gratitude serves to focus our minds on the things we have and the things we want, desire and need to live an even fuller, more meaningful and happier life.
In the end, gratitude is not just an attitude – it is a choice.
When we choose to be grateful and to express that gratefulness, we find our lives being shaped by its power. When that happens, we move our life to greater heights of happiness and effectiveness as an executive.
The basis of this article is that a hardworking, results-driven, empowered executive can find ways to be both effective in his or her work and experience happiness in their life. Although we see it far too often in the workplace, the two do not have to be mutually exclusive.
An executive that takes the time to think and dream about the things that truly make them happy, who is willing to stay fresh through ongoing education and who works hard to eliminate stress is an executive who has found the secret to being both happy and effective.
I wish you all the best.
DeLores Pressley, motivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She helps individuals utilize personal power, increase confidence and live a life of significance. Her story has been touted in The Washington Post, Black Enterprise, First for Women, Essence, New York Daily News, Ebony and Marie Claire. She is a frequent media guest and has been interviewed on every major network – ABC, NBC, CBS and FOX – including America’s top rated shows OPRAH and Entertainment Tonight.
She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” To book her as a speaker or coach, contact her office at 330.649.9809 or via email firstname.lastname@example.org or visit her website at www.delorespressley.com.
If you’re like most CEOs, your day is spent rushing around from appointment to appointment, both internal and off-site, meeting people, solving problems and plotting strategy. The hours fly by, days blur into weeks, and the years start to blend together into a nonstop race against time.
Take a moment to ask yourself if this lifestyle makes any sense. What race are you hoping to win? What’s the reward when you get to the finish line, assuming you even know where the finish line is?
John Ortberg, author of “The Life You’ve Always Wanted,” says it’s important to ruthlessly eliminate the hurry from our lives. If you are in a hurry, there is little time to care about people. We need to slow down, even to the point of solitude.
While we are running our nonstop race, the people that suffer the most are those around us. Friends, family, colleagues and employees are often ignored as relationships are neglected in favor of the next big deal.
Ortberg suggests forcing yourself to slow down and put yourself in a position to wait. For instance, pick the longest line at the grocery store or take the long way to work. Doing so will help train yourself to slow down and be patient.
You are the person that sets the pace in your company, so if you slow down and make sure things are done right, others will do the same.
Working at a pace that’s too fast typically results in things being overlooked — things like employee recognition. When you don’t recognize and reward your employees, their job satisfaction can decline and they may leave. For every person who leaves, you and your staff have to dedicate more time to finding a capable replacement, resulting in an even faster pace as time is lost to recruiting and training. It can quickly become a vicious cycle.
Enjoy life by slowing your pace and being more productive, both at work and at home. Slowing down doesn’t mean you aren’t getting things done, it means you are doing things right and building relationships with people.
Not every transaction will turn a profit in business, but you can bet that almost every relationship you have with people will pay off in the long run. Isn’t it time you started investing in those relationships by taking the time to slow down and build them?
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
The art of buzz: Reasons people talk about products and services and the best ways to seed discussionsWritten by Guy Kawasaki
Emanuel Rosen is the author of the national bestseller “The Anatomy of Buzz” (Doubleday, 2000) and “The Anatomy of Buzz Revisited: Real-life Lessons in Word-of-Mouth Marketing” (Doubleday, 2009). Prior to writing these books, he was vice president of marketing at Niles Software where he was responsible for launching and marketing the company’s flagship product, EndNote. He holds an MBA from the University of San Francisco. In this interview, he brings us up to speed on the techniques for generating buzz that every small business owner must master.
Q: Going back to fundamentals, why do people talk about products and services at all?
A: Buzzing is in our genes. We are programmed to share information with friends about where to find our next meal and about the tiger who’s about to have us as his next meal. We talk to connect, so when my daughter tells her friends about the new sweater she bought, she’s also establishing and maintaining her social ties. We buzz to talk about ourselves. If I tell you about a 10-day dog sledding trip in Alaska, I’m also telling you how adventurous I am.
Q: Which comes first, buzz or ink?
