Tag Archives: thinking

see the forrest and the trees

My catch phrase this week has been “Think like a Marketer, Act like a Salesperson”

A colleague went to raise $16M with a cunning plan. Two investors told him his plan was stupid, not cunning, and he pretty much threw his pitch in the bin.

See the forrest and the treesAnother colleague deployed some new infrastructure, based on market research for the demand. He blew his dough as it turned the research wasn’t nuanced enough. There was no demand for the new version of offering.

Now I have been a marketer and a salesperson, and what I have noticed is that most people have a tendency to think like a salesperson, and act like a marketer. However, success in business development tends to come from operating the other way round. What do I mean?

Sales people operate at the coal face, consequently their intuition and insight into how customers feel is excellent  – they are constantly altering their behavior based on feedback. However they tend to wear their hearts on their sleeve. If three customers in a row hate a new product, they will give up on selling it.  They don’t see the market, they only see the prospects. (Just see the trees, but can’t see the forrest)

Marketers have a much more dispassionate view of market places. They may estimate, as in the case of Encyclopaedia Britannica, that only one person in a hundred has demand for their product. Therefore logically, 100 people need to be approached to make one sale. However, they are always abstracted from customers, relying on research rather experience. After a while their gut feel becomes so disconnected, that they can be convinced that jumping into the fire is a good idea, if the data supports it.  (just see the forrest, but not the trees)

So, if you think like a marketer “I will have to speak to 25 investors to get one interested (a 4% response rate) then act like a sales person “I notice they wince every time I suggest it will only take 12 months” you end up doing the hard slog, but learning and refining every step of the way.  A winning strategy.

I think its an handy mental framework when trying to develop new business around new products and markets.

Insight on Insight

Have you ever noticed that Entrepreneurs never put an “Out of Office Message” on their email? John Stokes said this to me whilst we were having lunch at the soon to be demolished Rosati’s in Flinders Lane. John is a British Entrepreneur and Venture Capitalist based in Montreal, Canada, where he runs a US$50M fund called Real Ventures. He had spoken the night before at the Churchill Club on his thoughts on globally successful entrepreneurs, whilst on a tour of Australia sponsored by the Global Entrepreneurs Program.

John indicated during his speech that he felt that successful entrepreneurs tend to display four traits, a major one of which was insight. This was fascinating to me as I had been thinking a lot about insight all week, as I had just seen the movie Moneyball. In it Brad Pitt’s character has an insight that dramatically changed the way baseball operated. It was apparently a true story.

For seventy years, baseball talent scouts had been recruiting players, based on their assessment of whether the person would be a future star. Brad Pitt’s character, who was forced to think differently because of a lack of money in the club – realised that perhaps they should be buying home runs, not future stars. The Oakland A’s then picked up a series of cheap but high scoring players that the scouts didn’t like, and won a record 20 games in a row.

But John’s key insight with his Real Venture fund, was that Continue reading Insight on Insight

Tall & Stupid – Meet the CEO

Robert WadlowThe average height of an Australian Male in 1995 was measured at
174.8cm (~ 5ft 9in) by the ABS. I am 174cm (5ft 8in & ½) tall. So imagine my irritation when I met with the CEO of a major (AUD$1B in revenue) Australian organisation who was around 188cm (6ft 2”). He followed me around the board room as we chatted and not only stood to close to me, but was even leaning over a bit.

I realised afterwards that he was used to using his height to his advantage, which I thought was a bit stupid, so I decided to do a bit of research to make myself feel better. And voila.

Tall people are Authority figures
Pretty much everyone realises that size and status are related, its kind of hard wired from children looking up to adults There has been numerous studies around the phenomena and all its variations. Interestingly, the reverse is also true, we perceive that the more authority a person has, the taller he is. Con men know that titles, height, clothes & trapping convince you that they are authorities as they take your money. Robert B. Cialdini, PH.D. The American Psychologist laid this out plainly in his seminal work from 1984 : Influence – The Psychology of Persuasion.

Authority Figures get Promoted
Professor Tim Judge of the University of Florida discovered in 1993 what had been suspected for a long time. Being tall prompts employers and customers to ascribe more status and authority to a tall person. It also boosts self-confidence, actually making them more successful. When it comes to review time the subjective and objective results of their performance gets them the promotion.

Malcolm Gladwell is his book Outliers discovered that men over 6ft made up only 14.5% of the US population, but the made up 58% of Fortune 500 CEOs. This trend isn’t just overseas either, Andrew Leigh of Australian National University found that in Australia, taller people get paid more!

Stupid People are Overconfident
Its called the Dunning-Kruger Effect named for Justin Kruger and David Dunning of Cornell University who published their study of the cognitive bias in a 1999 scientific paper. According to the scientists, “Overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.”

