Business Insight Zone

I’m asking because of a comment made by Devin, a business student who is one of this blog’s most devoted commenters. He was responding to “When do you kill a business?”

It’s all about SWOT analysis. Strength Weakness Opportunity Threat. You must find your weaknesses and discover how to make them strengths; find the threats looming out there, and figure out a way to convert that threat into an opportunity.

Devin’s right that SWOT analysis can be highly useful. It can give you a brutally clear view of yourself and your marketplace, and it helps you plumb how the factors inside your business interact with external conditions. As I’ve been saying over and over, we should pursue brutal clarity, especially in this economy.

But we shouldn’t try to turn our weaknesses into strengths. It virtually never works, at least in the open fields of endeavor we normally pursue in business.

Wait . . . “open fields of endeavor”? What does that mean? Let me explain.

Open and Closed Systems

Some pursuits are OPEN: they have few rules, and people can succeed in them in a variety of ways. Consider, for example, the massive variety we see in good fiction:

• Plot: Good mysteries have lots of it; brilliant postmodern fiction often has very little.
• Dialogue: Some of Robert B. Parker‘s books read like scripts; at the other extreme, H. P. Lovecraft reinvented the horror genre while almost never using dialogue (at which he was terrible).
• Method of composition: Alex Haley spent more than a year on the outline of Roots; Anthony Trollope wrote his many novels without knowing what would come next.
• Length: Yasunari Kawabata wrote timeless stories a few hundred words long; the great Russian and English novelists of the 19th century routinely wrote stories many hundreds of pages long.

Et cetera. There are endless ways to engage a reader. Lovecraft didn’t need to be good at dialogue, and in fact was well-advised not to try. He could take advantage of the openness of the field of endeavor and focus on his strengths — ocean-deep creepiness, for example — instead.

Some pursuits are CLOSED: they have particular and often exacting rules, and success in the overall endeavor requires success in the parts of the endeavor. An easy example is professional golf:

• 14 clubs in the bag — maximum, period — and the clubs must meet the specs laid out by golf’s governing bodies.
• More rules than you can shake a flagstick at.
• Woods, long irons, short irons, putter. Successful pro golfers must — absolutely must — have a modicum of competence with every club in the bag, and be able to hit solid shots from the tee, the fairway, and the green.

Of course, different golfers will have different strengths and styles, and some will compensate for relative weakness in one area by overperforming in another. The greatest players (like you-know-who) will combine strengths across all areas, but any golfer on the PGA tour would be a fool to focus solely on one area of the game.

So what about people in business?

Most businesses aren’t as open as fiction writing — where, after all, you could win legions of fans by talking about battles in faraway galaxies, or by narrating the thoughts of ghosts. But most businesses aren’t as closed as golf, either.

There are a few absolutes: If you are going to work in finance, you must have facility with numbers. If you are going to work in sales, you must be able to deal with people all day every day. Successful COOs make the trains run on time . . . or they’re not successful COOs, by definition.

But on most points, there’s lots of flexibility. You could be a successful manager without being particularly verbal or gregarious. You could be a successful is sales without having a loud or aggressive personality. If you think about the managers and teachers and lawyers and network administrators you know, surely you’ll find that there’s a variety of strengths and weaknesses among them.

And what about companies?

Again, there are some absolutes: If a company’s basic financial practices are weak, it won’t survive. If it can’t sell, it won’t survive. If it can’t fulfill customer orders, it won’t survive. That list does go on a little bit, but in fact only a little bit.

There are companies that never, ever advertise. Some companies have great formal training programs; some do fine without them. Some are great at structured strategic planning; some spend zero time on that. You do the few must-do’s competently, then focus most of your energy on what you’re best at. Everything else, you let slide.

Examples

There’s a well-established school of thought in business that companies, like individuals, ought to pursue success by excelling in just a few areas, and leading from their strongest areas.

• Nike makes good athletic shoes and is competent across the board, but it is primarily a marketing company — perhaps the best in the world — backed by a serious design sense.
• Toyota designs, markets, and sells cars pretty well, but all of its strengths arise from its excellence in manufacturing.
• General Electric is, above all, a giant factory producing general managers of high competence. It combines this strength with world-class abilities in manufacturing and internal finance, and doesn’t worry so much about the rest.
• Procter & Gamble combines Nike-like marketing ability with General Electric-like ability to train general managers. And that about covers it.

Yes, these are oversimplifications. But the point should be clear that companies need not excel in everything.

Here’s the moral of this story:

We’re better served to focus on strengths rather than weaknesses.

