Posts Tagged ‘Jack Hayhow’

Peter Drucker famously said the purpose of a business is to create and keep a customer.  In order to do that, of course, your business must provide a product, service or experience the customer judges to be preferable to all of the other products, services or experiences currently available.  In other words, you must create a compelling offer for the customer to buy what it is you sell.

A compelling offer has four primary characteristics.  It is:

1. Meaningful to the customer
2. Divergent from the competition
3. Intensely focused
4. Concisely communicated

Let’s consider each of these characteristics…

Meaningful to the Customer

Since Edward Chamberlin first coined the term “product differentiation” in his 1933 book, The Theory of Monopolistic Competition, marketing gurus have beat the drum of differentiation.  And differentiation is critically important.  But not all differentiation is created equal.  Some differentiating qualities matter to the customer, others don’t.  For example, you might be the only bank in town that has horse in your logo.  That probably doesn’t matter to very many people.  On the other hand, if your bank is open 24 hours a day, that might be meaningful – especially in a community with a large number of night shift workers.

Divergent from the Competition

The second characteristic of a compelling offer is that it is divergent from the competition.  It’s unlikely that what you sell can be completely divergent from your competitors.  But if your product, service or experience isn’t divergent is some significant way, it simply doesn’t provide the customer with a compelling reason to buy from you.

Intensely Focused

The third characteristic of a compelling offer is that it must be intensely focused.  In their wonderful book, Made to Stick, the Heath brothers lobby for focus with this quote from a defense lawyer,

“If you argue ten points, even if each is a good point, when they get back to the jury room they won’t remember any.”

Customers and prospects simply don’t have room in their heads for all of the wonderfulness of your product.  So focus.  Tell them what matters most – emphasize the one thing that is most likely to compel them to buy from you.

Concisely Communicated

Finally, the fourth characteristic – your offer must be concisely communicated.  In the screenwriting trade, this is called the logline, or more commonly, the one-line.  The one-line tells potential viewers what the movie is about.  In his book, Save the Cat, Blake Snyder uses these examples of a one-line:

A cop comes to L.A. to visit his estranged wife and her office building is taken over by terrorists (Die Hard)

A businessman falls in love with a hooker he hires to be his date for the weekend (Pretty Woman)

Your one-line must explain to the customer what he or she gets, and it must do so in a heck of a hurry.  If your customers and prospects can’t easily remember and repeat your one-line, you probably need to keep editing.

If your offer contains these four components, it is likely to be compelling and your company is exceedingly likely to grow… leading to… A Good Business, A Great Life!

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Tagged as: A good business A great life, active garage, businesses, customers, distinguished, failure, focused, Jack Hayhow, made to stick, meaningful, save the cat, success

I was visiting with one of my friends on the phone this morning.  He told me about a former client, Jill, who had won the lottery.  The after tax payment to Jill was a lump sum of $13,000,000.  Where I grew up, that’s a sizeable lump.

Before I could say, “Yeah, but you know most lottery winners are worse off two years after they win the lottery than they were before,” my friend said Jill had told him the lottery curse was complete nonsense.  Almost 10 years after winning the lottery, Jill and her husband were living fun and fulfilling lives.  They didn’t buy mansions and they didn’t adopt any bad habits.  Each year they harvested 6% income from the $13,000,000 (which according to my math is closing in on $800,000), they traveled and they did pretty much what they damn well pleased.

That story got my friend and I talking about the question:  How much is enough?  How we answer that question has a profound impact on the joy and satisfaction we experience, and perhaps even on the level of success we attain.  My friend also shared some advice from a source he didn’t name (or that I don’t remember).  It went like this:

“Give away the first 10% you earn.  Save the next 10%.  Pay taxes and live on the balance.  If you do this, you’ll never be sorry and you’ll never be broke.”

