Just finished Jim Collins’ latest work, Great by Choice. Astounding! I love his work, and this is sure to engage you as well. I just finished the audiobook version, and his narration is the best of any business book I’ve listened to.

The book challenges assumptions about how great companies operate in chaos. What he calls 10X companies (those that deliver much greater returns than competitors) have several characteristics that fly in the face of conventional wisdom:

10X companies don’t always make faster decisions. Sometimes they let events unfold to gain more clarity IF waiting will not cause undue risk.

10X companies are relentless in their paranoia (see Andy Grove’s book, Only the Paranoid Survive). Yet they also are creative in approaching markets.

10X companies are not necessarily more innovative than their comparison firms. They are more disciplined in execution.

10X companies don’t have better luck, they have better Return on Luck, defined as the ability to capitalize upon whatever luck (good or bad) that they receive. You can’t control luck, but you can prepare yourself – and your company – for it.

Many other great insights. A must read for any business leader.

For a more complete review, go to Leading Blog.

(Photo by Charles Gupton)

I am constantly humbled by the energy, passion, and drive that people with ideas can muster. I saw half-baked ideas turned into viable concepts in a matter of seven weeks, with the final being a 10-minute venture pitch to judges and fellow classmates.

I just finished teaching an entrepreneurship course at UNC’s Kenan-Flagler Business School. The students were a combination of MBA students and cross-campus students, faculty, and staff with ideas they wanted to check for feasibility.

What Leads to Entrepreneurial Success

What really makes the class stand out is a combination of three things:

1) Students had to pass a basic filter before getting into the class, and brought their passion and thirst for learning. They were teachable, and they made tremendous progress and effort during the class.

2) Experienced entrepreneurs served as coaches and provided focused, one-on-one guidance to each team. The level of experience in the coaching cadre keeps me coming back because I love being around these folks. One of the coaches, for example, is listed in the Inc. 500 for the third year in a row with more than 100% growth each year. With guidance from such high-caliber coaches, students are bound to improve their concepts.

3) The instructors had real-world experience that they brought out in the teaching. I taught with two others – Patrick Vernon, who’s been teaching at UNC for several years, and Kevin Bowles, who is also a new instructor and a serial entrepreneur.

As I look through the lens of experience, I realize that only a handful of the companies will make it. But they all learned critical thinking skills to assess their ideas, their markets, and the willingness of customers to pay for their solutions. These are all aspects of what each innovator must learn and apply.

When companies get bigger, say around 100+ people, the day-to-day interaction between staff and the senior leadership begins to decrease, and many ideas get squashed in the trenches or at the first level of management. It’s no longer okay to let that happen. With companies in trouble all over the world, NOW is the time to kick up the innovation. To seek out new ideas for new and expanded revenue streams.

When companies settle for small or no growth, the CEO is always to blame. It is his or her job to use the available resources to make their companies thrive. Creating an innovative culture is not easy, but it is possible. Moving from a curmudgeonly culture to an innovative culture is harder than starting from scratch to build an innovative culture. You must overcome inertia and staff that may not be prone to innovation.

Keys to Business Transformation

The keys to transformation are similar to those found in the classroom:

1) You must have people who are willing to move the ball forward. To take bold actions and challenge ideas. Even their own.

2) You need coaches who can guide innovators to morph their ideas and build commercial viability from a kernel of thought.

3) You need champions who will spearhead the innovation within your company to see that ideas get developed and presented to senior management.

Senior managers are the ones who need to see the ideas because they have the broader perspective of how business opportunities can connect to other initiatives and ideas.

(Photo by Cain and Todd Benson)

Steve Jobs stepped down yesterday as Apple’s CEO. This is a big deal for Apple, which saw tremendous growth and became one of the world’s largest companies with Jobs’ leadership. He will remain Chairman of the Board, but drop his duties as CEO due to his health. Jobs has been dealing with pancreatic cancer for years.

Jobs stands out as one of the most innovative leaders of our generation. Reportedly a fiery manager at times, his vision and insight into the possibilities of technology is his legacy. Apple, with fewer than 20 core products, has managed to garner about $100 billion in sales over the past 12 months.

How can you apply Steve Jobs’ innovation practices to your firm?

Big Think has broken down the key principles of market domination that Apple used to rise to the top.