And here’s the prescription for action:

• Figure out how open or closed your environment is.
• If it’s open, steer away from weaknesses.
• If it’s closed, figure out how to shore up your weaknesses enough so that they don’t sink you.
• Whether it’s open or closed, capitalize on your strengths first, most often, and most intensely.

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Image of Bill Grant, still awesome after all these years, via David van der Mark, used under a CC-Share Alike license.

Running through my mind: better ways to “Parse Ruthlessly.” Here’s one:

When you’re looking at all the many things you could do with you time / energy / budget / staff / working life, DON’T ask “What are all the choices I have?” That’s too overwhelming. You have infinite choices, and you’ll never list them all, much less parse them (ruthlessly or otherwise).

Instead, dance this little two-step:

1. “What are MY . . . BIG . . . Goals?” Emphasis on “My” and “Big.” You can’t have more than a handful of these, or else you won’t be able to keep track of them.
2. What MOVES THE NEEDLE on My Big Goals?

Why to ask Question #1: so you don’t waste your time / energy / budget / staff / working life. Your stakeholders (a million shareholders, the team you manage, your kids, yourself, whoever) can’t afford the waste.

Why to ask Question #2: there are infinite choices that MIGHT relate to Your Big Goals . . . but far fewer that will actually make a difference for Your Big Goals.

Constrain yourself to Your Big Goals and the actions that really drive them. Hard to execute, but at least the concept is simple.

What are you doing today to Move the Needle?

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Photo by flattop341.

Twice in the past two days, I’ve talked to friends fresh off of strings of customer-service dissapointments.

• Friend #1 did an afternoon of errand-running, patronized four retailers, and had bad experiences at all four.
• Friend #2 took advantage of an afternoon off of work to window-shop for his next vehicle. Two of the three dealerships he went to . . . ignored him completely. At the third place, a friendly salesman came right over to him, talked him up, avoided the hard sell, and answered all his questions.

Both of these friends are savvy veterans of the business world. Neither of them was asking for white-glove treatment. Both of them had future buying decisions clarified sharply for them by the behavior of the retailers they went to — and not in ways that any of the retailers (except for that last vehicle dealer) would want. As you’d expect, both of my friends were incredulous to receive this kind of treatment, especially given current market conditions.

It shouldn’t need saying, but here’s an elementary-grade two-step guide to marketing:

1. Get attention.
2. Do something GOOD with that attention.

Have you experienced shockingly bad service during this downturn?

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UPDATE, Thursday afternoon: My friend Jon Swanson wrote a short, compelling post about a merchant — in this case, a restaurant — that got it exactly right on service.

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Related post:

• The Basic Basics: Run to the Point of Contact.

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Photo by independentman.

If you want to suceed, you need to cultivate your ability — and your organization’s ability — to do these two HARD things at the same time:

1. Stay firm in your belief that you will prevail in the end;
2. Confront the brutal facts around you.

In his landmark book Good to Great, Jim Collins described this as the “Stockdale Paradox.” It’s named after Admiral James Stockdale (that’s him in the picture, complete with his Medal of Honor), who survived more than seven years as a POW during the Vietnam War and went on to be Ross Perot’s running mate in the 1992 U.S. presidential election.

You can read the full account of the Stockdale Paradox on Collins’s Web site. But here’s the key quote, straight from Stockdale:

“This is a very important lesson. You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

This is a wonderful lesson for personal development, but Collins found that it also meshed perfectly with what he and his research team found when they studied ordinary companies that had made the tough transition to greatness:

In every case, the management team responded with a powerful psychological duality. On the one hand, they stoically accepted the brutal facts of reality. On the other hand, they maintained an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts.

(A side note: the more I look, the more I see lessons like this that transcend scales — that apply just as well whether we’re talking about an individual performer, a small team, or a huge corporation. More on this theme in later posts.)

Hoping for the Best, Prepared for the Worst

I thought of Stockdale’s Paradox while I was writing about the paradox of speed several weeks ago, but it came to mind forcefully earlier today. In the wake of yesterday’s confront-the-brutal-facts post, “What if the economy is worse than you think?,” I got a response on Twitter this morning that said, in so many words, “What if the economy is better than you think?”

Anyone who knows me will tell you that I’m an optimist. I can be prone to negative thoughts like anybody, but I always find myself coming back around to the sunny side of life. So please believe me when I tell you that I hope the economy is better than I think, I hope we have a soft landing and a quick conclusion to this recession, and I’m confident — on raw faith alone, if it comes down to it — that we’ll prevail in the end.

BUT . . .

That’s not the way to lay your bets. And it’s certainly not the way to run your business or view your career in the current environment. (By the way, if you think I’m pessimistic about continuing with business as usual, you should read Umair Haque. In fact, you should just read him anyway — super-smart guy.)