That simple suggestion and its remarkable promise took my breath away.  Of course, many religions teach the practice of tithing and charity toward others.  And we’ve all, no doubt, received the admonition from one of the many financial gurus to save, save, save.  Both of which are sound ideas to my mind.  But when you add the promise, you’ll never be sorry and you’ll never be broke – somehow that ramps the power of these ideas up exponentially.

What if we followed this practice in our businesses?  What if we donated the first 10% – to the church or school of our choice, to the many wonderful private agencies that serve the disadvantaged, to an incubator for new business start-ups, or to the arts?  And then, what if we saved the next 10%?  What would it be like, after a time, to be sitting on a stack of cash?  Wouldn’t that allow us to weather the inevitable storms?  Wouldn’t that allow us to make decisions based on what was really best for our business – without feeling like there was a gun to our head?  Wouldn’t we feel better about ourselves and sleep a bit more soundly at night?

But then I wonder, what would it take to give away the first 10% – save the next 10%?  Do we have the will, the generosity, the courage?  If not 10%, how about 5%?  If not 5%, how about 2%?  Could it be this idea is better than winning the lottery?  I’m not sure.  But I am 100% convinced it is more likely than winning the lottery and that the payoff could be huge!

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Tagged as: A good business A great life, active garage, business, charity, donating, giving, investing, Jack Hayhow, Leadership, lottery payback, management, OPUS, saving, Winning a lottery

Yesterday I heard that my friend Stan (not his real name) had just hired two new employees.  With those two hires, the head count in Stan’s company has doubled in just a few months.  The business press is writing about Stan’s growth and everywhere I go I hear, “How about Stan?  He’s really rocking.”

And yet I am deeply concerned about the very survival of Stan’s business.

You see, there’s a culture in the business community that equates success with a large number of employees.  That culture often leads small business owners down the primrose path of profligate hiring because as employment surges, recognition abounds.  If you own a small business, that recognition, often after years of anonymity and sacrifice, can be intoxicating.  In fact, hiring can be much like crack cocaine – an intense high followed by devastating consequences.

Well-meaning civic organizations often encourage this addictive hiring behavior.  In my hometown, the Greater Kansas City Chamber of Commerce sponsors a wonderful small business celebration each year.  As a part of that celebration, the Top Ten Small Businesses of Kansas City are recognized.  The top business receives the Mr. K Award, named after the legendary Kansas City entrepreneur, Ewing Kauffman.  One of the key qualifiers for this recognition is an increase in head count.  In fact, it’s more or less impossible to receive Top Ten recognition without dramatic increases in the number of people the company employs.  But as I look back on the list of recognized companies, I’m shocked by how many of those companies have failed or been reduced to a fraction of their previous glory.

For many businesses (and for virtually all service businesses) payroll is the company’s single biggest expense.  And while hiring is easy (requiring only optimism or delusion) firing is brutally difficult.  We like the people who work for us.  We worry about what will happen to them if we let them go.  We think we can fix the people – we tell ourselves they’ll get up to speed if we just give them a little more time.  We have a million reasons not to get rid of people who really need to go.  We hang on to people who are incompetent or who we don’t really need to operate the business.  And every day we do, we take a step closer to catastrophic business failure.

All because the culture and our egos tell us that success is having a lot of employees.

But that is complete and utter nonsense.  Success is about a business lean enough to survive the inevitable tough times.  Success is a business with sustainable operating cash flow.  Success is a business where the employees are fully engaged and secure in their positions as long as they continue to produce and to grow.  Success is a business that customers can’t imagine living without.  Success is a business that gives back to the community in a significant way.  Success is a business that provides the owner with the time and money to do what he or she wants to do.  That’s success!

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Tagged as: active garage, business culture, employees, employers, hiring, Jack Hayhow, success, successful business

When I was in the seventh grade, during our school’s annual track and field day, I was assigned to the shot put event.  That was a bit of a problem.  Back then, I wasn’t what you would call skinny – I was downright scrawny.  I could barely pick up the shot put, let alone heave it across the field.  Let me tell you, I was definitely scrawny but I was scrappy too.  I practiced hard.  The gym teacher worked with me and, day-by-day, I got better.  It hurt and I hated it, but I got better.

