Monday, September 18, 2006

A New Tipping Point...

Yesterday, I went to Starbucks and there was a tip jar sitting on the counter next to the cash register. It started me thinking about why you would tip the cashier. Does he deserve a tip for charging the right price? Is he going to make sure the coffee guy makes my drink right? What exactly has he done to earn a tip?

Okay, I have to admit, I’m not a big fan of tip jars and here’s why. It is a thoughtless tip, no different than the spare change you drop into a panhandler’s cup. The panhandler didn’t do anything for the tip, so tipping doesn’t improve anything. It’s not like the tip will encouraging him to take a bath and get a job. Worse yet, it encourages more panhandling. The same is true for tip jars.

Thoughtful tipping on the other hand is a great idea. Thoughtful tipping provides immediate feedback. Thoughtful tipping also provides a reward for good service.

So, what would happen if you tipped your doctor? Not for good medicine, you expect good medicine, but good services: she worked you into a full schedule; the nurse called with your “negative” lab results; your appointment started on time; you didn’t feel rushed. You name it, whatever it is that would make you say to your friend, “I had a great visit with my doctor! It was so good, I tipped her five dollars.”

If only a few people tipped their doctors, I suspect doctors wouldn’t take the money. A few dollars isn’t enough to persuade someone to subject themselves to that kind of immediate, possibly negative feedback. But what if everyone tipped their doctors? If your doctor sees 30 patients a day and they each tipped her five dollars, she would earn an extra $150 a day; that’s $38,000 a year.

More importantly, your doctor would get immediate feedback. She would know if she was meeting the expectations of her patients and could use that feedback at the end of the day or even between patients to improve her performance.

Would you work harder to deliver better service if you could earn an extra $38,000? I’ll bet you a dollar, no make that five dollars, that your doctor would too.

Take care…

John

Saturday, September 16, 2006

Red Notebook - Entry 3

I spend a lot of time thinking about “Singularity of Intent”. I picked up this idea from an article I read in Inc. Magazine titled One Step at a Time. Unlike most business-magazine articles, this one is as important today, if not more so, than it has ever been. The crux of the article is this. For most small business, the required resources, with the exception of one, are cheap and readily available. Money, talent, production capability, raw materials, etc… are readily available at commodity prices. However, time, specifically, you time as measured in your ability to pay attention and focus, to make important things happen, is not; it is in ever shorter supply.

Singularity of intent is about recognizing the scarcity of your most valuable resource, time. If you ill-spend your time, success will remain elusive. In short, your time must be focused on one of three activities: delivering, refining or redefining your value proposition. If you are not performing one of these three activities, you are wasting time.

Delivery is the process of running the current machine that provides the next opportunity for a customer to pay you for your value proposition. Delivery includes both the value-adding and non-value-adding activities required to run a company. Delivery is the activity most of us identify as “work”.

Refining is the process of making incremental/evolutionary changes, hopefully improvements, to the current machine. Refining also includes the process of applying the current machine to new challenges. GorTex is a perfect example of a company that refine. A product that started out as a water-proof/breathable fabric for extreme climbing apparel and tents has found its way to synthetic sutures and endovascular stent-grafts.

Redefining is the process of making bold/revolutionary changes, again hopefully improvements, to the current machine. Redefining is a complete change in the organization. When the United States rejected a Monarchy and became a Democracy they began a revolution in world government.

Singularity of intent is achieved when you have identified the next step that must be taken, the next bottleneck that must be broken or the next mix that must be achieved and made that step, bottleneck or mix the measure against which all work will be measured. Either you are working or you are not. If you are not working then you are wasting time.

The people at Marmot Mountain were able to turn their company around by implementing a singularity-of-intent culture. What would happen if you implemented a singularity-of-intent culture in your organization?

Take care…

John

Knowing the Machine

Knowing the Machine (KtM) is my attempt to address the challenges of finding oneself in a leadership position without falling prey to the pitfalls propagated by the spread of the Leadership Epidemic.

KtM consists of three basic concepts:

1) All processes can be viewed as a queue or line waiting for service
2) Three measures of execution matter most: Input, Overhead and Output
3) Time is your most limited and valuable resource

While I can not claim that any of the concepts behind KtM are original (I've borrowed liberally from much of my reading), I don't often see these concepts applied in this manner.

My initial purpose in discussing KtM is to develop a better understanding of how the pieces fit together and support each other. To that end, I welcome any comments you have.

Take care...

John

Red Notebook - Entry 2

Simply put, your “Value Proposition” is why people buy your product or services. For a place like Wal-Mart, the value proposition is at the intersection of low prices and good-enough quality.

While at first, this may seem like a knock, I don’t mean it to be taken as one. If you take a closer look at that statement, you will see what I’m getting at.

