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Archive for August, 2012

Well, Obamacare has passed muster with the Supreme Court.  Alas, alack.  Let the regulatory onslaught begin.
My feeling is Obamacare will be even worse for the small businessman than expected.  Here’s why:  TORTS.  Pandora has opened her medical box.  The lupine tort bar is salivating over the hopelessly recondite ferrago of bureaucratic processes delineated in the almost 400 new governmental entities created by this law.  My fear is that this well-meaning, but wrong-headed, 2700 page law will become the lawyer’s full employment act, a wanton feeding-frenzy of tort litigation.
In a July 9, 2012 article Crains’ reports (p. 3) four different federal agencies (the IRS, the Department of Labor, the Department of Health and Human Services, and the Department of Housing and Urban Development) are in the process of writing thousands of pages of regulations listing new employer obligations.  Benefits lawyers report a proliferation of potential HR liability around record-keeping, reporting, qualification, and payments.  It is a veritable mine-field of potential litigation.
Peter Marathas, a partner at Proskauer, states,  “The statute has an extremely complex regulatory framework that adds layers onto what  we already have.  It leads to an increased burden and increased liabilities.”
This is especially threatening to our small business community.  We simply don’t have in-house the cadre of administrators to deal with this onslaught, but I guarantee you right now an increase in accounting expense and lawsuits.
Rosina Rubin, CFO of Attitude New York, a limousine company with 60 employees, states simply, “I think that we’ve created some jobs for lawyers and accountants.”  I think you’re right, Rosina.
Yet, worse even than the administrative burden, is the further dampening of animal spirits that may well descend on our entrepreneurial world.  New ideas and creative risk-taking flourish in a petrie dish of freedom and open-ended possibility, not in an increasingly proscribed dirigism of tightly-controlling, top-down governance.  At a certain point entrepreneurs may choose to not grow—to subtly go on strike from the over regulation of these new legal strictures.  Ayn Rand’s Atlas Shrugged fictionalized this very event.
John F. Kennedy stated in his last State of the Union Address (Jan. 14, 1963),  “A police state finds it cannot command the grain to grow.”
Thank you, John.

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As many of us do, I keep a laundry list every day of things I need to do.  These are not big goals.  They are mostly small matters of the quotidian and prosaic.  Nevertheless, I take great satisfaction in checking them off as each day progresses.

I believe in the satisfactions and efficacy offered by the little joys of my entrepreneurial day.  Of course, I have my five and ten year hopes and ambitions, but I live one moment at a time in my company.

I am personally untrained in traditional techniques of command-and-control management.  But from what I glean of it, I find it old-fashioned.  It’s certainly not for me.  My instinct is for maximum creativity and freedom in accomplishment of corporate goals.  (My firm, Corporate Rain International, is designed as horizontally possible for this reason.)

In an interesting blog titled “The Folly of Stretch Goals” in the Harvard Business Review (4/20/12), Daniel Markovitz, author of Factory of One (CRC Press), quotes famed psychologists Edwin Locke and Gary Latham describing large (stretch) goal setting as “the most effective managerial tool available.”  Stretch goals are the tactic of giving yourself and your employees an end that is just beyond reach, pushing them to greater and greater achievement.   Markovitz does not agree with that approach and neither do I.  For Markovitz stretch goals are not useful and even dangerous for three reasons.

  1. Stretch goals can be terribly demotivating.  To the extent stretch goals seem overwhelming and unattainable they suck dry intrinsic motivation.  They are innately  manipulative, cynical, and condescending to the employee/colleague.  Money motivators crowd out intrinsic motivators like learning, growth, and service.  He cites  psychologist Karl Weick, who argues, in an article titled “Small Wins,” that steady, slow, organic progress creates more complete solutions, conditions, and accomplishment.
  2. Stretch goals have a dangerous tendency to foster unethical behavior.  For example, Markowitz offers the illustration of Sears in the early 1990’s.  “Sears gave a sales  quota of $147/hour to its auto repair staff.  Faced with this target, the staff overcharged for work and performed unnecessary repairs.  Sears Chairman at the time, Ed  Brennan, acknowledged that the stretch goal gave employees a powerful incentive to deceive customers.”
  3. Stretch goals can lead to excessive risk-taking.  Just over a month ago, J. P. Morgan took an eight billion dollar loss (and counting) inspired by the stretch profitability  goals of their London subsidiary and its leader, “The London Whale.”  This echos Enron’s incentivization of its executives to meet specific revenue goals, irrespective of the  profitability or the riskiness of the moves.  Enron was ultimately and totally destroyed in 2001 by this strategy.

So let me get back to my musing on my personal entrepreneur’s list of small steps and accomplishable goals.  For me, these little things create a target condition of steady growth and dependable value creation for my company.  If my employees and associates can do that too, why, I’m a happy business owner.  As Alchoholics Anonymous says, “One Day At A Time.”

Speaking of which, I just finished this week’s blog.  I’ll scratch that one off today’s list right now.