Differentiation focuses on standing for something, which makes you stand out. Apple focused on its vision of a computer for everyone, which required simplicity of use. Perfect for education. When you get it right, your ideal prospects will experience love at first sight. You capture their hearts.

Innovation focuses on the product, service, and experience that customers buy. When you innovate around your offerings and create a unique experience for your customers, they are captivated. Apple’s products look different, they’re packaged differently, and they are incredibly easy to use. When you get it right, your ideal prospects will say, “Wow!” You capture their minds.

Communication focuses on the way that you communicate your message to your customers. Steve Jobs is a master communicator, and learned to communicate from the heart first – starting with WHY Apple does things, then getting into WHAT they sell. Simon Sinek calls this the Golden Circle. Apple starts with their desire to challenge the status quo, to create easy to use and beautifully designed products, and then tells what they’re selling. When you get it right, you drive ideal prospects to action. You capture their wallets.

One of the companies I work with recently introduced me to a website that I think is totally cool. CrowdSpring.com is a crowdsourcing application that lets companies post a project that they want done in the creative arena (visual design), and have multiple parties submit their concepts. Another I just found is LogoTournament.com.

For startups, this is a fantastic way to get a great logo on the cheap, to leverage other peoples’ time to develop marketing materials, ads, stationery, websites, etc. I LOVE THIS! It has triggered a new stream of thinking for me about how to apply crowdsourcing to entrepreneurial needs like business plan writing, market research, copywriting, and more. LivePerson.com provides some of this functionality but is driven by the purchaser after wading through profiles – so technically, it’s not crowdsourcing.

Crowdsourcing is a book recently authored by Jeff Howe. He defines Crowdsourcing on his site thus:

“Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

To learn more about crowdsourcing, you can get Jeff’s book here:

Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business

Crowdsourcing has been enabled by the Internet, and is a great Big Idea to think about. Think Big about how you could use this concept in your business!

Positioning is something many people have heard about, but haven’t properly implemented in their companies. Positioning is determining how you fit into the overall market, and has the following characteristics:

1. Who you are
2. What you sell
3. Who you sell to (specifically)
4. Your value proposition (why will people buy from you?)
5. How you compare to competitors

I was thinking about the state of American business owners yesterday and came to the conclusion that there is a general paradigm that business owners seem to have fallen into that I call the 50 x 5 Trap.

Here it is:

• We work 50 hours per week
• For 50 weeks a year
• For 50 years
• We’re only 50% engaged in our work, and
• When we’re 50, we look back and wonder how we didn’t achieve what we set out to

This is a sad state. Business owners usually start their businesses for one of 5 reasons:

• To make a difference
• To create a better life for themselves and their families
• To make more money
• To have more free time
• To avoid working for someone else

Unfortunately, many entrepreneurs end up creating jobs rather than lives. There is so much we can do to create the kind of results we want to achieve, but we often get stuck in BAU thinking: Business As Usual. When we accept that what we’re doing is the way it needs to be done, but we aren’t achieving the results we want, we should seek out new opportunities for changing our businesses.

If you want more income, more time, and a better quality of life, here is my prescription for you:

1. Get clear about what you want from your life. Forget about the business you’re in right now. Think long-term about the kind of life you want and how much time and money you will need to have that life.
2. Look objectively at your business. Can it help you reach your life goals? Will it – by itself – get you to your ultimate destination? Or is your current business just one piece in your long-term plan to get you there? Do you need to sell your business and start something else?
3. Optimize your performance. Get a coach. Lance Armstrong has a whole team that helps him stay on track. He knows how to eat and workout, but he has a nutritionist and personal trainer to keep him on track and focused. We all need help. Get it. Few of us can do it all on our own. We need coaches, mentors, and mastermind groups to keep us focused, accountable, and in action.
4. Optimize your business. Make the business you have all it can be. You probably think you have done this already, but I challenge you to look again. If you are working in your business instead of on it, you’re not maximizing your value. Streamline, automate, eliminate, and refine processes and activities in your business so that it can run on auto-pilot (or at least with much less hands-on control). This will give you the time you want, and enables you to scale your business to achieve the income you want. It also maximizes the sale value.
5. Focus on what you do best and love most. What do you do better than anyone in your company? If it’s everything, then you stink at hiring. If it’s nothing, then take an extended vacation – and retire. Chances are though, there are a few things you do really well. Out of those, what one or two do you most enjoy doing? Focus there and delegate and outsource the rest.

