Planning, Startups, Stories

True Story: I don't Create Competition

In The First Day I told the story of leaving Creative Strategies and going out on my own to write books and, as it turned out, build my business planning and market consulting business. I was recently reminded of an offshoot of that story, valuable to me as a lesson in running a business right.

The lesson came from Larry Wells, who was the founder of Creative Strategies, president of Creative Strategies when this took place, and was later a venture capitalist in his own firm and then Citibank Venture Capital. I don't know where he is these days. It's been a long time, and I moved from Palo Alto to Eugene, but if you're out there Larry, send me an email. I just Googled you and it didn't work, there are many Larry Wellses out there, none seem to be the one who started Creative Strategies.

Larry and I remained friends during and after my exit from Creative Strategies. He kept me on retainer for more than a year, passed some business over to me, and made sure I got all of my accumulated vacation pay. I stayed on an extra nine months longer than I wanted, because my original exit date was awkward. Larry was trying to buy back the company from Business International and wanted me to remain until after the deal was done.

There was, however, one thing he wouldn't do: help me build a business to compete against him. That's exactly what he said when I asked him to cosponsor a newsletter that became Infotext: the Strategy Letter (and died many years ago).

"Sorry Tim, that would be helping you to build a name to compete against us. I never do that. That's always bad business." Larry looked me straight in the eye and answered as simply and clearly as possible. I got it.

It's a good lesson. Don't build the competition. Even if you're friends, or allies, you have to be able to look into the future and see where that leads.

Breaking Stereotypes on Immigration

Has anybody else noticed that discussion of immigration in this country has broken down into stupid stereotypes?  Fences on the border, for example, and the mindless grouping of immigrants together as if they are all from Mexico and all farm laborers? 

Thanks go to Steve King at Small Biz Labs for the occasional post of desperately needed real information, such as his Foreign Born as a % of the US Workforce today and his series Immigrant Entrepreneurs including four useful posts since last summer.

The World's Worst Seller? Is This You?

I very much enjoyed Meet the World’s Worst Seller posted by Valerie Maltoni on the Marketing Profs Daily Fix Blog. If this is you, then please don't call me, ever.

Facts, Lies, Business Truth

I can't resist pulling a couple of posts together today to follow up on truth, lies, statistics, research and, ultimately, metrics in business. We should at least recognize, if we're going to be in business and we care about ethics, that there are ranges and degrees of truth. It isn't black and white.

We have to manage that problem of truth on several levels. First, there's the example that
Mark Hurst posted as More on wine and charlatans over at Good Experience Blog today:

The experiment, conducted by Cornell professors Brian Wansink and Collin Payne, was fairly simple. A group of diners in an Illinois restaurant were served a free glass of Cabernet Sauvignon with the same fixed-price French dinner. All were told the wine came from Noah's Winery (a non-existent brand), but half were told the origin was California and the other half North Dakota. In fact, all of the wine was "Two Buck Chuck," a very inexpensive but brisk-selling wine from Charles Shaw Wines. Predictably, the "California" wine was rated as being better than the "North Dakota" wine.

Here's the interesting part, though: the diners who received the free glass of California wine also rated the food higher, ate 11% more food, and were more likely to make a return reservation.

So this story illustrates levels of truth, and ways to manipulate. Presumably we all agree that the restaurant can't lie about its wines. But are the people who liked the food better and ate more also lying? And what does this tell us about customer surveys? When a seemingly unrelated factor creates this much distortion in the data, how much to we want to use this to make decisions?

What if a restaurant is aware of a survey and decides to give free California wine that night? Is that dishonest?

We like to distinguish quantitative data from qualitative data and most of us trust the quantitative more. If you read that people liked the food better, that's not nearly as convincing as a number, in this case 11% more food. But how easy is it to manipulate that number?

And that brings me to Marc Andreessen's post  from this morning also, titled You have to love this industry, in which he tracks a self-serving switch by Microsoft CEO Steve Ballmer:

Oct. 2:

Steve Ballmer, the Microsoft chief executive, believes that the craze for individual social networks such as Facebook risks being exposed as a "fad"...

