Category Archives: business model

3 Simple Steps To Hold People Accountable

Great leaders and managers know these 3 Simple Steps To Hold People Accountable

There is a common theme that many leaders struggle with: they don’t know how to hold their people accountable. Even if they are great at hiring A players, many leaders still are left with that feeling that their people could be doing more or better work.

Rather than first finding fault with the employee, a great leader looks first at him or herself. And when you take that look in the mirror, you might find that you have not been effective at holding your people accountable for their results.

The good news is that you can rectify this today and become a better leader with the help of three simple steps: Continue reading 3 Simple Steps To Hold People Accountable


5 Trends That Will Impact Your Business in 2018 (You Might Already Know No. 3)

With the New Year right around upon us, here are 5 trends that will impact your business in 2018 and beyond:

  1. Lack of “Place” Accelerates

In the coming year, we will continue to see a diminished importance of the need to have a physical location to work in. Thanks to the widespread evolution of mobile platforms, where we now have high-performance computers in our hands, most of us can now work from to us Continue reading 5 Trends That Will Impact Your Business in 2018 (You Might Already Know No. 3)

The Secret to the Success of Southwest Airlines, Google, and Ritz Carlton: It’s Not What You think

It all begins with answering a crucial question: What makes your business unique?

Southwest Airlines, Google and the Ritz Carlton are three of the most successful companies around. But what makes each of them so successful?

The answer is that all three of these companies have a crystal clear understanding about what their basis for competition is and have completely aligned their business around that.

Let me explain, with a nod to Michael Porter and Brian Tracy. join_now

Continue reading The Secret to the Success of Southwest Airlines, Google, and Ritz Carlton: It’s Not What You think

How to Try Before You Buy a Company

While lots of mergers fail, and if you had to pick one reason – it is companies rushing in without really vetting the potential match.

It seems there is news everyday about a proposed merger or acquisition between two companies. While buying another company is certainly a viable strategy for helping your company achieve your long-term vision, the statistics about the failure rate of acquisitions is certainly sobering. One KPMG study found, for example, that 83% of all M&A deals end in to us

Continue reading How to Try Before You Buy a Company

Moats and Machines: How Warren Buffett Analyzes a Business

Warren Buffett knows great financials are critical to the success of any business, they are really just outcomes from having a strong “machine” and an impenetrable “moat” for your business.

When you ask most CEOs about their vision for their business, they usually give you an answer built around metrics like number of customers, market share, or profitability.

But what I would argue is that while all of those numbers are critical to the success of any business, they are really just outcomes that result from having a strong “machine” and a “moat” for your us now Continue reading Moats and Machines: How Warren Buffett Analyzes a Business

Apple’s Boring Mission Statement and What We Can Learn From It

Thousands of hours have been wasted talking about mission statements that are, quite frankly, boring. The best mission statements, are both inspirational and to the point.

Mission statements are critically important to your organization because they drive alignment in your organization toward the vision of what you want to get done. That’s why it should be the inspiration that your organization rallies around. Unfortunately, many thousands of hours have been wasted talking about mission statements that are, quite frankly, BORING! talk to us

The best mission statements, on the other hand, are both inspirational and to the point.

Consider the example of Apple. When Steve Jobs started the now iconic company, his mission statement was: “To make a contribution to the world by making tools for the mind that advance humankind.” Wow; that’s something I would get out of bed in the morning for.

But as much as Apple has contributed to the advance of technology, the company has come under increasing criticism that it has lost its way since Jobs passed away in 2011.

One of the changes the company has made in the years since is to change that original mission statement, which now reads like this: “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad.”


Which mission statement do you prefer? While the newer version is very specific about what the company does, it certainly fails to meet the criteria I suggested earlier: it’s not inspiring and it’s certainly not brief and to the point.

Now compare Apple’s latest mission statement with some other major companies. For many years, Pepsi’s mission statement was: “Beat Coke.” That’s certainly simple and while it doesn’t get into the tactics of how they will fulfill that mission, it gives everyone in the organization a clear vision of what they need to accomplish.

Another great example comes from Medtronic, the medical device manufacturer, whose mission statement is: “To extend human life.” That’s an exciting mission and certainly something that is inspirational for anyone who works inside the business producing products like pacemakers and defibrillators.

But you don’t have to be a major corporation to have a great mission statement. I worked with a business that competed in the exciting field of humidity measurement. It’s not a big market, maybe $500 million in total, but this company established its mission as: “Global domination of the humidity measurement industry.” Not only is that clear and inspirational, it gives everyone plenty of scope for the business to aim at over the next several years.

What happens in situations like what we see with Apple is that you are trying to please everyone. You worry about offending someone, or leaving someone out. But by trying to be inclusive and non-offensive, you lose that focus and inspirational tone you need for your mission statement to be meaningful. That then leads you down the path of a favorite quote of mine from the movie RoboCop where executive Dick Jones says, “Good business is where you find it.” It basically means, “We will do anything for anybody, if we can make money”. That’s not too inspirational.