By all means, be optimistic. But discipline yourself to prepare for the worst, too.

You Win Either Way

Here’s the thing: if I’m wrong — and the economy isn’t as bad as we think — then preparing for the worst helps you anyway. Think about what goes into preparing for radical changes in the business landscape:

• cleaning up your balance sheet
• building incredible rigor around analyses of costs and benefits
• demonstrating slavish devotion to discovering and meeting your customers’ needs
• planning ahead for possible disruptive market trends
• insulating against downside risks while seeking upside gains
• . . .

All of these things are hallmarks of the best companies — and the best individual performers — already. A few examples:

• Applied Materials has thrived atop one of the world’s most volatile industries for decades by anticipating trends and by exercising fiscal discipline at a level that most companies only dream of.
• Cisco Systems is hurting (some) along with the rest of its industry, but its timeless practices of prudent management and systematic innovation have it poised to excel in this climate as much as any other.
• The economic downturn has been brutal for Toyota just like for other auto makers. But do you have any doubt that it’s able to weather this storm?
• It’s a horrible time to be in banking . . . except for JPMorgan, Wells Fargo, and the other well-run banks that have kept their powder dry in case of bad weather. (By the way, there are plenty of local and regional banks in the U.S. that never departed from their old-school, safety-first, community-based lending practices. They’re making hay at this point while some of their bigger competitors are contracting.)
• Et cetera. (Which companies would YOU put in this category?)

The moral to this story:

Let this economic downturn — no matter how much worse it gets, or how much longer it lasts — be the kick in the pants you need to make your OWN transformation from good to great.

Do it by living out the Stockdale Paradox, keeping your spirits high WHILE you deal with the most brutal facts that confront you.

An Example to Follow

You’d be hard-pressed to find a better model for this than Hjörtur Smárason, the Icelandic marketer I talked about three months ago in “Hard times call for an entrepreneurial outlook.” This father of five watched as his country’s economy melted down around him — and promptly wrote a post titled “Never Lose Your Spirit.”

Right in line with Admiral Stockdale, Hjörtur is facing the brutal facts of his economic environment — which are much worse than those in the United States — and making the most of it.

Are you willing to do the same?

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Related posts:

• Paradox of success: Speed.
• Economic forecasting: How’s the weather for YOU?
• Landscape and weather, redux.

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Image via Wikipedia.

Harder times ahead?

I stay out of the predictions business as much as I can. But we’re hard-pressed to find good news about the economy these days — headlines like Labor report: “Shockingly awful” seem much more common — and there are good reasons to think that things are going to get worse before they get better.

One person who’s been making this argument consistently for a long while now is uber-commenter Dave Livingston, whose work as a consultant, combined with his penchant for economic analysis, has led him to conclude that:

• the current downturn is likely to get worse, or much worse, before things improve; and
• many business leaders — including smart senior ones — have been caught flat-footed by this downturn, and in many cases still don’t grasp its implications.

(For a fuller view of his data and arguments, you can sample recent posts of Dave’s here, here, and here.)

A Shift in the Landscape

In “Landscape and weather in the business world,” a post I wrote in August 2007, I laid out one way of thinking about the economy as it affects the business world. The short version: some conditions are transient enough to be thought of as “weather,” others are permanent enough that we can regard them like “landscape.”

We would carry on the analogy if we chose — with erosion, droughts, etc. — and we’d note that the boundaries aren’t always sharply drawn. Still, the perennial challenge remains: to determine which conditions are the weather and which are the landscape, and to respond appropriately to each.

When we look around at the economic landscape today, parts of it are unrecognizable in comparison to, say, August 2007. An easy case in point is the massive deleveraging that is transforming the global financial sphere, but there are similarly sweeping changes in technology, and it’s safe to assume that U.S. regulatory, fiscal, and foreign policies will look much different in the coming presidential administration than they have during the current one.

What’s It to You?

So here’s the thing: what if this IS a deep tectonic change in the business landscape? What if consumer spending (more than 2/3 of the U.S. economy traditionally) doesn’t bounce back for ten or fifteen years? What if business credit continues to be harder to come by? What if there is no froth in the world economy between now and 2020?

I’m not being rhetorical.

Try this: get out a piece of paper and make some categories.

• My own job
• My profession overall
• My company
• My industry

Now spend a few minutes thinking through these economic possibilities at each of these scales. Has your industry relied heavily on consumer spending? Has your company relied on carrying lots of debt? Are you personally overleveraged? Viewing yourself coldly, are you underskilled or overpaid (or both)? Does your profession suddenly look like it has way too many aspirants for way too few positions?