A: Usually it starts with some buzz that is followed by press coverage, which can take the buzz to a whole new level. Grassroots support can actually help you get ink — sometimes buzz is the best press release because it gives journalists this warm and fuzzy feeling that your story is for real and that there’s true excitement for it. Don’t get me wrong, if CNN calls you before your product is out, don’t tell them that you’re waiting for some grassroots buzz to build, but usually it doesn’t happen that way.
Q: Which comes first, buzz or sales?
A: There are some highly anticipated products — Halo 3 comes to mind — that get tons of buzz before a single sale. This is the exception. Since product recommendation usually starts with product experience, you need to have some people out there who use the product and hopefully get excited about it. How do you get these early customers? Part of it comes from word-of-mouth marketing methods, like seeding and sneak previews, but it also comes from traditional sales and marketing techniques. If your product is contagious in some way, then these early users will start buzzing about it.
Q: What are the essential elements of seeding a product?
A: The key point to understand is that although we’re all connected to each other, information about new products rarely spreads like a wild fire. Information tends to get stuck because we live in somewhat isolated social clusters. To accelerate buzz, companies seed their product in many different clusters. The ideal seeding campaign is done on a large scale and lets people have a firsthand experience with the product. You want to reduce the price barrier as much as possible, so the product is given for free or at a reduced price.
Q: How do you seed a website or free service?
A: The good news is that the price barrier doesn’t exist. The bad news is that the thing you’re seeding is less tangible. The basic idea is the same. You identify clusters of people by geography, area of interest, by academic discipline or whatever other classification makes sense in your case. You then approach some people in each cluster trying to engage them with the service. This is a challenge that is shared by other products. The fact that a publisher seeds the market with advance copies of a book doesn’t guarantee that people will read it. But with some follow up and encouragement and some buzz from fellow users, some more people eventually try the product and start buzzing about it too.
Q: What are the characteristics of a contagious product?
A: The best buzz comes not from publicity stunts but rather from the product itself. A product or service that makes you say, ‘Wow!’ when you use it for the first time is the classic contagious product. Other examples: products that evoke strong emotions — “The Blair Witch Project” — or reward you for talking about them — Facebook.
Products that are visible can be contagious as well — think of the first time you saw someone with an iPod. Even abstract ideas can become contagious this way. The idea of living with cancer was translated into the LiveStrong yellow wristband, which started millions of conversations about the topic.
Q: What can stop the spread of buzz?
A: Since I just mentioned LiveStrong, let me tell you about an interesting study. A research team at Stanford sold LiveStrong wristbands to students who lived in one dorm on campus. A week later, they started selling these wristbands in a neighboring dorm that had a reputation as a ‘geek’ dorm with a stronger academic focus.
What happened once the ‘geeks’ started wearing the wristbands? A week later, the research team measured a 32 percent drop in students wearing the bands at the first dorm. So sometimes, when we detect that ‘the wrong people’ are using your product, we stop using it and buzzing about it. This is true especially for products that have to do with our identity.
The most common forces that block buzz are noise, inertia and forgetting. We’re distracted by competing messages, we like to stick to ‘the good old way’ of doing things, and we forget what our friends told us. It is one reason why buzz needs to be accelerated. Even delighted customers might forget about your product and run out of opportunities to talk about it.
Q: What should you do if someone who has never used your product is bad mouthing it?
A: One of the things that surprised me most as I was working on the new edition of my book was that this type of negative buzz is quite common. One study found that 30 percent of negative word-of-mouth was by people who never owned the product. If you can identify the person who’s bad mouthing your brand, you might want to let them try the product. The problem is that you usually don’t know who they are, which brings us to another reason for why word-of-mouth marketing is so important. You have to counterbalance this constant trickle of negative comments with honest, positive recommendations from happy customers.
Q: What should you do if someone who has used your product is bad mouthing it?
A: First, listen to what they are saying. Our natural tendency when we’re attacked is to fight back, but negative comments may come from an actual bad experience. This gives you an opportunity to do two things. Solve that customer’s problem, which will often turn her from a detractor to a promoter. Even more important, it may help you identify a problem in your system, fix it and reduce negative buzz from others.
Q: Who is more likely in these Internet days to talk about your product: someone who’s had a good experience or a bad one?