In other words, you chase every opportunity you can–which can be the worst thing for your organization to do. As I have written about before, your organization is actually defined by what you say no to.

Worse than trying to please everyone are mission statements designed by committees. Mission statements are also like strategy in that they are best done in smaller groups–preferably one using the seven plus or minus two rule. When you give the job of crafting your mission statement to a committee, you end up with boring, multi-syllabic paragraphs that say a lot about nothing, much like the one from Apple.

So take another look your company’s mission statement. If you start yawning when you read it, it’s time to make a change by making it shorter, tighter and more inspirational. Grab a small team – be bold, say no to lots of things and inspire your team!

Want to Win? Keep Your Strategy Short and Sweet

When it comes to communicating about your strategy with your organization, and ensuring you don’t out think it, the phrase to remember is: keep it short and is we help you grow

Everyone who runs a successful business believes that they have the best people working for them. And that’s no accident since we invest so much time and effort in screening and interviewing people to ensure they are smart, capable, and a culture-fit all in one.

But the truth is that no matter how hard you work on attracting and hiring the best of the best, the collective intelligence of your organization is still just about average, especially if you have a larger operation. Maybe your organization is the exception and you are really, really good at hiring–but that only means the total team might be 5% to 10% smarter than everyone else. It all comes back to averages. It’s just a mathematical reality.

At the same time, one of the aspects that set great leaders apart from the pack is that they tend to have special skills–particularly the ability to see over the next hill and make connections and correlations that the rest of us can’t. Much of that ability comes from experience, knowledge, and the ability to do complex thinking. These are the people who can see into the future, if you will, since they are the ones who are great at mapping out the kinds of strategies that put companies on the fast track. They can anticipate how doing A plus B, contingent on C, equals Z.

Guess what happens, though, when great leaders like this try to explain their complex strategies to the average worker? They get looked at quite literally as if they were from another planet. Sure, most people might understand A and B, but how the heck did you get all the way to Z?

To put that another way, great leaders need to learn to not out think their organizations.

What this means at a practical level is that when it comes time for you as a leader to explain your company’s strategy, you need to pare it down. Yes, you can talk turkey with your senior leadership team. But when it comes to company-wide communication, make things short and sweet enough to give your team the information they need to act without overwhelming them. Boil it down to a maximum of three elements since that’s the maximum amount of information most of us can process. Not seven, not five–three is the magic number. Then take those elements and repeat, repeat, repeat as a way to drive them throughout your organization.

Consider the classic example of legendary CEO Jack Welch’s reign at GE. At the time, GE was a massively complex organization worth more than $100 billion with its fingers in all kinds of industries like light bulbs, locomotives, jet engines and finance. You can imagine the kind of complexity that went into managing the strategy for that kind of multi-pronged business.

But if you worked at GE at that time and heard Welch speak, he would have focused over and over again on just three things: globalize the business, drive service and recurring revenues, and improve quality throughout the company by embracing the discipline of six sigma.

Of course, Welch could peel the onion or dive deep whenever he needed to. But it was by repeating those three basic elements that he knew he could get everyone in his organization, no matter how average they were, aligned without fearing of talking over their heads.

I actually had a similar experience with a boss, Paul Snyder, earlier in my career. Paul was the CEO of High Voltage Engineering and, while we weren’t on the scale of GE, we were a multi-faceted and growing business with thousands of employees. But I remember even to this day the three things Paul repeated over and over again about our strategy: make the numbers, grow the business and invest in the people. Guess what we talked about every time we got together?

Boom: easy enough for anyone to remember, including me–for many years! That’s the real value in not out thinking your organization. So when it comes to communicating with your strategy with your organization, and ensuring you don’t out think it, the phrase to remember is: keep it short and sweet.

How to Avoid Mission Drift and Stay True To Your Purpose

Mission drift is an irresistible force. You need to build in measures to help you avoid suffering from this crisis of identity. If you don’t, you might end up running a company that is very different than the one you intended to build. contact is we help you grow

As every company gets older and matures, especially around its tenth anniversary and after, it can be become difficult to remember the reasons why it was founded in the first place. When you look to those organizations that have been around 30 to 50 years and older, it can be really hard to believe you’re talking about the same place.

For example, did you know that Harvard University’s founding purpose was to “prepare ministers of upright character”?

It would be tough to argue that Harvard still operates by that same purpose today even though it’s in the exact same place it was founded back in 1636. So what happened?

In short, mission drift.

This is something that threatens every organization out there and, unless you put some safeguards and preventative measures in place, you could find yourself running an organization you don’t even recognize anymore.