Carry on in that vein for a few minutes — I’ll understand if you want to do this sitting in an easy chair by the fire at home, maybe with a glass of wine to dull the sting — and leave yourself open to whatever the analysis tells you. Try it a few times over the coming days, if you have the stomach for it.

Stay Strong

Believe it or not, my point here isn’t to get you down, but to get you thinking. In his comment on yesterday’s post about helping people find jobs, Dave Livingston said that the best thing you can do for friends who have been laid off

is help them get their feet back on the ground. Most of us derive a large measure of our self from work. An unexpected layoff is confidence destroying — it makes the Universe groundless, as the Buddhists say. A corollary — being po’d and thinking negative thoughts is o.k. You should be. Denial doesn’t do any good. THEN you have to let it go . . .

In fact, I’m encouraging you to think through the negative thoughts now, especially if you have a good job.

I recommend that you think through them not just for yourself but for your company, too. Whether we’re talking about your own career or the health of your firm, It’s far better to face up to the toughest possibilities now than to be surprised by them later.

And keep this in mind: we’ve still got it pretty good, you know? While lots of folks are feeling economic pain right now, it’s clearly not as bad as living through the Great Depression or Weimar Germany — or, for that matter, any number of civil wars from the annals of history.

Get Aggressive about the Long Haul

It can be fascinating to see how some people strike it rich in business through being in the right place at the right time, or by having a lucky few years surfing a particular kind of economic wave. But these aren’t the ones to imitate.

No, it’s much more impressive to build a business that thrives in good times and bad. This is part of the reason why people idolize General Electric, which has paid a dividend in every quarter since 1899, and Warren Buffett, who has been making lots of money for his investors in all economic weather (and a few shifts in economic landscape) for fifty years.

Here’s your challenge: to think aggressively about what you can do today — this week — this month that promotes your prosperity and your company’s for the long haul regardless of the weather, and even regardless of changes in the landscape.

(For individuals, deliberate practice is a good place to start; for companies, the kind of relentless, atom-by-atom improvements that have taken Toyota to the top. More on that in a later post.)

The question isn’t can you thrive in good times and bad — you CAN — but will you?

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Photo by Ken Lund, used under a CC-Share Alike license.

The down economy has hit my personal network of friends in waves. Probably it’s the same for you — or maybe you’re the one who’s pounding the pavement now. Here are three things I do for friends who are hunting for jobs:

1. Open up my network to them.

I would say “open my Rolodex,” but it’s been years since I used the kind with paper cards. These days, it’s my LinkedIn contact list. In fact, when I connect with people on LinkedIn, I limit myself to folks I’d feel comfortable (a) asking for a job or (b) recommending for a job. That way, I can spring into action anytime one of these contacts either goes on the job market or announces that they’re looking to hire someone.

By the way, usually I don’t something casual like “Hey, if I can help, let me know.” I’m much more pointed than that, because I want to make sure I get through to my friends, who are often shell-shocked and fearful about being out of work.

So I say something like this:

“Whenever you’re ready, please make a point of going through my LinkedIn contacts, then send me a list of anyone you’d like to meet so I can make introductions. Please be aggressive about using me as a resource — pester me, even — because I want to see you land in a great new role as soon as possible.”

Although it’s been many years now since I was out of work, I know that knot-in-stomach feeling that goes along with unemployment. Opening up my network so aggressively is meant as an antidote to that feeling for others.

2. Offer them friendly advice on job hunting.

Many highly accomplished professionals are not very accomplished when it comes to looking for work, and so I point them to a series of posts I wrote a couple of years ago on my personal blog. (That was a year before this blog was born.)

I wrote those posts because a handful of friends all happened to be looking for work at the same time, and I wanted to do something helpful for them. In the years since, I’ve pointed more people to those posts than to any others I’ve ever written on that blog. (Come to think of it, it’s probably time for me to revisit and expand on that series here. Do you think that would be useful?)

3. Offer moral support.

This one, I find, is much more effective coming after steps #1 and #2. It’s one thing to tell your friend that you’re sorry she lost her job. No doubt she’ll appreciate your good wishes, but that’s about all she can do with them.

It’s far better, especially during that shock-and-doubt period right after your friend her job, for her to have concrete steps to take: Here, dig through this LinkedIn list and tell me who looks interesting. Here, read these blog posts — they have lots of practical pointers in them. This is the kind of advice that people can digest more easily, I find, than the airy assertions like “Everything will work out for the best” or “You’ll land on your feet in no time.”