"I think these things [social networks] are going to have some legs, and yet there's a faddishness, a faddish nature about anything that basically appeals to younger people," Mr Ballmer told Times Online yesterday...

[Ballmer] added that there was little in the way of technology to justify the lofted valuation attached to a site expected to achieve revenues of only $150 million this year.

"There can't be any more deep technology in Facebook than what dozens of people could write in a couple of years. That's for sure," he said.

Oct. 24

Microsoft Corp. agreed to invest $240 million for a 1.6% stake in Facebook Inc. that values the social-networking site at $15 billion, beating Google Inc. in a closely watched contest.

As part of the deal, the two companies expanded their existing advertising agreement. Microsoft, which previously handled Facebook's U.S. ad sales, will now also sell the site's international advertising.

I think this is amusing, but not dishonest. Opinions are not fact and business people are supposed to manage opinions and even information. That's his job. Actually, given our securities laws, executives of publicly traded companies can be liable for honesty when they are honestly optimistic about the future and then they turn out to be wrong.  I think Steve is doing exactly what he's supposed to do.

Put it on more personal terms: you're interested in buying a certain house. As you walk through the house you make negative comments that the seller's representative can hear: it doesn't have enough light, the appliances are old, etc. Your intention is to influence price negotiations to come. Is that dishonest, or just good business?

Now put it into a different case. Whole Foods CEO John Mackey uses a fake name to comment on his company and a company it wants to buy on stock-related sites. Is that dishonest?

And now I can make it personal, and specific to me. I've been an employer for many years now, which means occasionally I'm asked to give a reference on somebody who no longer works for my company. I have several times failed to give a full and fair airing of negatives about that former employee. Why? Because I don't have to and I don't want to. Am I lying by omission?

How about you, when a survey taker asks your opinion about a product: do you say it's too expensive just to manipulate the manufacturer to lower the price? When they ask you how much you intend to spend, do you increase the amount because it makes you feel more important? Do you assume honesty matters in a survey?

I don't know about all this but I'm interested. I think the restaurant that lies about what it's serving is dead wrong, and bad. I think the business person who shares negative opinions while negotiating a deal is doing the job. I think the business person who gives a falsely positive review of a former employee might be doing the job too. What do you think? Does it matter? Is there a right and wrong?

A New Media What?

Many thanks to Rob at Business Pundit for noting this, and even more thanks to author (originator?) Scott Monty of The Social Media Marketing Blog for the following razor-sharp two-minute video, which is both hilarious and sadly true at the same time. (Warning: adult language.)

Scott asks the obvious question: "does this really apply to you (or me)?" As for me, no such luck yet, give me time though, maybe I'll get there.

Metrics, SWAG, and Three Types of Lies

This is a true story. Back in my market research days, 20-some years ago now, I watched one of my friends and colleagues (call him Fred) present a market forecast to a committee of IBM executives. They objected to his numbers, which seemed way off of what they expected, which was also what they'd received from competing market research companies.

The pause that followed seemed to me to take forever. I watched with excruciating pain as the IBM executives in the room exchanged glances. I was sure they thought we were idiots; and expensive idiots too.

It was probably only a second, maybe two. Fred, thank goodness, was a seasoned veteran of this kind of moment, an alumnus of Stanford Research Institute with a lot of degrees and a lot of experience. He responded immediately. "Oh, that's because we define the market differently," he said, quickly and confidently. Then he started asking questions. "How do you define PCs? Does the processor make a difference?" Our clients seemed bewildered first, then apologetic. Fred resumed his presentation. We were home free.

What I knew, but kept to myself, was that Fred had changed definitions as quickly as a carnival con man changes peas underneath walnut shells. There's sleight of the hand and sleight of the definitions. Definitions are a market research consultant's best friend.

Which brings me to the subject of metrics. By that I mean numbers, measurement, a scorecard. People want to see how they're doing and we're used to scores in numbers. I've posted on this blog before about the importance of metrics, which drive accountability into planning and management. Metrics are to management what mortar is to a brick wall. How can you have accountability if you can't measure performance?

In three ways to make your employees miserable I quoted author Patrick Lencioni saying that employees need, deserve, and want metrics. Earlier I had posted the magic of metrics, about how much I like metrics in my own work life.