What makes this challenging is that mission drift isn’t something that happens all at once. Think of it more as being nibbled to death by ducks. It happens one little decision at a time, where you go astray by just a bit. Maybe it’s a decision about chasing revenue from a customer that doesn’t really fit with your mission. It doesn’t seem like a big deal at the time. But, when you add that decision up with all the others like it, you can’t believe how you got where you ended up.

Take another example, this time from the retail sector. Entrepreneur Dov Charney founded his company American Apparel back in 1997 because he was tired of seeing American manufacturing shop being shipped overseas. He started his company to create jobs by starting making clothes in the U.S. again.

But over time, the business experienced mission drift. Eventually, rather than focusing on creating American jobs, the company became known for its sexually charged ads. For his part, Charney became known as the Hugh Hefner of retail as the business continued to shift away from its original mission. More recently, the company declared bankruptcy, which should serve as a sobering reminder of what can happen when you lose touch with the values you began your business with.

So how do you avoid mission drift and keep your organization on the right path? Here are a few tips:

Your Board Tip one is to enlist a board that is fully in line with the organization’s mission. Make sure they buy into your purpose and then charge then helping make sure they say something if they think a decision is out of alignment with your values.

Your Executive Team The second tip is to hire executives and leaders who also buy into the mission, purpose and values of the organization. Then exit the people who don’t–regardless of how great a performer they are. While that might be a painful decision to make to your bottom line in the near term, it will pay off big time over the long run.

Embed Mission into Your Culture You can also use stories and symbols as ways to embed your mission and purpose into your organization DNA in such a way that everyone in the organization can make their own course corrections on a daily basis.

Similarly, everyone in the company should use the mission and purpose of the company as their North Star of sorts as they make their decisions. Everyone needs to be encouraged to act on the notion that if something requires him or her to act against those values, they quite simply shouldn’t do it.

Measure the Mission And finally, constantly measure how true you are acting when it comes to your mission. You need only look to the great retailer Nordstrom for inspiration in how to do this. Every day, Nordstrom posts a list of the top ten salespeople in the company: everyone knows who the rainmakers are. But just as importantly, the company also publishes the letters from customers who are saluting those employees who stood out in supporting the company’s mission, which is is to “provide outstanding service every day, one customer at a time.” Seeing those letters every day is a way to measure how well Nordstrom is tracking to its mission.

One day, for instance, the company posted the letter from a customer who couldn’t believe how, after she called a store to see if they had found a diamond that gotten loose from the customer’s engagement ring, the staff at the store scoured every inch of floor looking for it. More incredibly, they also went through every dirty vacuum bag until they found it. How’s that for supporting your mission?

The key again is that as your company gets going, you need to build in measures like these to help you avoid suffering mission drift. If you don’t, you might end up running a company that is very different than the one you intended to build.



Simple Is Hard: Design Secrets of Jeff Bezos and Steve Jobs

According to many iconic leaders, simple is hard, but it’s also an incredible advantage. So if you make time to make things simple, your customers will thank you.

The French philosopher and mathematician Blaise Pascal once penned a letter to a friend in which, at the end, he wrote: “If I had more time, I would have written a shorter letter.”

This quote is quite famous and, like many well-known quotes, often gets attributed to other luminaries such as Abraham Lincoln or Winston Churchill. But what Pascal meant when he wrote those words was that he had simply scribbled down what he was thinking as he wrote rather than spend the time to plan and process his ideas before he picked up his quill and ink bottle.

Pascal of course couldn’t edit as easily as we can with the help of our word processing software, so he meandered and digressed as he scratched the words into his piece of parchment, which resulted in a longer and denser letter than he might have liked to have sent.

But this exact same thing happens all the time when it comes to designing our business processes and systems. When we don’t do the necessary work up front to create a design that is simple and elegant, we end up building products and services that are complex and cluttered. Put another way: Simple is hard.

Simple is hard.

This is actually something that great business leaders understand quite well. Think about how Jeff Bezos helped design the way works–especially if you are an Amazon Prime member. Every time you return to purchase something, everything –your address book, credit card information, shipping preferences–is all ready to go with literally one click of a button. It’s incredibly simple to use and it shouldn’t come as a surprise that when Amazon introduced one-click shopping, the company’s revenues skyrocketed.

But what might go unappreciated is how much work Bezos and his team put into making that design so simple. They very likely invested thousands of hours in user testing to streamline the process that we now benefit from. Again, simple is hard.

Consider also any Apple product you’ve ever handled. Not only are they gorgeous to look at, they’re incredibly intuitive to use, so much so that Apple famously doesn’t even ship user manuals. Apple products are so simple to use, even children can literally pick them up and operate them.

But if you know anything about Steve Jobs, you know that he was fanatical about design and he spent countless hours obsessing over even the most minute design detail as a way to simplify it and make it easy to use. Repeat after me: Simple is hard.