Mind you, I’m an optimist: I tend te believe that things will work out for the best, and that my smart, hard-working friends will land on their feet in no time. But it’s more helpful, right up front, to share with them concrete means of achieving that.

Now, over to you: How do you help friends who have been laid off?

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Photo by Egan Snow, used under a CC-Share Alike license.

Dunno about you, but I’m having a hard time tackling the Big Stuff on this first Monday back from a long holiday break. The must-do’s are getting must-done, but otherwise . . . how about a few interesting tidbits to read?

1. I’ve argued before that you don’t need better technology; now Scott Berkun points to Vero Pepperrell, (a.k.a. “that Canadian Girl”), who says, sensibly enough, that what you really need for directing your own work is “a single sheet of paper and a calm brain.” Her post is angled toward the self-employed, but I find that many knowledge workers are essentially “self-employed” in terms of how they direct their own time. Adjust Vero’s observations (and Scott’s) accordingly based on your own situation.
   
2. If you care about design even remotely, or if you just want to jog loose a bunch of good ideas, dig through Paul Hughes’s design notebooks on Flickr — best viewed large. (Thanks to David Armano for pointing out Paul’s work.)
3. Kate Niederhoffer — who is, how shall I put this?, SMART — got together a bunch of other smart folks from psychology, social media, artificial intelligence, and so on to discuss where we might be headed in terms of measuring interactions online. Sample prediction for 2009: “We will determine how to measure the value of social interactions and attach financial value, whether we’re monetizing attention or a new medium.” Much more, including a PDF of the group discussion, on Kate’s blog.
4. Mark McGuinness, whose work I’ve raved about before, is offering a free e-book on How to Motivate Creative People (Including Yourself). I love what he has to say in it, especially about my old favorite, Anthony Trollope.
5. My friend Jon Lebkowsky is what you could call old-school when it comes to online communities. He offers excellent insights in his recent post, “Social media, identity, and civility.” One favorite line: “Yes, indeed – the line between social media and socializing face-to-face seems blurred – because it doesn’t really have to exist.”
6. Jim Grisanzio (you may remember his excellent thoughts on Toyota from a while back) brings the thunder with “Real Leadership Starts with Real Action,” in which he lauds JAL chief Haruka Nishimatsu’s brass-tacks approach to leadership. One choice bit: “Never mind that the service on JAL (and most Asian airlines) is vastly superior to every single American and European carrier in the air, I’m talking this guy’s plane because he’s talking the bus. Period.”

What have you been reading that you would like to share?

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Photo by Dawn Endico, used under a CC-Share Alike license.

Yours truly, holding forth.

Three shameless mercenary appeals items to note:

1. Next week – on Tuesday the 13th, to be precise — I’m slated to speak to the lunch meeting of the Houston Interactive Marketing Association on “Twittering Your Way Through the Economic Storm.” You can find full details and register for the event at this link.
2. Next month – on Tuesday, February 17th — I’ll be talking to Bootstrap Austin about how “You Can Create a Customer Anywhere: What Web Businesses Can Learn from Hardware Store Owners.” Details for the talk (as well as for this month’s Bootstrap talk on January 20th) are here.
3. Throughout this year, I’m looking for more speaking opportunities in general. If you think I might make a good speaker for your group or event, please contact me via e-mail: twalker {at} hoovers {dot} com.

Are there upcoming events that you’re involved with that you’d like to promote? Feel free to share in the comments!

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Photo by Paul Nobles.

You know, I’m not a technical expert, but I think that getting this error message . . .

. . . may have had something to do with the hundred-ish browser tabs I had open at the time. Possibly.

You know that expression “Jumping the Shark“? I’m coining a new one for myself: “Crashing the Browser.”

Just as a television series doesn’t want to “jump the shark” and slide into mediocrity, the savvy knowledge worker doesn’t want to “crash the browser” — either literally, as in this case, or figuratively, in the broader sense of trying to access so many streams of information at once that your brain shuts down.

Here endeth this lesson-to-self.

Now if you’ll pardon me, I’m going to trawl through my browser’s history (one link at a time!) to see which of those umpteen tabs were actually worth further thought.

That’s the fruit of a Twitter conversation I had this morning with Kathy Sierra (who, if it needs saying again, is one of my blogging heroes) about which activities to pursue.

It started when I was talking with another Twitter friend about trying to do something awesome every day in this new year. She rightly asked what would constitute “awesome.” (You can read that with or without the Bill & Ted intonation — it’s up to you.) I replied:

Then Kathy and I had this exchange:

Ponder this over your weekend:

What can you do in 2009 that’s
“Simple, Deep, Challenging, and Worth It”?

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