A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Last fall I commented on Zynga’s foot-in-mouth incentive stock errors; now it’s Groupon’s turn to open-mouth-insert-foot and they’ve done a bang up job—and not for the first time.

Once again Groupon says it needs to revise its numbers and once again the revision is in a southerly direction (along with the stock price).

Investors, whether co-founders, friends, family, angels or VCs, let alone the public markets, do not look kindly on management that gets its numbers wrong.

They may excuse it the first time, but from then on every restatement becomes a serious blow to the management teams credibility and integrity, not to mention the overall effect on trust.

Perhaps Groupon drank its own Kool-Aid (a major no-no), since it acts as if its golden boy status excuses it from the mundane requirements, such as accurate sales reports, faced by other companies.

I understand that startups love to brag about their hyper growth and lack of bureaucracy, but when internal controls are counted as bureaucracy the company is headed for a fall.

On another note, if you are a small biz looking for a successful approach  to daily deals that has the metrics in place to really measure the value and will work with you to maximize where you already are check out this 14 year old alternative, with references up the wazoo, called Constant Contact.

Option Sanity™ structures incentive stock grants

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

Last December a post entitled Top Ten Reasons Why Large Companies Fail To Keep Their Best appeared in Talent Forbes and about a month later another contributor boiled the 10 reasons down to one (with 2 parts),

1) Create an organization where those who manage others are hired for their ability to manage well, supported to get even better at managing, and held accountable and rewarded for doing so.

2) Then be clear about what you’re trying to accomplish as an organization – not only in terms of financial goals, but in a more three-dimensional way. What’s your purpose; what do you aspire to bring to the world? What kind of a culture do you want to create in order to do that?  What will the organization look, feel and sound like if you’re embodying that mission and culture?  How will you measure success?  And then, once you’ve clarified your hoped-for future, consistently focus on keeping that vision top of mind and working together to achieve it.

Yesterday’s Ducks in a Row focus was Greg Smith and his resignation from Goldman Sachs. Greg resigned because he felt the culture had deteriorated to the point that he could no longer ethically tell candidates that it’s a great place to work—Goldman’s focus is squarely on maximizing their own profit and clients be damned. (The story is all over traditional and social media.)

At the end of his resignation Greg says,

Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

The bold is mine and that thought fits the “if you learn nothing else…” admonishment.

But I will go a step further—

You can’t attract great clients without great talent, so even if you make money in the short-term you will die in the long-term—bereft of both talent and clients.

Great culture attracts great talent; great talent attracts great clients; great clients spend great money—over and over and over.

Flickr image credit: Samuel Mann

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

A study by Bain & Company, published in 2001, showed that acquiring a new customer can cost six to seven times more than retaining an existing customer, and that increasing customer retention rates by 5% boosts profits by 25% to 95%.

Why is it that so many managers ignore the connection between happy employees and happy customers?

Why do they insist on putting the cart before the horse and only invest in their people after revenues increase?

In yet another study researchers again found that customer retention is a function of great customer service, in other words, happy employees result in more loyal customers who spend more.

Zappos may be the poster child of the happy workforce, but there are many ways of achieving the same happy results.

2006, American Express, the credit card issuer, started an internal program that involved training and incentivizing its staff to get customers more engaged. The company transformed its traditional service call by getting rid of scripts and taking customer service representatives off the clock — which allowed the representative to decide how long he or she wanted to spend on each call. It also changed its employee compensation structure, directly linking a big portion of incentive pay to customer feedback. The result: Customers increased their spending on Amex products by 8% to 10% and overall service margins widened, according to a case study by Joseph Handelman, a professor at Ross. In the most recent quarter, the company announced that card members spent a record amount on their Amex cards; total revenue was $7.74 billion, up 5% from a year ago.

Underlying Amex’s actions was recognition of the intelligence of their customer service workforce and a decision to trust their people to treat their customers well and the payoff for doing so was substantial.

Lack of trust in employees is the elephant in managerial corridors and while it sometimes stems from a manager’s own insecurity it’s more often the result of poor hiring.

Managers claim that careful hiring is time-consuming and takes too long, but that’s a cop-out to short-term thinking, as is gutting customer service when the economy slows.

“When sales and profits are down, customer service is easy to cut. It [poor customer service] doesn’t show up right away. Where it shows up is in long-term customer profitability.” –Ronald Hess, professor of marketing at William & Mary School of Business, who studies customer satisfaction and loyalty.

And while you can’t control the economy, you can focus on eliminating the elephant within your own organization.

