Getting Employees to Think Like Entrepreneurs

The Wall Street Journal’s very informative Independent Street blog carried an item yesterday about getting employees to think like entrepreneurs. The keys are to: Organize them into small groups, share profits, embrace failure,  reward ideas and promote risk takers.
Those are all worthy ideas. But  they speak to the fact that employers tend to think “programs” when it comes to fostering an ownership mentality. The thinking goes: If we give incentives, share profits, write stories in the company newsletter about successful or unsuccessful ventures and make everyone a hero,  we’ll get ownership thinking.
A fundamental piece is missing: The top-down piece.

If owners want employees to think like them, they have to emotionally meet the employees where the employees are.  Workers will be more likely to think like owners if they have executive leaders who demonstrate compassion; who take workers’ feelings into consideration when making decisions; who express their feelings about people; who manage their own emotions well at work and project a strong but humanistic image. It is company leaders’ people skills that matter most to fostering ownership thinking.
The company I grew up in, where I worked from age 24 to 41, was such an organization for most of that time.  CMP Media sponsored frequent programs to foster entrepreneurial thinking.  They sent many employees to every conceivable training course to improve our business and sales skills. They even paid for me to go to Columbia for an MBA.
But what made the company remarkable was the husband and wife team who founded it.  (That’s Gerry and Lilo Leeds in the photo above.) They had superb emotional intelligence skills. They could read the mood of the work force and respond quickly. They had values they brought to work every day (the very well-off CEO drove an old station wagon to work for years and years). They were always approachable. That doesn’t mean they weren’t tough when they had to be. They made lots of difficult business calls along the way.

As employees and managers, the idea of “What would Gerry and Lilo do?” was never far from our thoughts as we made decisions that affected the organization. We didn’t own the  company, but because of them, we acted as if we did.

 

Franchising After a Layoff: The Cure May be Worse than the Disease

There’s a provocative post on one of StartupNation.com’s blogs. The title is,  “Out of Work? Consider Buying a Franchise.” The writer cites the downfall of Wachovia Bank and addresses the 5,000+ workers in Charlotte, NC, who have already lost their jobs.

The author writes, “When the unemployment rate is high and large corporations are downsizing, buying a franchise is typically a good alternative for someone with the entrepreneurial itch.”

Nooooooooooooooooooooooooooooooooooo!

Buying a franchise isn’t good for an itch. In fact, franchising can make you want to scratch that itch until you have a huge rash. An infection. Gangrene. Amputation! You get the point.

When you get laid off (and I know whereof I speak, I was there once seven years ago courtesy of Ziff Davis Media), you may not be in the best psychological frame of mind. Your confidence is shaken, your routine disrupted. You’re disoriented. To distract yourself, you start Googling and clicking and, before you know it, you’re a franchisee. You’re still hurting from what happened in your job as you embark on something that will test your limits as nothing has before.

You are not running toward something as much as running away from something. And it’s just a matter of time before you can’t run fast enough or far enough to get away from yourself.

If you find yourself laid off from a financial services job or any corporate job amidst the economic chaos that is unfolding, and you are fortunate enough to have enough cash in the bank to even think of buying a franchise, my advice is to wait a while. Consider taking a few months to do some things completely unrelated to work.  Travel, spend time with your family, read–whatever pleases you.  Even if you’re a “Type A” with a short attention span, resist the urge to jump too fast into something else. You may not be the franchise or entrepreneur type, and if the itch goes away by itself, that’s a lot better than spending your nest egg on a dubious prescription.

Have experience with buying a franchise before you were ready? Or one that totally contradicts my point of view? Let me know.

 

These Entrepreneurs Move their Own Cheese

I first met Emily Sunderman when we both worked at CMP Media, a publishing company on Long Island, in the 1990s. She was a business analyst and a great person. We both moved on and I hadn’t heard of her again until I stumbled upon her online.  Wouldn’t you know it, she and her husband, Michael Lee, are entrepreneurs. Their cheese-making business, Twig Farm, is based in Cornwall, Vermont. We reconnected and she and Michael were gracious enough to take time away from the goats to answer some questions about their entrepreneurial journey. I told Emily before she answered these questions that, looking at her website, I wanted to be a cheese farmer in Vermont just like her! After reading her answers, that fantasy hasn’t changed. Thanks Emily and Michael, and continued success!

