First Published: Mass High Tech: The Journal of New England Technology – November 16, 2006.

Concentrate. Things are about to get complicated. First there was the Internet, then came the web — and now we have Web 2.0. That sounds like a simple enough progression, but not if you’re asked to describe what differentiates Web 2.0 from what came before. If you ask a web designer, the differences are considerable. Ask the average web consumer and they’ll shrug and ask “what’s Web 2.0?”

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Recently, I had the pleasure of traveling from Boston to Chicago to the 37 Signals “Get Real Conference”. In my heightened state of user-experience awareness following the seminar, I encountered some snags with my return flight that made me realize firsthand the drastic and fundamental challenge that almost all major airlines are still grappling with – making customers loyal by getting the user experience completely right.

Needless to say, my experience with United was vastly different than Jet Blue – we’re very positive on them because they put the customer experience first.

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First Published: Mass High Tech: The Journal of New England Technology – Sept 1st, 2006

A large percentage of web applications are being designed by developers, and it’s costing the companies that build them more than they know.

A few years ago, I was at a web design workshop where the speaker was advocating the idea of treating web design as a visual technical spec for development teams. His suggestion was to design the user interface first and make it so clear that the developers would be able to write the supporting code using only these screenshots as guides, thus avoiding written technical specs entirely. A concerned participant, apparently from a Fortune 500 company, interrupted with the comment, “If we didn’t write technical specs at my company, my entire team would be on the street.”

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In recent months, several friends, colleagues & clients of ours have also made the decision to leave stable and predictable positions at medium-to-large sized companies to venture into the entrepreneurial space for more exciting and rewarding possibilities. This is never an easy decision but it seems to be one, at least in our locality, that is becoming more popular and attractive.

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When was the last time you ‘Googled’ something? An hour ago? Two? There’s a certain romanticism behind the world’s leading search engine having started as a simple solution to one of the online community’s largest problems – finding quality information. Anyone that’s familiar with Google’s brilliantly innovative algorithm understands just how challenging it is to take advantage of it for better search result placement. The confines of the structure Google imposes on a site’s ranking actually ensure that webmasters out there are doing their jobs, updating content and encouraging others to link to their information; and more recently, even registering their domains for more than a year or two! Read more

When David Greiner and Ben Richardson decided to build their first software product, they didn’t even consider going to investors for money. In fact they didn’t even consider asking friends or family for the start-up capital they needed. They used the revenues from their consulting business to fund their efforts. Building a product while running a small consulting business wasn’t an easy choice, but it allowed them to bootstrap their new business and successfully cover development costs.

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“This is a crowded market. Who, then, do you see as your biggest competition?” I asked, getting my notebook out. The CEO I was interviewing paused for a moment, and then triumphantly declared, “Well, I don’t think we have any competition, really. We’re not big enough to be competing with the big guys, and we’re not small enough to worry about the lower-end of the market. We’re in a funny protected space in the middle.”

I looked up, a little puzzled, and asked, “Regardless of your size, though, aren’t you still competing for the same clients as the bigger and smaller companies in this sector?” To which he replied, “Well, I suppose so. I hadn’t really thought of it like that.”

Competition and the challenges it brings are the essence of the free enterprise economy. Fair trade on an open playing field is the ideal we strive for in a perfect world. Whether or not the playing field is fair is a topic for another article. Regardless of your ideology of capitalism, if you are in business today, you will always have competition. If you think you don’t, you could be in trouble.

No competition is a lie, or, at the very least, a bad sign!

It is a counter-intuitive position to think of a healthy company as one with strong competitors. In any entrepreneurial dream, there is a desire to create something where no competition exists and, thus, own a limitless opportunity to dominate the demand. My challenge to this view is that without competition, the business has little or no chance of survival. Any business leader who claims to own the entire demand for a product or service is either lying, misguided or doing something illegal. For we all know what happens when you build a monopoly in a free economy. In the many years that I have been interviewing CEOs, entrepreneurs and executives, I have heard, “We have no competition.” far too many times. It is an illusion of grandeur that no leader need boast about, nor believe. For starters, having no competition could very well mean that there is a poor demand for the product or service in question.

