A View from The Prairie, 2016

January 2016

Managing Misfits

Recently, the unemployment rate officially dropped well below six percent. However, more importantly, the labor participation rate also dropped to the lowest level in a long time. More people are dropping out of the workforce than try to get their next job. Millennials are opting to be self-employed at a far higher rate than the previous generation. More and more people claim to not fit the jobs being offered. In order to fill those jobs, we have the opportunity to work with misfits.

Wrong view of Innovations

Last year, Quirky was flying high as an invention factory. They were getting thousands of invention ideas a week and they were moving new products into distribution at a rapid rate. This fall, they filed for bankruptcy protection and the place is basically closed down. We have a wrong view of innovation.

Sharing and Success

In building your company, one of the key objectives is to get the whole team working together towards the common goal. That involves defining that goal and making sure that everyone is on board with it. Here is the deep problem with all of the "Sharing Economy" companies such as Uber and AirBNB: the company and those providing the service have different goals. This difference is not solvable. A person famously said, "A house divided against itself will not stand."

Deep Thinking

Every CEO knows how challenging it is to get time to think. Most days are spent dealing with interruptions and crises. Brain studies have shown that it can take up to fifteen minutes to get back "into the groove" after an interruption. Yet, thinking and planning are the highest value actions a manager can do. It takes planning, practice, and compensation to think deeply.

Profit vs. Cause

Recently, a national magazine posed the question: which should be the focus of a business, profit or a cause, and they asked two entrepreneurs to make their case. It is true that under stable social conditions, a focus on profit is better than having multiple goals. However, neither mentioned the real reasons why a business needs to be more than purely focused on profit. When extremes happen, the businesses that are more than just profit oriented have better survival. The other reason is that a hard focus on profit often blinds us to how the market is changing underneath us.

Handling new ideas

Apple is known as an innovative company. However, they have killed far more ideas than they have brought to market and have killed a number of products that failed. Other creative companies have gone under. The challenge for the creative person is not in coming up with new ideas. The challenge is to limit which idea to follow. Often, we have to kill great ideas in order to profit. At the same time, we need to be always open to changing the corporate focus to follow where the profit is.

Have It Your Way

The Arts and Crafts movement in the early 1900's was a reaction to the sameness of the factory goods offered. People wanted something different. The same is true today. People want to offer unique merchant services which is why we offer custom merchant services software.

Mindfulness

Working sixteen hour days, handling email at all hours of the night, and seeing far more of your company than your spouse are all very common actions in today's world. However, these are also a recipe for bad decision making and losing what we really value. Far more marriages have broken up and executives burned out under these kinds of stresses than companies have succeeded. It is by focusing on the items that truly matter that we are most productive and most profitable.

Certainty vs Risk

Wall Street puts serious pressure on companies to "hit their numbers". In other words, many investors do not want risk. They want certainty with high reward. That is not possible in the long term. Attempts to get both actually take on systemic risks. This is especially true for when people get special freedom from taxation during hard times. Anytime a group of people feel like they have certainty of high profit at the cost of the rest of society, they incur the risk that the whole system will be overturned.

Real Performance

As you walk out the door, you notice with pleasure that one employee is still working at her desk. It seems that every time you leave, that employee is still there. But is she really working all that hard? In many companies, the appearance of working hard is rewarded more than actual accomplishment. When management does not have a process for measuring actual accomplishment, those who accomplish much get discouraged and move on.

Gambling vs Data

In a recent article, Michael Milken mentioned that some highly touted investors don't do a lick of research into the ventures they are presented with. They make the investment decision on if they feel lucky that day. That is not investing. That is gambling. While most people make gut decisions, the real question is whether or not we "educate our gut".

Fill that spot with a warm body

How many managers have stated words like that? Way too many. Hiring the wrong person isn't just a financial mistake. It can adversely affect the whole company. Hiring is often the most important decision by any manager. It is better to not hire than to hire just to fill a position. The best companies attempt to always improve the company with each new hire.

Lessons from the Brexit Vote

What can we learn from the Brexit vote and the similar sentiments echoed in this country? The main lesson is to be as real as we can with our customers. It shows that there are some real social risks for companies from uncontrolled rumors. And there are some very real opportunities for those who can offer hope to those who have aspirations.