What has been your greatest success as entrepreneurs? And your biggest failure?

Biggest failure first.  We tried raising buck kids for the Easter market this Spring—hundreds of hours of labor, lots of purchased feed, and we lost our shirts at the livestock auction. Live and learn.  Greatest success is we make a good product that we’re proud of and that people need, or at least want, very much.

What advice do you have for would be executive-to-farmer entrepreneurs?

Animals don’t take weekends, holidays, or two weeks paid vacation. There aren’t very many people who want to work Christmas so you can drive to Auntie’s.

When I went to your website, my reaction was, “I wish I was a goat cheese farmer!” It looks so idyllic. What’s it really like to be in the cheese-making business in Vermont?

It’s a lot of fun doing one shitty job after another–sort of a definition of farming. If you know that to begin with, it makes it all a lot easier.  Specifically to the cheese-making side of things, we’re part of a friendly community that rarely sees one another. We make a ridiculously small quantity of cheese, and have gotten very good at saying, “We don’t have any more cheese to sell you” in lots of very gentle ways.

Why did you get into this business, and what were your goals when you started in 2005?

I don’t remember.

How have your outlook and goals evolved since then?

We have a goal to take a family vacation next year.

What’s a typical day like?
Michael gets up at 4:45 to set up to milk the goats. By around 5:15 he gone out–this time of year wearing a headlamp as it is dark–to find the goats in the pasture and lead them to the milking parlor.  Milking and cleaning up are complete by around 7:30 and then Michael gets the milk into the cheese vat to start warming up.  We have breakfast together around 8:00 then chase down shoes for our toddler.  Michael drives our three year old son Carter to day care and Emily starts email and telecommuting at her job as a web traffic analyst. The cheese is usually ready to stir when Michael gets back from daycare drop-off and the cheese made is usually in the molds by lunch time.   We generally have cheese sandwiches together at noon.   After lunch Emily goes back to web traffic and Michael moves fences for the next pasture rotation or some other regular farm chore.   Michael sets up milk around 3:30 and is done with afternoon milking and clean up around 5:45.  Emily goes to pick up Carter from daycare at 5 and is back around 5:45 and we cook dinner and play at being pirates or firefighters.  After dinner the cheese is usually ready to move to the brining process in our walk-in cooler, so Michael moves the process along.  We take turns putting Carter to bed, and then read the New Yorker and do email before turning in for the night.

Has the larger economy (oil prices, feed prices etc) affected your business and if so how have you adjusted your strategy?

Yes–feed has doubled in price since we started four years ago.   We’ve raised our prices a little and are now buying milk from other farms as well so we can make bigger batches of cheese.

What do you love most about your business?

No boss!

What do you like least about your business, or hate most, if you feel that way?

It is no fun when an animal gets sick and neither we nor the vet can make them better.

Michael does cheese-making, Emily does marketing and web support. Who does everything else? Do you two do it all?

Emily looks after the bookkeeping and marketing.  We have a high school student that helps us on Sunday mornings with packaging cheese for shipment.  We also have help with milking on Saturday mornings when Michael sells cheese at farmer’s market and on Sunday afternoons so we can have family time.   Michael takes care of the animals and makes and ages the cheese, and everything else.

I live on Long Island. How can I buy your cheese?

You can buy our cheese sometimes at Lucy’s Whey in East Hampton, or at Saxelby’s Cheese in the Essex Street Market in New York City, or at Bedford Cheese in Brooklyn. Murray’s in New York City usually has our cheese too.

 

Sometimes You Gotta Bust Some Balls

Maybe this situation sounds like your business: you have a highly transactional business with lots of customer orders and deliveries. Orders are taken by phone (not online).  Once the orders are taken and entered into a database, a manager (or two) checks them for accuracy. Sometimes the managers are busy and mistakes get through — pricing that’s wrong, items specified that you no longer offer, addresses entered incorrectly. Because of this system, you have an error rate of about 5%. At the volume of business you are doing, that means about 10 customers a week are affected, and are they ever angry about it.