Competition provides validation

The good news about competition, is that it provides validation for your ideas. The more players that step forward to take a piece of your sector’s proverbial pie, the more confirmation there is that this space is a worthwhile place to make money. Bud Stoddard, CEO of Amerivault, a leader in the electronic backup market, says, “I love to compete with the 800-pound gorillas. If we are a world-class business, then the competition will see us as an opportunity, its great validation that we are doing the right thing.”

Competition provides opportunities

With Bud Stoddard’s words in mind, it’s apparent that the opportunity he’s alluding to is acquisition. By making his business a serious competitor, he knows he will attract the attention of the big players, creating a perfect exit strategy for himself.

In my own experience, the opportunities provided by competition have been in the area of learning. Speaking with my competitors has been very instrumental in my understanding of the market challenges. Whenever I say this, most people ask me what competitor would actually sit down and discuss their business with me? It’s not as far-fetched an idea as you think. Writing articles, for one, is a clever way to get people to tell you about themselves and their businesses. But, in fact, it is rather surprising that many business leaders, even competitors, will be open to a mutual exchange of ideas. True development through conversation is, after all, a reciprocal exchange.

All successful executives know that the only thing more expensive than a good education, is ignorance. If you are in a position to educate your clients, partners, vendors, or even your competition, do it, albeit with some thought as to the consequences. Educating your industry segment, which will no doubt include your competition, can be a very favorable strategy if you are in an industry that is new and is trying to gain credibility. By growing the industry, you grow the market. The spin-off is that if you lead the way, you will become known as an innovator.

Running workshops, training courses, publishing guides, and hosting web conferences are simple and inexpensive ways of extending your knowledge to your constituent markets. Every year, there are dozens of new services and products released to the market, but very few people actually know how to use them to make their businesses run more efficiently. The companies that succeed in getting their clients on-board, are very often the companies hosting free workshops and training for potential clients. This, of course, means competitors can visit your workshops, but, in a bizarre way, this can actually work in your favor.

Competition urges you to innovate

Living in a comfort zone can be a dangerous place. I used to work with an accomplished CEO who often paraphrased the common adage, “If you are feeling comfortable, you should be a little scared.” Positive attitudes are good, but there is nothing wrong with looking over your shoulder once in a while. “It’s the responsibility of every good leader to be doing their homework on the competition,” says, Alyssa Dver, Vice President and Chief Marketing Officer of Sedona Corporation, a software developer. “I interview up to forty people for a single article. It’s important for me to stay in touch with what’s going on.” Dver, who also writes for Newsweek, believes that the fundamental law of business is that you have to know what motivates people. “If you want to get people to do something, you have to know what will motivate them to do that thing,” she says. Understanding the competition and what motivates your customers to buy from them, rather than from you, is an essential part of that understanding.

Competitive markets are the essential formula for success in any biological system, whether they are human or otherwise. Taking the advice of the leaders interviewed, it seems embracing your competitive environment is a vital step toward keeping yourself ahead of the curve. Maybe the best way to look ahead, is to keep your eyes looking left and right.

Several years ago, I was managing a marketing consulting business that was gathering momentum, despite its competition’s failure to do so. Our management seemed optimistic and excited about the future of the company. In contrast, similar businesses were complaining about ‘down markets’ and their clients’, “Lack of commitment to marketing.” So what were we doing that gave us the edge? Several things, but most importantly our business strategy involved ‘giving away value’. Whenever we signed a new client, we would brainstorm about how we could add to the client’s positive experience with our company. For example, we closed a deal to create a campaign for a large insurance corporation. We knew that they wanted to make big noise about their campaign because it had a social responsibility component to it. With this in mind, we told the client that they could have complete access to our PR agency to assist them with the launch. We paid our PR agency a small fee for their time, providing our client with access to their services. Because of it, our client ended up using them several times again later. The client was very impressed with our willingness to go the extra mile and invest our money into their success. They referred us to other business units in the corporation, which led to more work and some great portfolio case studies. Try creating a result that will keep the momentum going when you give away value. Even if you have a small degree of control over the result, you can probably create a positive outcome.