Border or Highway

Drive south from London England and one quickly runs into the English Channel. Similarly, drive south from San Antonio Texas and one runs into the Rio Grande. For the car driver or for armies, those are both obstacles. Yet, for those who live on them, those waterways are highways to profit. In many situations in business, what can seem like an obstacle can actually be the path to good profit.

The Value of Standards

Back in the ancient days of early Greece, one area had very strong standards. Pottery had standardized shapes and scribes took note of much of society. The benefit was that trade flourished throughout that area. A while later, the Dorian Greeks moved in with a more individualistic approach and trade fell off to only local actions. In short, having standards over a wide area enhanced trade. It is a lot harder to sell when there is a lack of standards

What is the payout?

In any investment, it isn't just how much return that counts, it is how quickly that return happens. The shape of the return makes a big difference in how much money winds up in your pocket. Luck isn't just in how you play the game, but which games you play and when.

Dealing with Failure

In one poker hand, a person went from betting a few thousand to betting $50,000 and losing it all with people screaming in the background. He went back to his room to reflect on what went on. After reviewing the odds at each point, he figured out that he had made the proper decision each time. After that, he went back to the tables and won far more.

The Data is Too Late

Are you making the decisions too late? If you are looking at the data, that is a backward looking view, not forward looking. We are taught to look at the data. But when we work too hard to find and look at the data, we often have missed the opportunity because that data comes too late.

Trust, Walls, and the Internet

A number of authors point out that organizations with high trust are much more effective and profitable. Yet, we are having problems with technology that was built on the concepts of trust. History shows that we bounce back and forth between trusting and building walls to protect. Recently, the Internet had problems where people have violated the trust with Cyberattacks and stealing data. We need to build the "walls" for the Internet.

Late Projects

The project is late and the schedule just hit the fan. It is so tempting to just try to add people or ask people to work harder. But often there is a better solution. In many cases, what is needed is a deeper analysis of the problem so that the correct changes are made.

The Lottery Trap

"Oh, I'm going to win so much money with this pick." Every lottery advertises itself on the joy of winning while hiding the real costs of losing. People from all walks of life fall into this trap with the lottery, playing other games, investing, selecting a career, or even choosing what projects to pursue in business. The "Lottery Trap" has snared so many otherwise smart people. The basic aspect of the Lottery Trap is that there is money out there somewhere just for the picking, "getting money for nothing", and that we can get rich without hard work. In our fascination with the rewards, we lose sight of the risks of loss or the costs needed to actually gain those rewards.

Servers Wanted

"I want an App that does this and I would like the users to be able to share their thoughts with others and interact on a social basis." So many people look at the Apps on their phone and think that those are only operating on the phone. Yet, Apps need servers behind them. That is why Apps can cost "insane" amounts of money to get right.

The Vibrant Urgency of Business Ethics

"If you steal, if you cheat, just don't get caught. If you do, beg for a second chance, and you'll get one." Sherron Watkins reported that was the culture at Enron. Yet, the company had a very good Ethics document (64 pages long!) that simply sat on the shelf, ignored. Business Ethics are a vital part of any business and may be just as important as marketing is to the future of the company. Ethics happen in the painful, often gut wrenching decisions such as hiring and firing employees or in purchasing.

Slowly Swallowed

A friend recently shared pictures of trees swallowing other items like fence posts, wires, nails, and other trees. There are also fairy tales of people, hobbits, and other creatures being swallowed by trees while they slept. That becomes a cautionary tale for businesses also. We can get slowly swallowed while focused on the day to day crises, missing the slower changes. The same thing happens when acquired - what made us special gets swallowed up by the acquirer and lost. So, it is important to spend time ever so often to look around.

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Our newsletters are completely free and available on request, see our ordering page, for more information. Recent newsletters are available on the web after print publication.

Prairie Trail Software offers a complementary newsletter, A View from the Prairie.

These newsletters are our chief form of marketing. But beyond letting our clients know that we exist, they also provide a great source of information about consulting in general.

Our newsletters are completely free and available on request. Recent newsletters are available on the web after print publication.