Overconfident People get over Promoted
Overconfidence is an interesting trait – there are many papers on the strategic and mathematical value of overconfidence in negotiations and approaches to problems as well as its role in the downfall of individuals and organisations. Cameron Anderson and Sebastien Brion at the University of California Berkeley had a look at this and concluded that “overconfident individuals will be perceived as more competent by others, and should attain higher levels of status, compared to individuals with more accurate self-perceptions of competence”. That’s because overconfident people send out more “competence cues”. For example they talk louder, have more confidence in their opinions and use more emphatic gestures. This is all wrongly interpreted as signs of actual ability.

The Conclusion
So now I have a new hypothesis which I am testing regularly. If I meet a CEO and he’s tall and overconfident, chances are he’s completely stupid.

The Boogey Man

One of my relatives occasionally drives me mad with his worrying: How would it look if he failed? What would his wife say? What if he didn’t like it?

His worrying almost always to takes the same form.

1.    Identify the worst case outcome (eg usually a combination of bankruptcy/divorce courts/public ridicule).
2.    Don’t explore it any further (eg eek, ears closed, ears closed).
3.    Plot any course that avoids this scenario (and I mean any course).

I call it “The Boogeyman”.  Its the scary thing in the corner until you turn the light on.

And you can turn the light on by saying “so what” .  But I have looked at that before, the Military thinking technique of asking “so what” and following the chain of inference until you come across the facts that matter.

Since every day we have doom and gloom in the newspapers, I thought it was timely to remind you of another technique that can be used in conjunctions with my “so what” technique.  DeBono’s Six Thinking hats In my words:

White – The facts, what we know and what we don’t.
Red – The feelings, recognising how we feel about the situation.
Black – What bad things can happen?
Yellow – What good things can arise from this?
Green – What creative thoughts can we have about this?
Blue – Is our thinking robust about this?

So some Yellow Hat thinking about the current doom and gloom. Yesterday’s Smartcompany says:
One third of SMEs will cut jobs in 2009 – cool, plenty of good people spilling into the marketplace.

Gold Coast developer Raptis Group finally collapses – good news if your a liquidator, good news if you want to pick up a property cheap.

Economists mixed on outlook for house prices – cool uncertainty in the market place leads to opportunity.  Maybe time to launch a newsletter on property opportunities?

Be prepared for four months of pain: Gottliebsen – Cool, Low staff morale in the big stores makes it easier for small boutiques.

The Boogey Monster?  A land of opportunity!

Last will and testament.exe

My wife and I are at the lawyers, going through our will. The previous lawyer had made a number of mistakes, and then promptly left the firm, so it is up to the principal to fix our issues. The Maserati in his carport tells me this guy is either good at his job or good at charging.

So we go through this list of scenarios, some of which need to be changed, some deleted and some simply moved around in the document to make it easier to understand.

I notice that the lawyer renumbers each paragraph as he moves sequentially along, sometimes having to change the number again as he works his edits into the document. I think this is a very disciplined approach and must have been part of his lawyer training.

However, my wife and I have a large number of additions to make, to cover different situations. The lawyer is surprised we could generate so many additions, but we are allowing for situations he has not considered. It is only afterwards I realise what has happened.

Just as the lawyer relied on his training to move through the document and make edits, I relied on my IT training, which made me approach the document in a totally different way. It wasn’t a computer problem, a software engineering approach made sense. I used a basic programming construction, which probably now has a fancy name, but I call it the IF THEN ELSE decision. Virtually all programming languages have a version.

This construction is used in the following way:

IF condition exists (Say my wife is already dead when I die)
THEN carry out an action (Give everything to the kids)
ELSE carry out an alternative action (Give everything to the wife)

Now the lovely thing about this construction is that one IF THEN ELSE decision can be nested inside another. Programmers then indent the bits of text to make it easier to read. For instance:

IF my wife is already dead when I die
THEN

IF my children are all over 18
THEN give everything to the kids
ELSE give everything to my executor

ELSE Give everything to the wife

What a wonderful thing, software engineering converges into drafting my will. Software constructions can jump straight out of the computer and help me better order thoughts to get a logical outcome. Technical training can benefit the non-technical person.

Now I just have to figure out how to make a DO WHILE loop get me a Maserati.

How I learnt to love bad suppliers

I got a quote the other day from a computer guy, who emailed: “I will charge you $350 to upgrade your Drupal installation to the latest version.” This was probably the worst quotation I have ever received. (Drupal is an open source content management system that I use in one of my businesses.)

So I thought I might write about bad suppliers, whom I learnt to love even before I learned to love bad customers.