A: There are two types of bad experience. There’s ‘I didn’t like this hotel too much,’ and there’s ‘The guy at the reception insulted me when I asked for towels and then sent up a dirty one.’ Frustrated customers are very likely to share their experience. However, it turns out that most buzz among consumers is positive. This may seem like a contradiction, but it has some simple explanations. One of them is that most of our experiences as consumers are actually positive.
Q: What is the role of old-fashioned advertising these days?
A: It is fashionable to say that advertising is dead, but I don’t agree. Very few products can live on buzz alone. Advertising can help a lot — at least good advertising can help a lot. First, in creating awareness and building the pool of people who can buzz about the product. Second, a good ad can prompt me to tell my friends about the product. Third, a good, authentic ad that brings in real people can stimulate buzz.
Q: How has technology changed buzz and word-of-mouth marketing?
A: It hasn’t really changed what we talk about. We still talk about ourselves, we brag, we seek advice, we gossip, we connect. The Internet’s biggest effect is that it accelerates buzz. In addition, it doesn’t only let us tell our friends about the products we use, but also lets us show them these products through videos and photos. It has enabled aggregation tools such as Yelp or TripAdvisor. In essence, it gives more people more opportunities to share information with others, which directly translates to more buzz.
Q: How can a company effectively measure the buzz it’s generating?
A: The simplest method is to ask your customers how they heard about you. You can measure the daily mentions you get on blogs and on Twitter. You can supplement this with traditional marketing research to learn what customers who don’t use these services are saying. Whatever method you choose though, you need to measure on an ongoing basis, if you want to detect any effects. Companies such as ChatThreads, The Keller Fay Group and Nielsen Online provide buzz measuring services. WOMMA, the Word-of-Mouth Marketing Association, offers lots of resources on the subject.
Q: Do you believe that there are key influencers who companies should focus on because of their insight, power and prestige — that is, an ability to lead a market as their wisdom trickles down?
A: The importance of influencers varies by industry. I suspect that they are more important in the pharmaceutical industry than in the yo-yo industry. Regarding the ‘trickle-down’ theory — this is not the way that buzz flows — especially today, buzz flows in all directions. I use the term hubs to describe people who talk more than average, and I make a distinction between social hubs and expert hubs. Both can definitely help a company spread the word, but companies should encourage everyone to talk, not only hubs.
Q: Where do you draw the ethical line on generating buzz and word-of-mouth marketing?
A: One key idea here is disclosure. Word-of-mouth marketing is not about tricking people. It’s about openly inviting them to try the product and talk about it. WOMMA offers a code of ethics that can help. When you’re trying to build buzz, you want to push the envelope and think outside of the box. And when you look for original ideas, you can’t police your thoughts. But after the brainstorming, you have to change your attitude dramatically. This is best done the morning after — over some strong coffee. Think again about your wild new idea. Ask other people what they think. Ask your customers and people in the community if you are crossing the line.
Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the Web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of 10 books including “Enchantment,” “Reality Check” and “The Art of the Start.” He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at firstname.lastname@example.org.
There’s a classic line from the 1970 movie “Love Story” that has become a part of our popular culture. In the drama, the dying heroine played by Ali MacGraw says to her husband, played by actor Ryan O’Neal, “Love means never having to say you’re sorry” as he apologizes for his anger. It is certainly a memorable and tear-jerking line, but is saying, “You’re sorry” all that bad if it can soothe a wound caused by someone speaking or acting out before thinking?
Disagreements and anger are a reality in the workplace and in life in general. Various people react in different ways when under pressure. Some lose their cool completely and say things they instantly regret, while others launch into tormenting the perceived offender with the silent treatment. No matter the technique used to punish, all of these methods quickly become tiresome and, more importantly, adversely affect the workplace.
Too frequently in the work environment, many people just can’t suck it up and utter the two simple words, “I’m sorry,” even when they know they’re dead wrong. It’s not a macho thing either, as women don’t behave much differently when they feel put upon. What’s a boss to do when this stubbornness becomes problematic?