Sales writer Og Mandino once said, “It is those who concentrate on but one small thing at a time who advance in this world.”  Thank you, Og.

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Being “good” is the most selfish action an entrepreneur can take.  I believe in goodness because I am selfish.

To cite but one shining example, I heard Tony Hsieh, CEO of online shoe retailer Zappos, address the Inc. Business Owners Council a couple of years ago in New York.  He was promoting his (then) new book Delivering Happiness.  What I remember about Hsieh’s appearance was a simple annecdote on service he shared.  About pizza, of all things.

As background, Tony’s unique success at Zappos came from imbuing Zappos with a ubiquitous corporate culture focused on nonpareil service and customer care.  His company succeeded by branding itself around, customer service, corporate ethics and dependability of deliverables.  This became so embedded that Zappos’ service ethic extended way beyond normal good service.

The story he told in 2010 was this.  Hsieh was at a sales conference in Santa Monica, CA and, after a night of bar hopping, came back with a group of friends to his hotel.  The group decided they wanted a pizza.  The hotel kitchen was closed.  In a fit of drunken braggadocio, Hsieh recounts, he dared his friends to call Zappos customer service and ask for a phone number for a local 24 hour Santa Monica pizza delivery.  They did and within two minutes were supplied with several numbers by the Zappos employee.  Such was the broad-minded, unscripted service orientation Hsieh branded throughout his firm.

Creating a practical ethical, customer-centric company is about little actions, not grand idealistic mission statements.  It is about making service like breathing.  It’s about becoming habitually “good.”  Tony Hsieh understood this in spades.

Michael Douglas, as “Gordon Gekko” in Wall Street, famously said, “Greed is good.”  He had it exactly backwards–“Good is greed.”  For the long-term entrepreneur, goodness and service make the putative rewards of business greed—money, success, status, and happiness—much more likely.  Customers sense and smell goodness.  They want to be around it and touch it.  They intuitively trust it more than all the quantification analysis and sales explication in the world.

In a world frequently populated by rogues and thieves masquerading as benign capitalists, and in a world increasingly dominated by coldly efficient technology—oriented toward dehumanizing, distancing, and quantifying those pesky customers—branding one’s company as humane and caring in all the simplest human interactions is invaluable.  It builds trust, reputation, good will and value for the long term.  This is not Pollyannaish.  It is really practical greed.  It is the ultimate selfishness.

Per creating a culture of goodness,  Aristotle said, “It is easy to perform a good action, but not easy to acquire a settled habit of performing such actions.”   Thank you, Aristotle.

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Let us consider that loathsome bete noir of our wired age:  multi-tasking.

We’re in a recession/stagnation economy.  Well, duh.  No huge insight there.  However, one near universal result of this economic state is the pressure to increase worker efficiency–for the owner for the manager, for the secretary, for the janitor.  Everyone feels pressure to do more in less time.

Americans are mostly paid a lot more for their time than laborers elsewhere.  In an increasingly “flat earth” world economy, with investment flowing to the least expensive, most efficacious sources of producing goods and services, it is tempting to resort to magicalism for producing silver bullet solutions to the greater efficiency conundrum.

For many that silver bullet is multi-tasking.

Well, it turns out that multi-tasking is a chimera.  It is ca ca.  It is hooey.  It is self-delusion.  In an article in the WSJ (Melinda Beck, D-1, 4/24/12) titled “What Cocktail Parties Teach Us,” it is made abundantly clear that our brains are wired to focus on only one thing at a time.  Using the cocktail party as a metaphor, Ms. Beck states,

“You’re at a party.  Music is playing.  Glasses are clinking.  Dozens of conversations are driving up the decibel level.  Yet amid all those distractions, you can zero in on the one conversation you want to hear.  This ability to hyper-focus on one stream of sound amid a cacophony of others is what researchers call the ‘cocktail-party effect.'”

Ms. Beck goes on to note that our brains are wired for selective attention and can only focus on one thing at a time.  She cites a University of Utah study which found that only a rare group of “super taskers,” estimated at 2.5% of the population, were able to attend to more than one thing effectively.  Dr. Rene Marois of Vanderbilt University says, “Our research offers neurological evidence that the brain cannot effectively do two things at once.”

As I understand it, what most people consider multitasking is really just shifting their attention quickly between two subjects, and not properly servicing either.

So, what’s a girl (or a busy entrepreneur) to do?

I certainly don’t have that proverbial silver bullet, but here’s what I try to do:

  1. Prioritize and organize.
  2. Do one task at a time.  Do it fully.
  3. Turn off the computer for periods of time.
  4. Turn off the blackberry for periods of time.
  5. Forward your phone for periods of time.
  6. Stop looking for phony, false hope magical solutions like the myth of  multitasking and just buckle down.

Not very helpful, huh?  Afraid that’s all I’ve got today.

But I agree with what British actress Helena Bonham Carter who says:  “Multitasking?  I can’t do two things at once.  I can’t even do one thing at once.”

Thank you Helena Bonham Carter.

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