After what seemed like an eternity of training, track and field day arrived and I threw the shot put farther than I had ever thrown it.  It was a personal best.  And I came in … dead last.  Thirty-seventh out of thirty-seven boys.  I had worked hard, I had gotten better, and I had gone from poor to just a little less poor.  My immense effort went largely unrewarded.  That’s what happens when the talent doesn’t match the task.

The truth is, many of us have been sold a bill of goods.  It started with Napoleon Hill when he said, “Anything the mind of man can conceive and believe, it can achieve.”  Which is just plain nonsense.  Think about this:  I can conceive of playing in the NBA, and with enough self-delusion I might even be able to believe it.  But I won’t achieve it because you can’t coach tall … or fast.  In other words, I don’t have the talent.

Talent is the capacity for near perfect performance.  It’s something you’re born with or that develops very early in life.  Talent can be cultivated, but it probably can’t be created.  The good news is, everyone has talent of some kind.  But each of us also has some non-talents – some things we just don’t do very well and probably won’t ever do very well.  (My list of non-talents includes anything requiring a power tool, math past the 8^th grade level and throwing the shot put.)

If you want exceptional performance in your company (and who doesn’t?) there are two crucial activities that you and all your managers must engage in.

#1 – Identify the talent of each of your people

#2 – Match that talent with a task that needs to be accomplished

Identifying the talent of subordinates and matching that talent with a task that needs to be accomplished just might be the most important contribution to organizational success a manager can make. A wonderful, if somewhat awkward, question is:

Who Does What Well Around Here?

That question focuses on the right thing – it focuses on talent, on what a person can do.  Far too often, managers are in “cop mode”.  They’re on the lookout for what’s wrong.  Certainly there are times when a manager needs to take corrective action.  But great managers spend a lot of time looking for what’s right with people.  To find out more about what great managers do, spend a few minutes with our free online management development course, The Foundation of Management.

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Tagged as: A great business A great life, Business Strategy, Jack Hayhow, Leadership, management, shot put, Talent management, team, teamwork, www.pigwisdom.com

In 1971 I was 19 years old and freshly promoted into my first management job – assistant manager of the band and orchestra department at Jenkins Music Company.  To this day, I’m not sure exactly what it was I was supposed to manage, because I was clearly the lowest ranking employee in the building.

No Trouble

On the first day of my management career I was called into Jess Coulson’s office.  Jess was my boss’s boss.  He was a compelling, charismatic guy.  He had a huge mane of silver hair and a twinkle in his eye that told you he knew the secret and he just might let you in on it.  Jess smoked cigarettes nonstop, he drank bourbon and milk pretty much all day long and he told the greatest musician stories a kid like me had ever heard.  I was in awe.  So when he called me into his office I was nervous and excited.  Here’s what happened:

He was on the phone when I walked in and his chair was swung around so he was looking out the window.  All I could see was a cloud of smoke swirling around the top of his head.  He spun around, stood up and shook my hand and said,

“Congratulations, Kid – you’re in management now!”

He grinned and his eyes sparkled and I’m sure I stood up just a little straighter.  He looked away for a moment like he was lost in thought and then he turned and locked in on me like I was the only person in the world.  He said,

“Kid, the big guy wants three things and only three things.”

I wasn’t exactly sure who the big guy was but it didn’t seem like a good time to ask so I just stood there.

“The big guy wants high productivity, low costs and No Trouble.  You got that?”

High productivity, low costs and No Trouble.  I got it.

“That’s good, Kid.  Now get out of here.”

I was in Jess Coulson’s office for a total of about 60 seconds.  But in that 60 seconds he outlined the essence of HR.  High Productivity, Low Cost and No Trouble.  For business owners, that’s what HR is all about.