Simple is a competitive advantage.

Now think about the processes and systems in your business. How much time are you spending up front to make them simple and intuitive for your customers to use? Have you fallen into the trap of relying on a user manual as thick as your forearm while making the assumption that your customers will just figure it out?

It’s worth thinking about, especially if your competitors are offering an easier-to-use alternative. If you had to reenter all of your billing and shipping information every time you placed an online order, versus just clicking a button, where would you spend your money?

Or what kind of device would you rather buy: one that you can pick up and start using right out of the box, or one that makes you fall asleep trying to pick your way through a user manual? Customers like simple. And simple wins in the marketplace.

Simple is hard, but it’s also an incredible competitive advantage. So make the time up front to think hard and write a shorter letter; your customers will thank you.

The 5 Best Kinds of Recurring Revenue

The 5 Best kinds of Recurring Revenue picture

Not all recurring revenue business models equally valuable. You can think of it as a scale with five levels where the higher your business model falls on the scale, the more valuable it is. And the key to value in this case is making it hard for competitors to take your customers while also making it undesirable for your customers to switch their business.

In a prior post, we talked about the power of recurring revenue. But some recurring revenue business models are more valuable than other kinds. You can think of it as a pyramid with five levels where the higher your business model falls on the scale, the more valuable it is. And the key to value in this case is making it hard for competitors to take your customers while also making it undesirable for your customers to switch their business.

Repeat Customers are Good

At what we’ll call Level One of the pyramid is a business model based on Repeat Customers, say something like a grocery store. Having folks around the neighborhood stop by every few days to pick up their staples like milk and eggs is a great thing. By providing solid customer service, you can hope to attract those same customers on a weekly basis for years. The rub is that there is really nothing stopping your customers from stopping by a new store that opens on other side of town. Other than the possible cost of fuel, there are no switching costs for that customer. So, while having repeat customers is far better than not having them, your revenue stream remains risky because you can’t count on your customers sticking with you. Many firms in this mode have build affinity programs, like frequent flyer cards to create stronger brand preference and make their offers stickier.

A Network Effect is Better

That leads us to Level Two of the pyramid, which is called Repeat Revenue with a Network Effect. What this means is that the more someone uses the company’s product or service, the more each individual customer gets out of the experience–something called the network effect–which creates a barrier to that customer leaving because no other network is as good. Consider the appeal of a company like eBay. Regardless of whether you are a buyer or a seller, the more people that participate in the company’s online auctions, the more valuable it becomes for you to the point that you wouldn’t even consider switching to a competing offering. Can you even name a viable competitor to eBay these days?

Sequenced Product Purchases are Great Revenue

The next level up is Level Three: the Sequential Revenue Model. The idea behind this approach is to create recurring income by encouraging your customers to consistently upgrade to new product and service offerings. Consider the example of a company like Constant Contact, which starts customers out on a basic plan that costs $10 month. As you begin to use the system more, you can then upgrade if you like, spending an additional $5 a month to get unlimited image storage or the ability to input a larger number of contacts. In other words, the more you use the system, and the more valuable it becomes to you, the more you’re willing to pay. This model also works where companies may offer a free service as a way to attract new customers, something known as a “freemium” model. DropBox, for example, has both a free service and a premium service where customers can access advanced features. Even if the company can convert just a fraction of its customers over to the premium service, it can create an extremely valuable recurring revenue stream.

Good Until Cancelled Revenue is Really Great

Level Four of the pyramid is called Good Until Cancelled Recurring Revenue, where you find examples like insurance agencies or your cable company. What makes this model powerful is when it’s based on an “opt-out” model where the customer has to terminate your relationship with them. Think about when you sign up for your auto insurance policy: You agree to pay a certain amount of money every month until you cancel, which makes for a fine source of recurring revenue. You actually have to make an effort to stop using the insurance. Credit card or bank account billing, where the customer pays their bill automatically, is an extremely powerful way of keeping customers over the long haul.

Contractual Recurring Revenue is the Best

Level Five, the highest level of the pyramid, is Recurring Revenue with a Contract. Think about the contract you signed when you got your new cell phone. Not only did you agree to pay a certain amount of money each month depending on the plan you selected, you also agreed to keep paying for something like two years. Sure, you can change your phone provider, but this time it will cost you, say, a $175 switching fee. That makes changing a little more painful for you as a customer, which, in turn, makes for a better business model. The phone company also runs promotions where it offers you a discounted new phone every year or so. Of course, there’s a catch: You need to sign a new two-year contract to take advantage of the offer. Again, this is an extremely valuable model because you can predict with a higher level of certainty what your recurring revenues will be both in the short-term, as well as over the longer term.

In our next post, we’ll talk about some of the strategies you can use to build recurring revenue into your existing business model.