In a word: intervene. When not controlled, these unreasonable, obstinate antics can become time-consuming and disruptive. It could all start with an impetuous negative e-mail or a less-than-mature voice mail left in the heat of battle that cascades into a futile distraction, as otherwise effective and seemingly sensible employees act out as if they’re in a 20- or 30-year time warp, behaving as if they’re back in the third grade rather than adults in the workplace.
The most expeditious method that works with either the protagonist or antagonist in an office drama is to call a spade a spade, so to speak, and get the feuding parties together and cut to the chase, making each person agree to bury the hatchet but preferably not in each other’s skull. If employees’ anger management issues are left to fester, they can easily result in other people in the same work environment taking sides, and in short order, you will find yourself in the midst of a Civil War. The only thing guaranteed when this occurs is that there will be casualties. It is incumbent on the ruling manager to make sure that the company doesn’t wind up as the victim, incurring a loss of productivity and causing everyone around the two factions to feel as if they’re walking on pins and needles.
While many times it would be easier for the boss to ask one of the warring participants to approach the other to work out their differences, this tactic just takes too much time and the outcome can be iffy. It really doesn’t matter who is right or wrong but that the nonsense is stopped dead in its tracks. The best way to accomplish this is to make it more than abundantly clear that anger in the workplace is a nonstarter and could be a career-inhibitor.
Allowing employees to exhibit a lack of civility will cause a domino effect that will lead to no good. Civility does not just apply to peers. Instead, it’s applicable to all who must work together, including superiors, subordinates and even fellow board members. Don’t confuse civility with agreeing or disagreeing with someone. It also doesn’t mean one has to believe that someone is effective in his or her role. Instead, what must be required is that those within an organization, no matter what level, simply take the higher road and respect not necessarily the person but the role and make the assumption that everyone has a part in working toward shared goals, until it is proven otherwise.
Once everybody knows the rules of engagement, many times the negative engagement suddenly ends and it’s back to business as usual. When that doesn’t happen, it’s time for offenders to be forced to go to their respective corners so as not to do each other or the company any more harm.
To promote coexistence when no one wants to take the first step and say, “I’m sorry,” it’s up to the adult in the room — and that would be you, the boss — to step into the fray with your whistle to call a permanent timeout to these types of disruptive shenanigans.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at email@example.com.
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Launching a new venture is probably one of the most thrilling moments for any entrepreneur. It’s a birth that often brings forth a long-standing dream for the founders and is steeped in joy, pride and egotism. However, for many new captains of industry, the dream vanishes like smoke shortly thereafter. In fact, just half of all businesses survive the first five years, and only one-third survive 10 years, according to U.S. Small Business Administration statistics. Thus, it’s worth investigating why projects fail.
In a large majority of cases, the business owners failed to raise sufficient capital to fund the labor, marketing, taxes, insurance, legal expenses, bookkeeping, supplies and costs of goods for the business. Oftentimes, they underestimated expenses and overestimated how quickly revenues would increase. In other cases, they knowingly entered the market with insufficient cash because of limited credit and savings.
Other failures are caused by an implosion from within. Specifically, the founding partners reach a point at which they disagree on how to build the business and then fail to come to a consensus that leaves all parties feeling invested in the project. Or the business develops naturally in a way that calls for the founding partners to take on roles they don't want to assume. In either scenario, the remaining partners must buy out the exiting partners in order to stay in business or fold up shop.
In the worst collapses, the venture was just poorly conceived. The founders developed a business concept based mostly on their own personal experiences or anecdotal evidence. They failed to conduct or acquire scientific research on whether there was sufficient demand for their proposed products or services. They made a cursory study of the competition. Or they made assumptions about what drives potential customers to buy when designing marketing campaigns, rather than collecting data that revealed true trends in buyer motivations.
In these cases, the founders could have mitigated their chances of failure with some thoughtful planning before the shingle was hung. Would-be entrepreneurs should clearly write out their vision with detailed specifications and the cash that will be needed to complete it. They should plan contingencies for overcoming potential obstacles.
They also should identify the strengths and weaknesses in any potential management team and seek out individuals who can fill the holes. For instance, a visionary leader who prefers to focus on the big picture will usually need someone on board who loves the details in order to ensure the project is thoroughly vetted and structured.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.