In the 40 years since I stood in Jess’s office, the No Trouble part has become increasingly difficult for employers.  Employment laws are more onerous and courts are significantly more sympathetic to employees’ claims than ever before.  For business owners, legal attacks by employees or former employees have become a serious concern.

The bad news is, there is no foolproof way to protect your business.  No matter what you do, there is still some risk associated with having employees.  But you can minimize that risk by creating an employee handbook.  An employee handbook is the centerpiece of an effective HR program.  It explains your company’s policies and procedures and it communicates your expectations to employees.  A good handbook also helps protect your company in the event of a dispute.

Now the good news – there is a quick and free way for you to create an employee handbook.

In less than 10 minutes and at absolutely no cost, you’ll have an employee handbook with the policies most small businesses need.  And that’s a huge step toward No Trouble!

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Tagged as: A good business A great life, active garage, Business Management, business planning, Business Strategy, Employee handbook, HR, human resources, Jack Hayhow, Leadership, Opus Training

Over the last three years, I’ve asked hundreds of business owners this question:

What’s Been Harder in Your Business Than You Expected?

More than 95% of the time, the answer was immediate and unequivocal:

The People!

Jason Colleen owns Colleen Concrete and when I interviewed him he employed about 50 people.  Jason’s response to the question captured the essence of what I heard over and over again.  He said,

“I didn’t expect so many headaches to come from the employees.  Every little problem they have somehow becomes my problem.  People are just so high maintenance.”

Dealing with employees seems to be a universal challenge.  The truth is, people have issues and the more employees you have, the more issues you have.  But there’s another truth as well, and that is:

Great Companies Grow One Person at a Time

Or more precisely, great companies grow one great person at a time.  One of the things I’ve discovered in my own business and in the experience of the owners I’ve interviewed is that you can’t stack enough good people up to make a great one.  Good simply isn’t good enough.  Great people are far more likely than good people to do three things on a consistent basis:

1. Initiate: Fundamentally, initiative is thought or action that is not prompted by others.  It’s the ability to assess independently and the willingness to take charge before others do.  The soul of initiative is an intensely active engagement – engagement with the company, client, problem or opportunity.  Initiative requires thought, which as Henry Ford said, is probably the hardest work we do.
2. Stretch: Stretch is about setting your sights higher, much higher, than what seems reasonably achievable. Unless there is a critical mass of people in your company that are willing to reach for incredible, you’ll never achieve incredible.  When you stretch, even if you fall a bit short of incredible, you will inevitably wind up doing better than you would have if you didn’t stretch.
3. Grow: Employees usually have an expectation that you’ll pay them more next year than you paid them this year.  But why would you?  The only logical reason would be that they contribute more next year than they did this year.  Great employees get that.  They’re always looking for ways to make themselves more valuable.  They improve their skills; they learn how to use new tools; they take classes to expand their knowledge.

That’s what great people look like.  Now, I’m not saying these great people won’t also have some issues.  But if I have to deal with people issues, I’d prefer to be dealing with the issues of highly productive contributors as opposed to the issues of the mediocre, uninspired or disengaged.

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Tagged as: A Great Business, A great life, accountability, Achieve, active garage, ambition, business owner, employers, Great employees, growth, initiative, Jack Hayhow, Leadership, Opus Communications, organization, responsibility, Stretch

When I was researching the book, Breaking Through the Barrrier: What Companies That Grow Do Differently, I would often ask business owners,

Do you want to grow your business?

While I received a range of answers, the typical response was some variant of, “Well, yeah, sure.”  When I probed a bit deeper, asking how much do you want to grow your business, I’d usually get an answer that involved traditional metrics such as market share, annual revenue or head count.  But these traditional metrics ignore one profound truth:

In a privately owned business, the owner’s life should be better because he or she owns the business.