My story here is about another side of metrics, the pliability of metrics.  There's an old quote, attributed to Mark Twain, Alfred Marshall, or Benjamin Disraeli: "There are three types of lies: lies, damn lies, and statistics."

Sometimes we manufacture truth to fit our purposes. It's not necessarily bad. When our Palo Alto Software soccer team went 8-1 in the city league last year we called a local trophy shop and ordered our own trophy, which most of the players assumed was given by the league for finishing in first place (and if this is you reading this, sorry, we thought you deserved it).  This gets particularly interesting when we do this with the metrics that are built into our management.

That comes to mind today for the juxtaposition of a story in the New York Times and a post by Seth Godin. In How Many Site Hits? Depends Who's Counting, Louise Story reports on widely varying ranges of traffic statistics on different websites, depending on the source.

...big media companies — including Time Warner, The Financial Times and The New York Times — are equally frustrated that their counts of Web visitors keep coming in vastly higher than those of the tracking companies. There are many reasons for the differences (such as how people who use the Web at home and at the office are counted), but the upshot is the same: the growth of online advertising is being stunted, industry executives say, because nobody can get the basic visitor counts straight.

I do remember that in the old days of the dot-com boom we could manipulate definitions to change Web traffic numbers. For example, there were visits, visitors, unique visitors, unique visits, page views, hits, lots of different but related numbers. Of course the true measure was sales, but even with sales, did we count returns? Did the month end at midnight of the last day of the month, when orders were made, or when the orders were tallied and posted? There's always some wiggle room.

In his post "The New York Times Bestseller List", Seth Godin points out that the New York Times is manipulating the list to serve various purposes. But, he adds,

The best part... it doesn't matter. Cumulative advantage is so powerful that even though the accurate reports of book sales often completely contradict the Times list, authors and others still obsess over it. We're always looking for clues, especially in crowded markets.

The easy answer to this puzzle is consistency. Measure performance by one consistently applied measure, without making it matter much which measure you use, but stick to the same measure so you can see change over time. In the real world, however, even those consistent measures over time are subject to change.

Fred, the market researcher in my opening story, was in his early fifties when I was working at Creative Strategies, myself in my early thirties, and he taught me a thing or two. One of them was his use of the term SWAG as a data source. SWAG stands for "scientific wild-ass guess."

The Rest of the WSJ Story

The Wall Street Journal has a story today on my decision to name Sabrina Parsons CEO of Palo Alto Software and dedicate my time to blogging, speaking, and my next book. It's nice to get press notice, and Laura Lorber did an excellent job boiling down 75 minutes of interview to a few hundred words.

This may have started with Steve King's story, Baby Boomer Un-Retirement over at Bizlabs, which was related to my post The Ideal Job on this blog, and one last April when I announced the decision. 

I emphasized that this  isn't retirement, it's a delightful new job. "He wasn't -- and still isn't -- interested in retiring," Laura wrote, and that's important. "Now blogging full time, he posts up to 10 times a week to more than three blogs, including blog.timberry.com."

I'm a bit embarrassed about the King Lear  references. Laura reported that accurately, but I really don't spend my time reading Shakespeare classics (talk about out of date!). I looked up Lear after a reference in a conversation, and it seemed interesting because of the old guy and his three daughters. For the record, though, I also mentioned Christopher Buckley's Boomsday, which is about baby boomers getting out of the way, and about blogging as well.   

I also talked about how I never really liked the management side, but stuck with it for 19 years because this was my company, my work, and I felt that I had to run it or it wouldn't be run. Then I turned around and saw that there are others around here who can run it as well or probably better than I. So I get back to my writing. During that long interview, Laura asked me about career paths. I mentioned how I gave up the VP spot at Creative Strategies to do the work myself instead of managing others, which I described as First Day of a New Business in a previous post on this blog.

Blog Action Day Wrap Up

The very first Blog Action Day was an unprecedented success and they've got the final wrap-up where the site used to be at http://blogactionday.org complete with statistics, sample posts, details of the huge amount of press coverage it had all over the world, quotes and more.

I posted We Drank Water Straight from the Stream on Monday on this blog as part of Blog Action Day.