So what’s wrong with this system? A few things:

• The employees taking the phone calls from customers are actually trying to avoid picking up the phone. They are paid an hourly wage; they can see each other in the office. It becomes a game of “it’s your turn to answer the phone.”
• Once they do pick up the the phone and are disturbed by customers, they have no incentive to check and double-check their own work. After all, a manager is going to check it anyway. They make $9 an hour and are watching the clock until it’s lunchtime or time to go home.

This was an actual situation in a sizeable business run by a friend of mine. Here’s what happened next:

He hired an outsider (from the same industry) to head up sales. The New Sales Guy has a reputation for being (can we say this on the Internet?) a ballbuster with employees. Very demanding. Customers love him though–he delivers on his promises with fantastic commitment and quality. Here’s what New Sales Guy did:

• Teams. Reorganized the phone-order takers into teams of three: two salespeople and one to do data entry and quality control. The managers were immediately taken out of the order process.
• Performance Linked to Pay. The teams were given responsibility for checking their own orders. There would be no one else to blame for mistakes, as all orders would be easily tracked back to the team. Most importantly, the team received a commission on each order. If the team did its job well, each team-member could earn up to an extra week’s pay every month. If they made errors, no commission.
• First Ring. When the phone rings, if the customer is new, the salesperson who takes the order now gets that customer for life and a small annuity commission on all orders. That new customer  belongs to their team.

Sometimes salespeople complain to the boss about New Sales Guy. The boss rightly says, “He’s your boss now, not me. Work it out with him.” The boss now has a lot more time to work on boss-type things.

The error rate on orders is down 90%. It took six weeks to make the changes and “re-educate” everyone. The teams don’t mind so much about New Sales Guy being  a ballbuster sometimes, because they have a pocketful of extra cash, which, let’s just say, cushions the blow quite a bit.

 

What to Say when a Great Vendor Raises Prices

When my CPA recently sent me an email saying he was raising my monthly fee, what do you think I said when I emailed back?

I said, “Thank you, Mike. You deserve it.  Congratulations! And thanks for being a great accountant and adviser.”

Sometimes, price increases from vendors are justified not just because of the rising cost of doing business, the skyrocketing price of gas, or other factors. Great service providers get to raise prices regularly and their customers could care less about having to pay more. How many of your vendors would you say that about? How many of your clients would say that about you?

 

When Franchising Goes Wrong

I like to think I walk the entrepreneurial talk. In addition to writing about entrepreneurship, I do it. I’ve been doing it for over six years in a national franchise. It’s been a long, sometimes painful, but now increasingly rewarding experience.

The franchisee base of which I am a part is a bell-curve of success–some people are killing it, some are getting killed by it, and most are somewhere in the middle. In the past week there has been an email thread going around from some of the people who are on the left side of the curve. One asks if anyone is interested in initiating a class-action lawsuit against the franchisor for selling them “a bill of goods,” for “disclosure issues,” for lack of support.

Over the years, many prospective franchisees have called me and asked my opinion of the franchise. They want me to tell them whether it’s a good idea for them to become a franchisee. My answer is always the same. I try to discourage people from buying this or any franchise. Not because I don’t like the business–I love it and it’s a big success for me. But people who seek affirmation from strangers to make the biggest financial investment of their lives are getting themselves in too deep. So it’s easier for me to tell people who are interested in this franchise (or others), one or more of the following things:

• Why do you want to buy this franchise? Are you running away from something?
• You’re going to invest $300,000 or more (for those who decide to open a retail store). How long will it take you to make that back, and what percentage return on that investment do you expect? How does that compare to taking the same money and buying a no-risk Treasury bill? Are you just bored? How about getting a job you like better than the one you just took a buyout from?
• Have you ever in your life done anything entrepreneurial? If not, what makes you think you will be successful with a franchise? And if you fail, what happens then? Will you lose your house? Your 401(k)? Your marriage?