Better is, obviously, a subjective term.  For some owners, better might mean more money – for others, more time off.  A better life could also mean doing work that makes the world a better place.  The problem with traditional metrics is that they don’t address the owner’s quality of life.

So it might be productive to look at business and growth through a slightly different lens.  It’s a lens that helps an owner consider how he or she wants to be involved in the business – a lens that helps clarify what activity the owner wants to engage in on a day-to-day basis – a lens that illuminates how the owner wants to live his or her life.

There are, essentially, four business structures:

1. Hands-On: The owner does some or all of the work.
2. Owner-Operated: The owner supervises the line level employees.
3. Managed: The owner manages the managers.
4. Enterprise: The owner is largely removed from day-to-day operations.

While to some extent revenue dictates the structure of the business, revenue isn’t the only determinant.  Let me use a couple of my friends to illustrate.  Mike Pasley owns Central Packaging.  Danny O’Neill owns The Roasterie.  These businesses have a similar revenue, cost of goods sold and overhead structure.  Mike operates in the Owner-Operated structure and Danny operates in the Enterprise structure.  Mike has a high need for control and is committed to a methodical approach.  Danny lives at 30,000 feet and abhors operational details.

Both of these guys have profitable, growing businesses and from what I can tell, both guys are happy.  But if for some reason they had to switch places, they’d both be miserable.  It’s not about revenue or market share or profit – it’s about how they live their lives.

How big your business should be depends on how you want to live your life.  If you’re happy in the owner-operated structure, will you be as happy when growth forces you into the managed structure?  Can you accept the loss of control that inevitably comes with growth?  Is your life really going to be better if your business is bigger?

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Tagged as: A great business A great life, active garage, Breaking through the barrier, Central Packaging, companies structure, Danny O'neill, enterprise, Grow your business, Jack Hayhow, Mike Pasley, owner managed, profitable, revenue, The Roasterie

Two factors comprise the market potential for any product or service – demand and attachment.  Demand is about quantity – how many people want what you sell.  Attachment is about quality, how much do people want what you sell.

There are some products and services for which there is obvious demand.  For example, almost everyone needs a grocery store, a cell phone and the occasional cup of coffee. Universal demand creates extraordinary opportunity.  But universal demand also spawns burgeoning supply and intense competition.  The harsh reality is, in virtually every sector, supply exceeds demand in a way that isn’t cyclical.  We’ve crashed full speed, head first into a world where we have more stuff to sell than people want to buy.  And yet, a number of companies in highly contested categories are growing dramatically, even exponentially.  How do they do that? What’s their secret?

Attachment

Their secret is attachment.  Attachment is about how much your prospects and customers value the product or service you provide.  It’s about the extent to which you improve their lives.  And at the highest level, it’s about how your product or service defines or supports your customer’s aspiration and self-image.

There are five fundamental value platforms – what you might think of as the five basic reasons that any customer is motivated to make any purchase.  They are:

• Price/Value
• Location/Convenience
• Quality/Functionality
• Style/Status
• Experience/Lifestyle

The platforms of Price/Value and Location/Convenience are rational platforms and very seldom create much attachment.  If a Walmart customer discovers that Target has a lower price on laundry detergent this week, that Walmart customer will probably hot-foot it over to Target and load up.  She’s not attached to Walmart, she’s attached to the low price, which is relatively easy to replicate.

At the other end of the spectrum, a Nordstrom’s shopper who is motivated by Style/Status or Experience/Lifestyle is unlikely to darken the door of JC Penney, even if JC Penney has the same item at a lower price.  Style/Status and Experience/Lifestyle are emotional platforms.  They have the potential to invoke powerful feelings and create strong attachment which are almost impossible to replicate.