When you set your destination, get a coach to help you get there, do the work you love, and get the income and free time you want, THEN you are living the dream.

(Photo by Siddharth Pedarkar)

In other words, do you focus on bringing in the big kill? The large contract? The Fortune 500 account?

If so, you may want to start hunting something new. If we call the big account an elephant, there are lots of elephant hunters in the world. However, why not hunt for the elephant herders? The companies and people who already know the elephants, have relationships with them, and who can help you get into the account?

I don’t typically hunt elephants myself. But I have others who have referred me to elephants. But it’s the elephant herders who I have the best conversations with. I just met one today. As we were talking over lunch, I mentioned a client in Denmark, and he said that he’s worked with a complementary company in Pittsburgh. He suggested we connect the two companies and help them expand their businesses globally. This is good thinking. Fortunately, he’s not a one-trick elephant herder. He has connections that I don’t have.

It’s a beautiful thing when you get two elephant herders together. If you’re an elephant herder, you can even sell the elephant hunter the ability to bag one of your elephants. Fortunately, bagging doesn’t mean killing in this example. You can re-use your elephant connections, all the while benefiting all parties.

Go hunt some herders!

(image by ivanpw)

I have people ask me all the time about their company name. And then there are the folks that I have to pull to the side and tell them that their company name is killing their business.

Either way, your name is important. It either adds value, or detracts from your business. Names that mean something help people understand what you do. Names that are unique can be memorable. Names that click for your clients can be memorable.

I have lots of people respond to the name Big Think. But I have found that when talking about me or the business, it’s a split between whether they talk about me, Craig Mathews, or my company, Big Think. Sometimes they talk about my title, Chief Thinkologist. All I care about is that they’re talking about what I do in a positive light.

To Name, or To Be

Should you have a company name that is different than your name? This can be a tough question to answer. I’m thinking about this myself right now. Which brand do I want to be associated with most? Big Think or Craig Mathews?

Here is a quick rundown of how you can make that decision:

• Do you ever want to sell your business? Create a company name.
• Do you want investors? Company name.
• Do you want to appear larger than you are? Company name.
• Do you want to be known for your speaking and writing more than anything else? Use your name.
• Do you want to create an organization larger than 100 people? Company name.
• Are you well known now? Your name.
• Do people talk about you more than your company? Your name.
• Confused? Make it a combination.

In general, a company that is just someone’s name sounds much smaller.

Addendum: Just the day after this post, I had an advertising executive ask me if Big Think is a franchise. He meant that he liked the overall look and feel of my materials, marketing, name, brand, etc. Franchises typically get that kind of stuff right. I was thrilled that someone so astute would ask such a question. Guess I’m doing something right. I seriously doubt, however, that even with all the good stuff in place, that he would have asked the same question if my company name was “Craig Mathews Consulting”. Or even my former name – Forrest Consulting Group. Think Big! Then act Big to get Big.

(photo by Omer Unlu)

Thinking hourly is thinking small.

Take these scenarios as fodder for the No More Hourly Arsenal. When you think hourly, you:

• Are thinking in terms of your cost, not the value to your client.
• Lose perspective on the bigger picture and instead focus on getting things done within budget – not necessarily delivering butt-kicking results.
• Pay employees for existing inside your company, not for producing quality work.
• Can’t scale your business because you are only charging for the work you perform.

Enough reasons to think bigger?

Here are my thoughts on how to escape the hourly rat race:

1. Consider everything from the perspective of your client – They don’t care how much time you put into your service. They care about results – quick turn-around, cost-effective, mind-bending creativity, effectiveness, a total solution, more profit, or whatever else your service provides for them. Repeat: They don’t care about your time invested in delivering the solution. Price based on value delivered and forget about pricing on time. When you give a total price for a solution, you take on the risk of getting the project done profitably. Your client should not be penalized for your lack of training, poor processes, poor estimation ability, or any number of other factors. They should pay for the clearly defined solution you provide.
2. Think in terms of deliverables, not hours spent working. If it takes 5 hours or 50 hours to produce something that you want, you still want that deliverable. Maybe it’s a new brochure or a client deliverable that you need completed. You only care how much time it takes your employee/service provider to the extent that it costs you more or less. You honestly don’t care how much time it takes them if it doesn’t cost you any more. Right?Start paying your employees and service providers based on output and not time spent, and see what happens to their productivity. Now they’ll start thinking like a business owner instead of a worker. And they will deliver what you want based on your defined expectations. This also rewards those people who can get it done faster, because then they can move on to another revenue-generating project and make more money. Those who don’t put in THEIR time to learn, will not earn as much as those who do. This is the best way to reward those who really want to excel, because it gives them the ability to make more and learn more and become the best in their skill.