My first bad supplier experience (that I really thought about) was about a decade ago. I was the financial controller at a multinational engineering group at the time, and I received a bill from an IT company on which was simply stated: “Server tweaking – $750.”

At this point in time I realised that customers enjoy having verbose invoices, and I was instantly grumpy because server tweaking just didn’t sound like value for money.

In later life I actually created a series of paragraphs for use on invoices. When my techo said, “I tweaked the server” on the service sheet, I would paste into the invoice a large standard paragraph about applying patches, checking logs, changing settings, checking virus controls, etc. Everyone was happy.

Then there was the consulting group, who taught me that the time that it will take to complete the work is completely disconnected from when the work will actually be scheduled.

And a special thankyou to my heating guy, who taught me that you need to specify exactly what is excluded from a quote if you want to avoid a customer absolutely hating you and wishing acid rain pouring down at your place.

In fact, I have learnt so many lessons, that I created an open letter to anyone who wants me to buy from them, that includes the following points.

  • Only quotations in writing will be considered.
  • Let me know whether the cost includes GST.
  • Let me know which costs are once off, and which are recurring.
  • Let me know what isn’t included in your quote that might be expected to be.
  • Are there other third-party costs to be incurred?
  • Is invoicing linked to milestones, and if so what are they?
  • When will the work be scheduled?
  • When will the work be completed?
  • What do I need to supply, and by when?
  • What are the risks involved?
  • What are your payment terms?
  • What milestones will I be billed against?
  • What is your warranty?
  • Whom exactly am I buying from?
  • How will you communicate with me over the course of the job?
  • Who will be working on my job?
  • Where will the work occur?
  • Don’t charge me for learning on the job, unless I am getting a discount for it.
  • And finally, if you don’t invoice me within 30 days of doing the work, expect me to pay in the same timeframe.

So of course the computer guy didn’t get the work. In fact, he didn’t even get a response. But if he ever follows me up, we will have plenty to talk about.

Problem Solving Pathways

The other week I went to hear a speaker talk on leadership in times of crisis. I noticed during the question time that lots of people were asking really good questions, but I didn’t think of my good questions until the next day. Irritating but not unusual.

On discussion with a friend, we came to the conclusion that my situation stemmed from two problems. The first issue was that I went to the seminar without having spent time thinking about what specifically I wanted to get out of it. The second issue was that I wasn’t thinking on my feet because I didn’t have the right mental model to analyse the information.

Thinking about this further, I realised that I can make good decisions about IT on my feet because I have a mental model that I use to probe for further information. Consequently I get all the facts I need before making a decision.

This mental model consists of four different aspects of an IT product that I explore before making my decision. They are:

  • The performance aspects.
  • The commercial aspects.
  • The security aspects.
  • The continuity aspects.

Now, for example, if I was looking to buy a CRM (customer relationship management) system, I think I might be asking myself the following questions.

The performance aspects

Does the CRM system do what I want it to do, including can I send out personalised emails to 1000 people without hassle?

How does the calendar integrate with Microsoft Outlook?

How does the contacts integrate with Microsoft Outlook?

Can I record who I have sent invitations out to, who has accepted, and who has declined?

Can I categorise individuals and select people according to category?

How does it handle an individual who belongs to more than one organisation?

How does it handle an individual moving between organisations?

How can extract data?

How can I customise what an opportunity looks like?

How can I network/share the information?

How fast will the application work on my computer?

How does the performance compare to its competitors?

The commercial aspects

How much is the software really going to cost me? – including:

What is the cost for the box product?

Is there annual maintenance fees?

What support do I need to get it going?

How much does the support cost?

What volume discounts are available?

How much is it to buy the software as media and licences, rather than buy boxes?

How old is this version of the product?

When is the next version of the product likely to come out, and will I get a free upgrade?

How does the pricing compare to its competitors?

The security aspects

How is software piracy prevented?

How is the database of customer information secured?

Is the database open? Password protected? Encrypted?

How are backups secured?

Can anyone open up a backup with a text editor and extract information?

Can anyone open up a backup if they have a licensed version of the software and extract information?

The continuity aspects

How does the CRM system back itself up?

Can this backup be automated?

How often should I backup?

How much storage do the backups require?

Who is the beneficial owner of the software and do they have competing products in their stable (will my product be phased out?)

What happens if my database becomes corrupted?

Who provides support in my area?

Now obviously all of the above questions are not a complete list, but it is a fairly good start achieved by just thinking about the four attributes of any IT decision – performance, commercials, security and continuity.

In recent years I have deployed Maximizer, Maximizer Enterprise, Act, Saleslogix and Free CRM. For the Churchill Club I chose Maximizer 8 as the CRM system.

The integration without Outlook is poor, but I like the way it handles my member database and invitations to events. I also like its pricing for the size organisation we are and support is readily available.