Nepotism vs. Common Sense

If my wife and I raised well-educated, hard working children, who believe in our business and carry it forward, is that bad? At one point, years ago, we had preteen kids putting sticky labels on floppy disks in our living room. We had teenage kids going to the office and answering phones for the business after school. Our son managed our Internet presence from 1998 until 2001, and our daughter and her husband built our UK subsidiary and then managed our marketing for years. Three of our daughters work for our company, Palo Alto Software. One of those three runs it.

Is that bad? Apparently some people call that nepotism and that sounds ugly.  In Nepotism vs. Family Business over at MommyCeo, Sabrina Parsons objects:

We can see that family businesses are extremely important to the US economy, and are part of what makes America what it is today. So, how do you reconcile a family business and these negative attitudes towards nepotism? You can not see a family business from one generation to the next, unless family members work and run the business. Family succession planning is very important to the health of a family business. Good family succession planning means the difference between a healthy business that keeps growing and running from one generation to the next, and a business that burns out and fails, or worse gets sold out of the family (often times for bargain price to be dissolved for assets).

She has good reason to be angry. She's responding to a Harvard Business Review post, picked up by NPR today,  that seems to assume family members are by definition incompetent. That's a dumb generalization, a sloppy stereotype.

In fact, the real definition of nepotism is favoritism and unfairness, not just family. I looked it up. Google gives me 7 definitions of nepotism, 6 of which incorporate unfairness and favoritism, leaving one outrider that assumes nepotism whenever there is a family tie in a business.  Wikipedia, the best of them, clearly defines it as favoring relatives because of their relationship rather than because of their abilities. That's one of the points Sabrina is making.   

So let's clean up this sloppy thinking up. I expect better from NPR and HBR. Passing leadership on to smart, hard-working, and committed family members isn't bad. Sharing DNA doesn't lower ability. Don't talk about nepotism without making this important distinction.

We Drank Water Straight from the Stream

My thanks to the organizers of Blog Action Day for a great idea, well implemented, and here's hoping that it changes the world. I'm certainly proud to be participating. I'm also happy to see this happening, belated or not.

I have to admit that it's a bit disheartening to think that we were talking about environmental issues back in 1964 when I was a sophomore in high school in suburban California. So much of what Al Gore has finally convinced a lot of people is true was already there. My family joined the Sierra Club in 1964, in part because of an annoying 15-year-old (me) who wouldn't shut up.

I'm happy to see the success of An Inconvenient Truth, and the success of blog action day. Later is better than never.

So much has changed for the worse in so little time. Here's one simple example. My wife and I used to take our kids, now grown, into the high Sierra mountains in California every summer. We rented a burro at the Tuolumne Meadows stables in Yosemite, and went up into the mountains where we would be two or three days hike from the nearest road. You see the stream in the background in the picture here? We drank out of it, used it to cook our food, without any worries about salmonella or parasites or anything.  That picture was taken in 1988. We didn't carry bottled water, we didn't carry iodine pills, we didn't boil the water, it was clean runoff from Sierra snowmelt. It tasted so good. It was deliciously cold, clear, and completely clean.

In fact, we used to carry aluminum Sierra Club cups on our belts. Instead of lugging water, the cup would bang pleasantly along with the beat of our walking pace, keeping time to the hike, there in an instant. Streams came along at perfectly reasonable intervals, every half hour or so.

I just Googled the Sierra Club cup. They're producing them again, but as a tribute to the past. They had been discontinued for at least 10 years. After all, what good is an aluminum cup for dipping in streams? Just get a plastic water bottle with a section top.

So that's just a detail, I know, but details are the only way I can get a handle on this. Those days are gone now.  It hasn't been that long. Our grown-up children, the oldest of them now in their 30s, remember that well. Our younger children,  now in their 20s, have no such memory. The idea of drinking water straight out of a stream sounds like some scratchy old black-and-white storyteller from the distant past.   

When my kids are the age I am now, what else will they be telling their kids about? I guess polar bears and penguins are already doomed. "They used to live in the wild, dear, not just in zoos."  Will they be telling them that there were streams running down the mountainsides, fed by melting snow? Yosemite Falls? The San Francisco Bay?