Flickr image credit: Phillip Martyn

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Most people consider it wrong to take something, whether tangible or intangible, from someone’s home without asking—it’s called stealing.

Most people will be highly offended, if not downright pissed off, if someone goes through their cell phone, contacts their friends or reads their texts and emails.

Companies, on the other hand, see nothing wrong with it—unless they are caught.

I’m not referring to sleazy porn sites, but to the biggest names in mobile and social, the ones that are role models; names like Google Android, Twitter, Foursquare, Apple i-Whatever (Apple claims they prohibit it, but Yelp, Gowalla, Hipster and Foodspotting all do it) and a host of startups and app makers.

The address book in smartphones — where some of the user’s most personal data is carried — is free for app developers to take at will, often without the phone owner’s knowledge.

Heck, appropriating data was actually industry standard, until they were caught, that is.

Now they all claim to be changing their practice and giving users notice when they take personal data.

Does that give you a warm feeling or do you still feel violated the way you would if your home was broken into? (Most people spend more time with their phone than their home.)

Do you trust them to be upfront/authentic/transparent/honest in the future?

Or do you wonder what else they are doing that they haven’t mentioned and probably won’t unless/until they are caught.

Trust is fragile and difficult to fix once it’s broken.

Even oblivious Americans are starting to notice.

Option Sanity™  is trustworthy.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process; so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

Today is Lincoln’s birthday and I thought I would share some of his lesser know words.

However, I’m starting with a very well-known quote, because it’s a favorite of mine “Better to remain silent and be thought a fool than to speak out and remove all doubt.”

Hedge funds are the ultimate expression of capitalism and the capitalist don’t seem to have changed much since Lincoln’s time, “These capitalists generally act harmoniously and in concert, to fleece the people”

There is a reason that today’s discussions of corporate culture focus on the benefits of trust and smart managers would do well to embrace Lincoln’s approach, “The people when rightly and fully trusted will return the trust.”

And if trust isn’t something you’re big on you might rethink your position in the light of these words, “No man has a good enough memory to be a successful liar.”

Lincoln said, “Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing;” when hiring be sure not to mistake one for the other.

I’m often accused of being too blunt, although I do try and follow Lincoln’s advice, “Tact is the ability to describe others as they see themselves.”

Finally, advice that was good for the thousand years before Lincoln said it and will be good for the thousand year after—if not longer, “Things may come to those who wait…but only the things left by those who hustle.”

Flickr image credit: USDAgov

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

Unless you’ve been living on another planet or alternative reality you’ve heard that Facebook is going public.

Facebook loves to position itself as users’ friend, with only their best interests at heart.

In his founder’s letter Mark Zuckerberg said “We don’t build services to make money; we make money to build better services.”

Huh?

There is far more truth in the editorial comment, “This also seems disingenuous considering that Facebook’s biggest triumph is to help advertisers by mining user data to target ads and to train them to treat corporate brands like friends.”

The exception is the 845 million people who log in on Facebook’s mobile app, “We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.”

But I’m sure they’ll find a way.
How much personal data does Facebook collect?

Consider the disk sent to Max Schrems, a 24-year-old law school student, a Facebook user since 2008, who is spearheading a protest against “Facebook’s illegal practices of collecting and marketing users’ personal data, often without consent.”

The disk contained 1,222 pages of information.

That’s a very rich vein of ore for any marketer to mine.
Privacy is a far bigger deal in Europe.

Europeans demand more privacy than Americans and the EU is far more willing to enforce that desire than the financially beholden US Congress.

That makes international monetization more difficult.

The drive for monetization underlies everything Facebook does—but that’s not what’s bad.

What’s bad is their pretense that it isn’t true.

Facebook as a social force isn’t going away, but you would be wise to remember that Facebook is not your friend.

Flickr image credit: marcopako 

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

I seem to write too many stories about bosses who don’t walk their talk, which, I realize, is an overused, hackneyed expression.

But that doesn’t mean it’s not an accurate one.

Here’s the background and I have to admit it really floored me.

“Mark” is a thirty-something engineer and was the third person to join 23 year old “Jim’s” startup early in 2011.

Out of several offers he chose Jim’s. He’d read and heard a lot about the values that Millennials demanded and Jim’s description of his values and the culture he was building based on them closely matched Marks own.

Things were going well and they had grown to 6 people when they landed on the radar of a major corporation.

Near the end of the year Mark heard a rumor that the company was being acquired.