1) A low price is easy enough to accept. It’s hard work making a profit with the lowest prices in town. Besides, who doesn’t like paying less? So, no knock there.

2) Quality is a little different. Who wants to be known for selling or buying low quality? But let’s face, Wal-Mart is not the center of the universe when it comes to quality. When was the last time you said to you self, “I have to have the very best money can buy, where is the closest Wal-Mart?” Almost nobody goes to Wal-Mart for high quality goods. But that’s okay because Wal-Mart has figured out where good-enough is an acceptable substitute. I mean really, do you have to have the very best that money can buy every time you shop? Can you afford it? So, no knock there.

When you find and bring together the attributes that people need and offer them in a package that people can and will execute, you have a value proposition. Wal-Mart has done an amazing job of bringing low-price and acceptable substitutes together and delivers a remarkable value proposition. So, I say, “Good on Wal-Mart!”

The point isn’t product quality at Wal-Mart. Rather, it’s their value proposition. Wal-Mart has built a machine, rather, is a machine that delivers a specific value proposition. If you work at Wal-Mart, you are part of that machine and the more you know that machine the better equipped you will be to become a part of the process that defines the evolution of the machine. The same is true whether you volunteer at your local hospital; work in your parent’s auto parts store or are a VP for a Fortune 500 company. If you want your organization to succeed, the ability to identify and understand your value proposition, i.e. “Knowing the Machine” and how you can influence it’s evolution toward the next value proposition/machine is the single most important skill you can develop.

Take care...

John

Red Notebook - Entry 1

Strategic Development
- Vision
- Mission
- Goals
Execution
- The Value Proposition
- Singularity of Intent
- Knowing the Machine
Maintenance
- People Development
- Incentives and Rewards
- Support
- Feedback

What do these concepts mean in your organization? If it is anything like mine, one, if not more, find their way into every problem discussion we have. People speak of them, frame their issues in one or another of them, point to shortfalls regarding them, etc... But no body ever seems to "do" anything with them.

Now, I have to admit, I think these concepts are important; they are the elements I've been exposed to for most of my professional life. How could I think otherwise? But you see, I'm beginning to wonder if any of these concepts really mean anything. I need to think about this some more.

Take care...

John

Thoughts on Limited Liability

Vinay at WorldChanging posts...

One of the persistent threads running through environmentalism is the notion of "Corporate Responsibility." I've been thinking through some of the issues involving how corporations are formed and how the nature of the corporation affects how the economy assesses and handles risk and I'd like to present an idea for comment and examination.

The seed of the idea is that the limited liability corporation is a government subsidy to risky investments and as such may be partly what drives the reckless attitude of corporations towards the environment...

While Vinay is correct in stating that limited liability corporations (LLC) encourage investors to invest. I believe he is missing the point in assigning the cost of the limited liability.

If investors are willing to accept a given level or risk for a given level of return on investment (ROI), as you increase the expected risk, you must increase the expected ROI to generate the same level of investment.

The risk in his example can be quantified by the cost of insuring against liability; a product that by his estimates would be very costly because it covers a large risk.

Using his example of an insured partnership. To encourage a given level of investment (I1) and the purchase of the required liability insurance (LI), the partnership would have to generate ROI on I1 equal to a lower risk investment (I2) where I2 = I1 + LI.

If the partnership operates at the same level of efficiency/effectiveness as the LLC, microeconomic theory tells us that the increased requirement for ROI, i.e. increased cost, would be past onto the consumer by higher prices and/or fewer choices.

In other words, the individuals he wish to protect from the damaged caused by imaginary governmental subsidies would suffer real damages caused by increased prices and/or reduced choices.

Additionally, since the insurance paid for by the partnership's customers would maintain the status quo in regard to risk exposure for organizational management, the decision making environment will not have changed, e.g. your system provides no incentive to choose a more environmentally friendly path of action.

In fact, under his system of thought where increases in greed = increases in environmentally-damaging business activity, the added pressure to perform, i.e. to act more greedily to generate higher ROI, provides an incentive for organizations to consider proposals and pursue activities with greater potential for negative environmental impact.

Given the protections that LLCs provide for everyone, not just investors, I would think that that any clear minded individual: liberal or conservative, industrialist or environmentalist would be supportive of this type of governmental protection.

At least these are things I would consider when I was analyzing the situation.

On a side note: A few years ago, I took my girls yurt camping. The semi-permanence combined with the openness of the structures provided an exceptional camping experience. Vinay is working a project called Hexayurt. He is positioning it as a refuge shelter. However, given my experience in yurt camping, I bet this project would make a fantastic opportunity for a visionary investment capitalist to underwrite in such a way that it would support both humanitarian and capitalist objectives.

Take care…

John

Check out Vinay's post at WorldChanging...

Check out Hexayurt at MindsMoving...