One franchisee, who has become a valued business partner of mine doing profitable projects together, saw the email exchange and asked me, “What the hell is going on!?” I told her this: “Ignore stuff like this. Negativity = Failure. Positive attitude + action = Success.”

It is incredibly easy to psych yourself into a tailspin when you own a business. Or to raise yourself up and keep going until you find the formula, the business model, the customer set that works.

I’m a collector of franchising stories, so if you have one, good or bad, feel free to share.

 

Succcessful Delegation Starts with Small Steps

One of my clients, Ken, runs a very successful service business. He has two employees who do administrative tasks. His problem: he hasn’t been able to free up enough time to pursue projects that capture his imagination and will propel the business forward — largely because he is not comfortable with delegating. By inventorying his work habits and style, we found that:

• His default work style is to do things himself rather than delegate to his staff. (For example, he opens his own mail, although his staff does put it in a separate stack for him.)
• He listens to dozens of voicemails every day, of which a third to half are solicitations from salespeople he does not know for items he does not need. Also, he listens to them as soon as the red message light flashes on the phone, which makes it difficult to have uninterrupted time to concentrate.
• He has not trained his staff to handle clients as well as they could. They answer the phone for him and take messages but don’t try to resolve the caller’s issue themselves.

Given that Ken is an ambitious entrepreneur who is eager to launch many more business ventures, he wanted to address these issues as soon as possible. Ken agreed to make some critical changes to the way he does business. Here’s what he has done so far:

• Started a weekly staff meeting to delegate projects and get the staff’s feedback on how they can do more substantive work. His employees were thrilled and look forward to bringing their ideas to the meeting. They are being challenged like never before and have more job satisfaction.
• His staff now screen all voicemails and handle everything that does not absolutely require his attention. Ken has given them a list of clients who are priority and must get a call back from him immediately, but most calls can be handled without his intervention.

These changes seem easy, don’t they? For some they are, for many they are not. I almost didn’t write this post, thinking these points were too basic. Then I thought of a time about 20 years ago when I got into a lot of trouble because I was a miserable delegator. Here’s what happened:

I was editor of weekly business newspaper and one of my functions was writing the headlines for page one. Little did I know I was about to have my own “Dewey Beats Truman” moment. I wrote a particular headline that was really exciting and a bit shocking. Problem was, it had little to do with the story that followed it. Our process for putting out the paper was that every reporter and editor in the newsroom read a copy of page one to look for mistakes. They all saw my headline. They all knew it was wrong. But no one said anything!

Why?

They assumed that since I wrote it, it was the headline I wanted. And since I did so many other things myself in my (then) autocractic style, they didn’t think I’d want my authority questioned. Well, I wish they had challenged me. When the paper came out on Monday I was covering a convention and the CEO of the company I’d written the headline about was the keynote speaker. He held up the paper and railed against the false headline. I wanted to sink into the floor.

It’s not easy to trust other people with your business. When you know you can do it better and faster yourself, it’s so tempting to take that shortcut. Entrepreneurs who learn managed delegation (as opposed to delegating without giving clear direction) gain efficiency and have time to create new opportunities. And avoid potentially embarrassing (or worse) mistakes.

 

Insights from an Entrepreneur’s Entrepreneur

One of my favorite entrepreneurs is Jamey Bennett, founder and CEO of LightWedge. If you read, you know what a LightWedge is. If you read a lot, you have more than one and have one for everyone in your household. I’ve known Jamey for many years. We worked together at LendingTree Inc., where he was the co-founder and head of strategy and I was president in the very early days of the company. Jamey is an entrepreneur’s entrepreneur. LightWedge is just the latest of the companies he’s launched out of an idea in his head. He’s remarkable for his drive, intensity and also his great sense of humor and humanity. Several months ago, I asked him to answer a few questions for this blog. It took him a while (you’ll see why momentarily) and he just emailed his responses to me a few minutes ago. His insights are so good, I wanted to put them up right away.

***

What does being an entrepreneur mean to you?