There are several ways for small businesses to give away value, at little or no cost. In my business, I generate a large amount of written material for my clients. Most of it can be easily rewritten into an article or a ‘how-to’ guide. These elements can be emailed or included in newsletters without much additional effort. The key is that when you make contact with your audience, demonstrate to them that you are frequently giving away value. It might take five or ten times before they buy from you, but they will notice you.

Educate Your Target Audience

All successful executives know that the only thing more expensive than a good education is ignorance. If you are in a position to educate your clients, partners, vendors, or even your competition, then do it. Educating your competition can be a very favorable strategy if you are in an industry that is new and is trying to gain credibility and develop a market. By growing the industry, you grow the market, and the spin-off is that if you lead the way, you will become known as an innovator.

Running workshops, training courses, publishing guides, and hosting web conferences are simple and inexpensive ways of extending your knowledge to your constituent markets. In the early days of the Internet boom, there were dozens of new services, but very few people knew how to use them to make their businesses run more efficiently. The companies that succeeded in getting their clients on-board, were very often the companies hosting free workshops and training for potential clients.

Identify Channels Before You Start Creating New Products

If you are growing a business, there is a good chance you are adding new products, services, or value to your existing offerings. You may also be repackaging your existing products for newer markets. Many businesses spend more time focusing on the product, forgetting about the distribution channels. Successful growth strategies are very often associated with distribution strategy. Think of Microsoft and Dell’s strategy to use partnerships or the Internet to ensure easy accessibility to their products. Understand how your products will reach the ultimate consumers who pay the bills. Try to understand the sales channel and use critical thinking; although your understanding might be imperfect initially, you can quickly refine the distribution model and make it work.

The Lifetime Market Value (LMV) of each customer is based on the amount of money they will spend with you during their relationship with your company. The only thing standing in the way of a high LMV, is if the customer decides not to use your services again. The number one reason a customer will not use a service more than once, is because of ‘no customer contact strategy’ (about 67% of customers). About another 15% will not use a service again because they were ‘dissatisfied with the service’, and another 9% will ‘use a competitor’s service’. With this knowledge, it should be evident that reaching out to past customers is an excellent strategy for developing new business.

What is the most common challenge?

For most companies, the immediate challenge is to find clients that are willing to use their products or services without an extended delay between contact and purchase (i.e., a long sales cycle). For most companies, waiting 3-6 months to close a cycle is too long.

How can this challenge be overcome?

Any clever marketing should make the selling unnecessary, at least in theory. The only way to achieve this is to ensure the message will reach pre-qualified people with a desire to use the product or service in question.

How is this done?

Clearly, most small businesses, or any other businesses these days, do not have the luxury of embarking on a marketing strategy that follows traditional conversion cycles. The suggestion is to employ a more simple, and, ironically, more effective, marketing strategy based on referrals. This will entail sourcing, organizing, and contacting a customer list of clients who have used the product or service before.

This is not about asking our friends, “Do you know anyone who you can refer me to?” This is a sophisticated plan, aimed at creating reciprocal interest in referral-making. By pursuing referrals in an organized and structured way, we can turn our existing networks into active referral networks. Referrals offer significant advantages over cold-calling and direct marketing leads. For example, referrals:

1. Are always more cost effective
2. Generally make decisions about purchasing more quickly.
3. Are likely to purchase more often (returning customers).
4. Require less negotiation or convincing.
5. Will be more willing to make further referrals.

What structure does this referral marketing have?

The formula for referral marketing is as follows:

1. Identify the ideal referral candidates.
2. Articulate the Unique Selling Proposition (USP) of the product or service and how it relates to their network.
3. Create the ideal environment for referrals.
4. Thank the referrers for their help and participation.

Thus, an active referral system will look something like this:

1. Identify targets and referrers based on specific criteria.
2. Educate and enable referrers to communicate effectively.
3. Actively trade referrals.
4. Be present and available (commonly called top-of-mind awareness).
5. Offer incentives when appropriate (commissions and intro fees, etc.).
6. Make referrals a condition of doing business.

What kind of results can we expect?