When he asked Jim if it was true he said it was and that they hoped to keep the staff.

Mark was flabbergasted; not because Jim was selling, but because the acquiring company’s culture was known to be diametrically opposed to almost all of Mark’s stated values.

When Mark said as much Jim said that it was an amazing offer and that he would be a fool to turn it down. Although they could easily raise an investment round, his holdings were far more valuable with the acquisition than if they were diluted by new investors.

Mark asked Jim if he had meant anything he said during the interview or if it was all just BS.

Jim’s response really blew me away.

Mark said he shrugged and said “that was then and this is now.”

What do you think? Was Jim justified? What would you do?

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Last summer I wrote about the damage done by misrepresenting the real facts of your company culture.

Today I want you to think about the damage that can be done by misrepresenting your past—as was done by Yale football coach Tom Williams.

Williams said he had chosen to pursue a career in professional football at the expense of a possible Rhodes scholarship — and never regretted the decision. Witt leaned on his coach for advice, and eventually decided to play in the game. Yale was crushed, 45-7.

But Williams’s story was a lie.

Bottom line, Yale lost the game, Witt lost the scholarship, and Williams lost his job.

It doesn’t matter if the lie is large, like Williams’ was, or a minor tweaking of the facts; these are personal lies and they go beyond damaging cultural touchstones, they damage lives.

Too many entrepreneurs believe there is wiggle room as long as the words or actions further company goals or land rare and needed talent.

These entrepreneurs are willing to sacrifice not only everything, but everybody, to their vision.

Are you one of them?

Option Sanity™ isn’t for liars

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  So easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Option Sanity™ is not recommended for micromanagers, manipulators, or politicos. Founders and CEOs with large egos, or a sense of entitlement, should avoid prolonged exposure to Option Sanity™.
Use only as directed.
Excitement and a strong feeling of virtue are expected; contact your Option Sanity™ rep at the first sign of smugness or if you experience any difficulty explaining Option Sanity™ to others.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

“It’s all about sales. I’ve never seen an entrepreneur who wasn’t a salesman. I always feel like, with an entrepreneur, it’s not just about convincing someone to come in but it’s really about getting them to see life the way you see it through your eyes.” –Barbara Corcoran, Shark Tank

Corcoran is right, but it isn’t just entrepreneurs; it applies to everyone.

“See it through your eyes.”

Isn’t that what everyone wants?

From convincing investors to give you their money to selling yourself to a potential boss (or selling the company to a candidate), to making the case to your boss for a new piece of equipment to deciding what movie to see, it’s all sales.

Persuade, influence, blandishment, brainwash, cajole, con, conversion, enticement, exhortation, force, induce, inveigle, sweet talk, wheedle, preach, manipulate—call it what you will it’s still sales.

Folks do tend to get upset when “negative” words—manipulate, brainwash, con—are included in a discussion of sales, but then, there are people who think ‘sales’ is a negative action.

Which is ridiculous.

Without all the myriad ways we sell every day not only commerce, but religion, relationships and most of life would grind to a halt.

The actions that are termed sales or any of its synonyms aren’t good or bad; as with any tool it is how you choose to use it that defines whether it’s positive or negative.

Or, to paraphrase, sell to others how and what you would want sold to yourself.

See, is that so hard?

Flickr image credit: PR_Springer_Fachmedien_Wiesbaden

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL

With all the research and resulting proof, much of it expressed in dollars, why is it so difficult for companies to execute good cultures?

There is no lack of advice and how-to help available and in a variety of ways, from consultants to books, blogs to videos.

Real-world facts show that good culture is still elusive; one of those ‘should’ actions that are frequently talked about, but often not done.

You create the culture in which those subordinate to you work, no matter your level of management, from team leader to CEO,

CEOs set overall company culture, while subordinates then create, intentionally or not, their own culture that either copies it, is synergistic to it or diametrically opposed to it.

The only guarantee is that whatever culture emerges will accurately reflect its creator’s thoughts, values, beliefs—in other words, MAP.

And therein lies the reason and the problem.

All the cultural intelligence focuses on good culture, with touchstones such as fairness, trust, authenticity, merit, etc.

If those attributes aren’t the bedrock of your own MAP then it’s impossible to implement a culture that embraces them.

So if you are looking to change a non-performing culture or improve a mediocre one, be sure to look deep inside yourself first to know what is possible and what won’t stick unless you change first.

Flickr image credit: zedbee

Your comments-priceless

Don’t miss a post! Subscribe via RSS or EMAIL