For Clients

Depending on your industry, this may be more or less difficult to implement. If you are in professional services, for example, most clients are used to paying for hours, usually with an estimate on the front-end. Shifting from hourly to fixed fee can cause some confusion, but it ends up benefitting both parties. Your clients gets a fixed price that will not be exceeded, reducing her risk. You get to build in some margin for error, and the better you do at estimating the project, the more money you can make.

For Employees

This can get tricky. If you have staff that are producing specific deliverable for clients, it is much easier to make this transition than corporate workers who are doing IT support or HR benefits administration. HOWEVER – every single job you have in your company can be outsourced (whether it should be is a different discussion). Paying for performance will help your staff think in terms of being their own business owner – focusing them on profitability and ways to make more money – just the issue that most business owners struggle with in their staff. When you do shift employees to pay-for-performance (also called piece work), they will start to understand that getting more business for the company can help them make more money, that learning to do things more efficiently and effectively can make them more money, and that completing projects faster will make them more money.

The Big Catches

The biggest catches that most people find are: What about undefined time spent doing non-billable work, innovating, doing busy work, accountbaility, and going to meetings? Lets address each in turn:

Non-Billable Work

How much non-billable work do you want people to do? You probably expect people to improve their area of responsibility – better processes, tools, and capabilities. To do this requires some time. How much would you pay an outside vendor to do these things for you/ What is it really worth? What you’re paying now? This is not always an easy question to answer. If you had people stop doing non billable work, what would happen to your company? It depends on your fluff factor, or the amount of stupid stuff your staff has to do to keep you happy, as well as the undefined work that people do. Both are fluff. If you pay only for deliverables,

Innovation

Do you pay for innovation? If so, how do you define a return on the investment? If you have highly skilled workers, you may want to pay them for time to think and play and create. Nothing wrong with that. Just realize that you need to direct that time toward innovations that can make a difference in your company.

Busy Work

People will not want to do busy work any more. This actually helps your company by forcing the removal of non-productive work, and gets the company more streamlined.

Accountability

This system requires accountablity. For a manager to clearly define and set a value for the expected outcome of each portion of work. That non-client time is defined, valued, and agreed upon in advance. This takes time, but over time, it becomes easy and standardized. You will then know exactly what is happening in your company, and will only pay for those things that make a difference.

Meetings

Meetings are a part of business, and should be considered part of each billable project. If your employee was a contractor, you would pay them for that effort anyway. The cool part about paying for meetings is that everyone quickly starts seeing the cost of meeting. If you pay an employee $20 an hour now, pay them $20 for a meeting and see how quickly they want to get the meeting closed out and move on to other paying project work. When you have 5 people in a meeting, there is a significant cost now, and paying for attendance per meeting will help you make that even more real – reducing non-productive meetings and focusing attention. This can have both positive and negative side effects, both of which can be managed with thoughtful action.

Is This for All Employees?

No, not necessarily. For front-line production employees, this enables them to make more money as they produce faster and better. Managers require time in the seat, but can also get paid for defined deliverables of creating new programs, managing well-delivered projects, and other managerial tasks.

Is This for All Companies?

No. Retail requires staff to be on the floor or at the cash register, and must be paid hourly. Think responsibly about how to make this work, and if it appropriate for your business.

An Alternate Reality

I have laid out an alternate reality. One which many companies are using to dominate their markets in profitability, aligned action, and employee engagement. Which also helps grow their client base and create raving fans.

Will you dismiss this because it’s different? Will you dismiss it because it takes some big thinking? Or will you choose to consider it and talk with Big Think about how you can turn your business into a super-charged profit-making machine? Your choice.

BHAGs. Sounds nasty. But it’s a great way to get your thinking out of yourself and into a compelling vision. Jim Collins talked about Big Hairy Audacious Goals in his book Good to Great. This can also be part or all of your vision for your life and company.

Here is a great slide show that communicates what BHAGs are quite well:

Big Hairy Audacious Goals, by Ysobel Hamidjojo