By creating appointments to meet and educate others in our network, we can develop numerous ‘pots on the stove’. Additionally, each educated referrer becomes an evangelist for our services. It is important to realize that it is not the referrer that offers the opportunity, but rather their network of potential clients. So, we can expect to see the number of referrals increase exponentially with the number of referrers we have ‘activated’ in our network.

Can you give me examples of how this works?

Absolutely! I Recently observed how when two people sat down and systematically went through their rolodexes, they were able to generate over 50 potential referrals for one another. When these two were initially introduced, they tried to find ways to work directly with each other, but came up with nothing. In response to this, they decided to try linking their networks together to create opportunities.

Another great example was when a client of mine hosted a cocktail party to ‘enlighten’ a group of carefully selected, well-connected people in their network. The cocktail party aimed to educate attendees, making them better informed about the host’s professional services and, therefore, more likely to see potential referral opportunities. A short presentation that clearly articulated their USP gave the audience improved insight into a complex service offering, accomplishing the host’s goals. The event was attractive because of the good food, good company, and not-so-serious approach. Over 35 people attended the party, and many of them evangelized the host’s services to their respective networks. The host also held one-on-one sessions with each of the guests in the weeks following the party to ‘work the rolodex’ of each guest. Great idea!

Further creative ideas for active referrals come to mind: seminars, educational workshops, letters of introduction, brain trust meetings, developing an advisory board of well-connected people, sporting events, and partnerships, etc. Less formal engagements are also a fun way of meeting new people and building a referral base. Consider hosting a party in a unique location, a business breakfast with an enlightened guest, or simply have a few friends over for coffee and a discussion about how you can help one another professionally.

What will the plan look like when it’s complete?

Although this is just one example, it is a typical format for a referral-marketing plan. The plan will typically have three stages:

Stage One:

• Create a list of potential referrers.
• Set up referrer education meetings.
• Attend networking meetings to ‘enroll’ potential referrers.
• Identify future events and meetings that provide networking opportunities.

Stage Two:

• Host one-on-one meetings with referrers.
• Exchange Rolodex opportunities.
• Discuss referral incentives and partnerships.

Stage Three:

• Provide support to referrers with access to business cards, website, and materials.

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• Follow-up calls and meetings.
• Write ‘thank you’ notes.

Is there a standard timeline for a referral marketing campaign?

Not really…in fact, it is impossible to say exactly how soon actual referrals would result from this type of campaign. In my own experience, the sales cycle of a referral is about half that of a traditional cold-call cycle. It is also important to remember that this is an ongoing process and not a one-time campaign. You should seriously consider investing a few hours each week to developing this channel of new business. Block off a few hours on your slowest day and start to treat it like a sacred part of your business development process. Arrange a meeting and arrive early, because, in the words of Edward Tufte, Professor Emeritus at Yale University, “If you show up early, something good happens.”

If you are starting a business, a project or a family, you are starting a company of people. When you get a bunch of people working towards a common goal, then you are starting a company. Attracting the company of other people is the quintessential human activity. Building connections and relationships is the most natural thing that biological organisms do. We do it every day when we work and play in the company of other people. We also know that some teams really work, while other teams crash and burn. So, what are the key elements that make the difference? Have you ever been involved in a group of people where everything just seemed to work like clockwork? Each member of the group had a purpose, and nobody got in anybody else’s way? This type of rare union does exist, and it is apparent that with the right leadership, these teams can be created.

Trust vs. Experience

Trusting only your experience can be dangerous because each business is very different. There is no doubt that experience is valuable, and the experienced person will feel more confident about building a new team or managing an existing group, but it cannot guarantee success. Building a productive, healthy team of people is not a function of how much experience you have in creating harmonious teams, but rather, it’s a function of the trust within the group. Trust is what binds our thriving relationships, and the lack of it is what will lead to the union’s collapse. Building trust is not something that can be done instantly, but it is possible to remove doubt fairly quickly. The best way to initiate a pathway to trust, is to remove doubt. The best way to remove doubt, is to never, ever lie and always keep your partner and team members up-to-date with relevant and useful information.