Effect of Attachment

Let’s think about the effect of attachment in one of the categories with universal demand, grocery stores.  Have you ever met a customer of Trader Joe’s?  They are borderline rabid.  Given half a chance, they’ll regale you (endlessly) of their Trader Joe’s favorites:  Two Buck Chuck, Green Papaya Salad, Mango Butter or Chili Feta.  To say these folks are attached to Trader Joe’s might be the understatement of the century.  And that attachment translates directly into revenue.  Think about this:  According to Fortune Magazine, Trader Joe’s averages $1,750.00 per square foot in sales.  That’s more than double the sales per square foot of competitor, Whole Foods Market.

Now let’s turn our attention ro cell phones.  Ever try to pry an iPhone out of the hands of an Apple fanatic?  That’s attachment in every sense of the word, attachment that has led to astonishing growth for Apple.  Since being released in 2007, well over 100 million iPhones have been sold and Apple has become the most valuable tech company on the planet.

Attachment means your product has become an essential, even indispensable, part of your customer’s life.  When that happens, you have a shot at exponential growth that few can match with, let alone surpass!

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Tagged as: active garage, attachment, convenience, demand, experience, Good business great life, Jack Hayhow, lifestyle, location, price, status, style, supply, target, trader joes, value, walmart, whole foods

Many people assume that most any business can become a big business.  But if that’s true, why is it that 95% of all businesses in the United States never reach a million bucks in annual sales?

Surprising as it may be, most businesses simply don’t have what it takes to grow significantly.  In fact, only two or three businesses out of a hundred will ever grow past the Mom & Pop stage – past the owner’s immediate span of control.

If you’re a small business owner with visions of growth, these facts can be a little unnerving, and more than a little disheartening.  What these facts tell us is that if you want your business to grow into a substantial enterprise, you need to do something that roughly 25,000,000 other business owners have been unable to do!

So where do you start?  You start by confronting the brutal facts.  You start with perhaps the most important question a business owner can ask:

Is the market sufficient?

Two factors comprise the market, demand and attachment.

• Demand is about quantity – how many people want what you’re trying to sell.
• Attachment is about quality – how much do people want what you’re trying to sell.

For a business to grow significantly, there must be high demand or strong attachment, preferably both.  Although it’s a little unwieldy, here’s a question that gets to the core of market evaluation:

Do enough people care enough?

Sometimes, the answer is no.  Last year about this time our company released an online service called ReallyEasyHR.  The service provided a complete small company HR program for $30 a month.  It was a great service and a remarkable value.  But guess what?  Nobody cared.  It turns out that small business owners have virtually no interest in spending even a few dollars a month on HR.

I believed ReallyEasyHR was going to be successful.  And I suppose I could berate myself about how wrong I was.  But here’s the thing:  You don’t know how the market will respond until you start trying to make sales.  The hard truth is, until you ask a prospect to fork over some cash, it’s all just guesswork and speculation.

That’s true in small companies like ours and it’s also true in huge, wildly successful organizations.  Not so long ago the brain trust at McDonald’s looked at emerging demographic trends and saw what they thought was an opportunity.  People were living longer and the older adult population was burgeoning.  In response, McDonald’s spent $300 million to develop and launch the Arch Deluxe, a sandwich positioned as “a more sophisticated burger for the adult palate”.  The Arch Deluxe was a complete flop. As it turned out, people didn’t want a sophisticated burger from McDonald’s.  Which just goes to show you that some of the smartest people on the planet can be flat-out wrong when projecting demand.

Demand is one thing your company can’t grow without.  Unless enough people care about the product or service you’re trying to sell – and care enough to go out of their way to buy it – survival is unlikely and growth is impossible.  So here are two important reminders for owners who want to grow their businesses:

1. You won’t know if there’s enough market for your product until you offer that product for sale.
2. There’s a chance you’ve overestimated demand, so don’t go all in.  Make sure you live to fight another day.

In my next article, I’ll offer some thoughts on the other factor of market potential, attachment.

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Tagged as: A Good business, A great life, active garage, adaptation, attachment, business, Business Strategy, demand, failure, Jack Hayhow, OpusKC, product, success