For me, being an entrepreneur is about the challenge of turning ideas (abstract potential value) into reality (actual tangible value). I have the world’s greatest job.

With Lightwedge, what was the darkest moment (forgive the sort-of pun) and why didn’t the lights go out?

The dark moments are always about cash. In the darkest of dark moments, my core group of enthusiastic investors stood ready to support the company. One of my board members has persistently coached me to ALWAYS have a backup plan. Like most entrepreneurs I am a pathological optimist, so this has been a hard behavior to learn. I am still learning.

How many hours a week do you:

Work ___ 60
Think about work___ 40
Spend w/family___18
Read____8
Sleep ___42

This is scary. I am not sure I am happy about having done that breakdown.

What support systems have you developed that help you be effective in your business?

I work closely with my wife. [That is Debbie in the photo above, she's head of marketing and sales for LightWedge.] She is a critical part of our team. This means we have an even tougher time getting some distance from the business. Truthfully, we have mostly handled this badly. Recently we became much more disciplined about having some times, and places, where work talk is not allowed. That makes work time and non-work time more productive and healthier. I couldn’t do any of this without being in synch with my wife on priorities for work and life.

What is the biggest misconception people have about the idea of being in business for themselves?

I think people fall in love with their ideas. I believe entrepreneurship is the process of creating value out of the idea – it isn’t about the idea itself. To put it another way, the name for the job of developing your idea is “professor”. The name for the job of creating value from your idea is “entrepreneur”. Both jobs are important and can be very fulfilling, but you really need to know which one you are doing. If you have accepted investments in your business from others, you ABSOLUTELY must know which one you are doing.

What’s your best work-related habit?

I delegate. I make sure people understand that they will be accountable for the results they produce in their defined area of responsibility. I make sure they have what they need (or, at a minimum, they have all that is available) to do the job. And I make sure that people understand how the results will be measured. I think I do a good job letting people know how success is defined.

What’s your worst work-related habit?

I don’t do a good job helping people figure out what tasks to do on a day to day basis. I tend to define the destination and expect people to figure out all of the steps to get there. I have an unrealistic expectation that everyone thinks like I do, so they will figure out how to get to the destination on their own. Lately I have discovered that this approach has its limits.

The thought of having to say, “first, turn on the fryer, next put one bag of frozen fries in the wire basket, next drop the basket into the hot oil, next wait 3 minutes for the beep, etc.” really makes me impatient. I know I need to draw a few dots for people to connect, but I am really bad at it. This pattern of mine isn’t fair to people and isn’t particularly good for business. I am learning to change it.

What are you reading now and why?

I read fiction to non-fiction in about a four to one ratio. The fiction is all over the place: crime novels, historical novels, espionage thrillers, etc. I read it to escape. The non-fiction is mostly biography and science with the occasional business book in the mix. The most useful business book I have read recently is Verne Harnish’s “Mastering the Rockefeller Habits”.

Describe the Lightwedge journey: past, present, future.

I started LightWedge in 2001 with one product, the LightWedge Original. Since then we have developed over 200 SKUs (including color and package variations) within the footprint of “products that help people see better”. In 2002 we did less than $1m in revenue. In 2007 we did more than $11m. We have a plan to get to $50m over the next several years. We work off of a set of clear objectives that keep us focused on the activities that we believe will create the most value for investors.

How many of these suckers have been sold?

Well, quite a few.

***

Here’s a great video interview just published on the Boston Globe’s website about Jamey, Debbie and the LightWedge story.

 

A Mysterious Syndrome that Affects Entrepreneurs

Have you read the latest issue of the New England Medical Journal? If you’re an executive who is thinking of going entrepreneur, you need to check it out. Turns out there’s a newly discovered condition affecting entrepreneurs, and it’s called ABF. Unlike Restless Leg Syndrome and E.D., there’s no drug yet to treat it, so you will have to manage this condition without a prescription.

Oh, ABF stands for Accumulated Boss Fatigue. I first noticed I was developing ABF around five years before I left corporate America. I am glad to be able to share the details of my condition so that others may find relief.