Managing Expectations

If you have ever made a promise you couldn’t keep, then you understand that awful feeling you get when you know you have let somebody down. In a way, promising something that you cannot deliver, is as bad as flat-out lying. By under-promising, you not only save face, but you retain the advantage of being able to exceed expectations. Executive coaches guide their partners to use the principle of under-promising and over-delivering. It is a powerful tool in managing expectations.

Automatic vs. Time-Tested

A group of great individuals does not guarantee a great team. There is nothing automatic about creating a team that will lead to greater productivity. It is more likely that the great people, and their great egos, will find it more productive to act for their own good. This is one of the serious problems with modern companies. It is assumed that buying the best of the best and fencing them into teams will automatically lead to success. Not true!

Be Selfish

Advice like this may seem counter-intuitive at first. The first rule of lifesaving is that you cannot help others if you cannot first help yourself. If you intend on starting a company or being the member of a group, you need to be sure you can help yourself, first and foremost. Be selfish and consider what you want from the group, but make sure that the group understands this. It is another way of managing expectations. If every member of the company is aware of what the others want, and are each willing to meet those expectations, then the work will flow a lot more smoothly. This means that you are ready to accept responsibility and the tasks that are set out for you.

Startup Management is Different from Ongoing Management

If you understand the difference between these two management skills, then you are probably already a great manager. This is the hardest lesson that any leader will ever learn. Starting a revolution and rebuilding once the smoke has settled, each requires its own, very distinct character. Don’t be fooled by the likes of Bill Gates, who was both the founder and then the senior leader of Microsoft. This combination of skills in one person is very rare. If you are good at attracting people to start something from scratch, you will probably want to be starting something from scratch in a few year’s time. Being a starter with low follow-through skills is not a failing, it’s just one of the many different types of leaders that any economy needs to survive. Think of it this way: if the fast-growing plants don’t take hold when the earth is ravaged by floods, then the top soil will be blown away and the big trees will never get a chance to take hold. It takes all kinds.

Learn to Listen

Can you remember what the person that was just in your office said to you? Probably not. Even though each of us has two ears and only one mouth, we are not very good listeners, preferring to talk and not hear what people have to say. Listening is a skill, but more importantly, it is a sign of maturity. If you can stop yourself from interrupting or speaking during a meeting, you will be astounded by the things you will hear, both said and unsaid. When we stop to listen, we open ourselves up to hear the subtleties of what people are really saying. Is the manager who repeatedly shares her own experience with everyone really so experienced, or is she asking for more recognition for her achievements?

Judgment

Apply loads of judgment to advice. It is a common fact that people prefer to dispense advice, rather than receive it. When you receive advice from your advisors, it is excusable to initially ignore it and continue to ask for more input. Knowledge is a powerful motivator when making tough decisions.

Intuition

Intuition is the greatest advisor you can have, in all aspects of your life. This is especially true when working in the company of other people. Listen to your gut, even after you have gathered your advice. Learning to listen to your gut will be the greatest intellectual achievement of your lifetime. The amazing biophysicist, Candace Pert, PhD, in her work on the relationship between emotions and molecules, identified receptors on every major organ that respond to the same external stimuli that the brain responds to. Every cell in our bodies is studded with hundreds of thousands of these receptors. Because of their crucial role in guiding our body’s responses to inner and outer cues, they have been called informational substances. By being aware of what your body is telling you in a situation, you can make better decisions that will benefit yourself and, ultimately, the team you work with.

First, Build the Company

If you have any desires to build a business that will generate profits, then you must create a company first. A great company leads to a great business. People are the core of all businesses, successful or unsuccessful. But getting those people to work harmoniously with one another is what is standard among successful businesses.

The Mind of The Group

Having served in the army, I know that, in many cases, there is nothing so mindless as a group of people. The individual’s thinking and acting power, far outweighs the power of the group. Group energy is the direct result of the ability of the individuals in that group to remain independent. Give your teams the power to think and work as individuals. If you remove the ability of the individual to think, be productive and be innovative, you will never build a strong team. The team is just a support structure for the individuals in the group. The purpose of creating companies, is to unify this power, not distribute it.