Stage One – Independence Day: How do you know you may have ABF? For me, it happened like this: After years of dutiful service to various employers, I found myself forgetting I had a boss. I was routinely making decisions and taking actions that were contrary to what the boss asked me to do. Even worse, I often didn’t bother letting the boss know I had absolutely no intention of following through on the ridiculous stuff she asked of me. This early onset stage is called RIS – Raging Independence Syndrome. It’s curable at this stage if you get back in line, apologize, maybe take some time off to clear your head, and remember that in most companies, the nail that stands out gets hammered down. If that doesn’t work, you’re on your way to Stage Two.

Stage Two – Craving the Movie “Office Space”: When it came out in 1999, I felt I was watching my autobiography. My job may have been bigger and less cubicle-bound than the characters in the movie, but I could relate. I must have watched it a dozen times that year. And whenever I had a meeting with my boss, I saw the face of Lumbergh in my mind and heard “Yeahhhhhh. Thannnkssss.” That’s stage two, and from there, you’re pretty much a goner.

Stage Three – Anything but This Job: You know you’ve reached doneness if your juices run clear when you are poked with a fork; when any other type of work appeals to you more than what you are currently doing, like for instance, being a concessionaire at Yankee Stadium; and any face would be a refreshing change from your Lumberghian boss’s. There’s a danger here, though: when you decide to go it alone in business, make sure you’re doing it for the right reasons, at the right time, and with the right support–and not just to run away from your battle with ABF.

 

To Communicate Effectively Takes Emotional Intelligence

Reading an article in the New York Times the other day, I was struck by a problem I see all the time in business (and in life in general): our difficulty communicating clearly with others. The article was about an American baseball manager who’s training the Chinese Olympic baseball team. He tells them:

“If you hit it here,”… acting as if he were hitting a ball after it passed his body, “you drive a Chevy. If you hit it here,” he said, pretending to hit the ball as it crossed the middle of the plate, “you drive a Cadillac. But if you hit it here,” he said, pretending to connect a smidgen earlier, “you’re in a Rolls-Royce with a chauffeur! Get it? That’s how much money they have. They don’t count it, they weigh it!”

They had absolutely no idea what he was talking about. Despite the interpreter.

The article reminded me of two other communications-gap stories. One was another language/culture problem, the other just corporate comedy. In the first example, a respected publisher of one of the largest electronics newspaper in the United States was addressing a group of Japanese executives. He told them an anecdote about the U.S. semiconductor market and ended it by saying, “…but what do I know?” The audience was puzzled. If he didn’t know the electronics market, why was he addressing them? His intention was to be humble and self-deprecating. But it came across as awkward ignorance.

In my favorite example, a former employer of mine brought in a new senior executive to “fix” what was wrong with our corporate sales effort. This fella came into a meeting with a half dozen senior VPs heading our various business units. He was toting a well-worn copy of a magazine he had been publisher of….a decade-and-a-half earlier. He plopped it down on the table and it landed with a thud that made the room shake. His message: he knows a thing or two about selling advertising. What we heard: as long as we’re selling it 15 years ago!

And then his well rehearsed speech began. “There are three kinds of people in the world,” he started, with great import and seriousness. I looked out of my peripheral vision to see one of my colleagues in the room starting to stifle a laugh.

“There are people who watch things happen.” Now where is he going with this? He seems like he knows what the next line is, so I’ll be patient.

“Then there are people who make things happen. “ Ah, that must be himself he’s talking about.

“And there are people who say, ‘What just happened?’ ” Wow! Where did those lines come from? There was no Google at the time so I just had to sit and wonder. This is my boss’s new boss talking! C’mon, there must be a hidden camera in this room. This is a joke, right?

We then went around the room introducing ourselves to this brilliant executive. I took my turn and then my boss said, “What just happened?” I had to excuse myself briefly from the room.

Entrepreneurs take note: Whether you are talking to a group of people from another country or another company, or in the case of “What-just-happened-man” perhaps people from another planet, you had best have some insight into what those people are thinking, believing and needing to hear at that moment. You better have some emotional intelligence to get your message across, or you will be laughed out of the room.