$2,000 for the tickets

August 29, 2016

By Seth Godin via sethgodin.typepad.com   Article

Good decisions (and sunk costs)

“An anonymous friend sends you two tickets to Hamilton, showing on Broadway tomorrow night.

On your way to the show, someone offers you $2,000 for the tickets. If you don’t take the money and go to the show instead, how much did it cost you?

Or, consider the opposite:

An anonymous friend sends you $2,000.

You go for a walk in New York. On your way, you pass the theater where Hamilton is playing. You offer someone $2,000 for two tickets. If you end up buying the tickets, how much did they cost you?

It’s pretty clear that the answer in both situations is exactly the same.

We make decisions (about what to do and what not to do) every single day. And we lie to ourselves all the time about costs.

If your team has been working for a year on a new project, and two weeks before your (expensive) launch, someone comes out with a competitive product that’s better and cheaper, it means that it will cost you millions of dollars to fight your way to decent market share. Should you launch?

What if your team had only been working on it for a week?

Past expenses have nothing to do with future economic decisions.

Past profits have nothing to do with future decisions either.

That’s not easy to embrace, but it’s true.”


What they really think of you

August 29, 2016

Via shmula.com   Article

Voice of The Customer: What They Really Think of You!

Living the Fantasy

Voice of the Customer programs are crucial to the success of your business. The problem is so many think they know exactly what their customers think and feel. You have been in business for 30 years and do things the same way, that’s what your customers want. Are you sure about that? For many businesses, they are either disconnected from their customers or they live with rose colored glasses when it comes to the voice of the customer. Those same businesses are very quick to deal with a vocal, disgruntled customer. Immediately, they are showered with attention, promises and apologies, then a discount to make up for the upset. The customer walks out and everyone breathes a sigh of relief and pats each other on the back, thinking they have saved another customer. Truth be told, what you think just happened is probably not what the customer thinks just happened. This begs the question: do you really know what your customer thinks about you? …

What They Really Think of You

Using a solid Voice of the Customer program, you are going to get to the core of what your customers really think of you. For some, it might just be a bit unsettling. Here are some facts you should keep in mind as you begin your journey down the road of truth:

  • 78% of customers have walked out on a transaction because of a poor service.
  • On average, loyal customers are worth more then 10 times as much as their first purchase.
  • It takes up to 12 positive experiences to make up for one negative experience.
  • 91% of frustrated customers will not continue to do business with you.
  • 40% of customers expressed that if they could improve one thing, they would improve the human element of the service.

These facts are both enlightening and staggering to some. They should disturb organizations enough to happily engage in a viable Voice of the Customer program that is effective. The days of reactive customer service experiences are over. Your customers expect you to be proactive and anticipate their needs and exceed them!”


Revenue is revenue, right?

August 29, 2016

By Outlier via us10.campaign-archive2.com   Article

Gross, Net and other Adjectives

“Revenue is revenue, right? I’m not sure, that entirely depends what you mean. There are a number of flavors of revenue, and today we’ll discuss the two most common: Gross Revenue and Net Revenue.

Gross Revenue is the total amount of cash coming into your business from operations. For example, if you sell basketballs for $20 apiece and you sell 1,000 balls your gross revenue is $20,000. This is also known as “top line” revenue as it appears as the top line on financial statements. (I know, clever!)

Net Revenue is the total amount of cash coming in minus your cost of goods (COGS). Back to our example, if you sell 1,000 basketballs at $20 apiece but they cost you $10 to make (your COGS) then your net revenue is $10,000.

Okay, so when should I use which?
Gross revenue will always be useful on your financial statements as it’s the basis for many other calculations. However, you should never use it as a metric since it’s very misleading! As you can imagine, by ignoring the COGS you are missing the fundamentals of the business. A business that sells a product for $1 that costs $10 to make would have fantastic Gross Revenues but be a truly horrible business!

Net Revenue is a much better reflection of your business for the purposes of determining things like LTV (customer life time value) and ARPU (average revenue per user). For example, since it takes the COGS into account you can compare it to your CAC (customer acquisition cost) to determine if you are generating more money from customers than it costs to acquire them.

*** COMMON MISTAKE WARNING ***
Net Revenue is not the same as profit! Your profit has to take all costs into account, not just COGS. Many companies confuse the two to their own peril!

*** END WARNING ***”


The caring leader

August 29, 2016

By Steve Keating via stevekeating.me   Article

“You either care about people or you don’t. There is no in between. You don’t have to like someone personally to care about them, it certainly is easier but for an Authentic Servant Leader ‘liking’ someone is not required to care about them.

You can’t really teach someone to care but you can help them see value in other people and seeing value in someone is where caring begins. I’m not talking about ‘value’ in terms of what they can do for you, the value I’m taking about is the value that a human being brings to the table just by being themselves.

A great measure of authenticity in a leader is how they treat people who can absolutely nothing for them. If they are still willing to help, support and guide that individual when they know there will be no personal return on that time investment then it’s highly likely they actually care about other people. …

Authentic Servant Leaders understand the value of diverse opinions and thoughts and they work to learn from people different than themselves. If you’re surrounding yourself with like-minded people then you will struggle to grow as a leader. It is by allowing other people to be who they are that you become a better person and a better leader.

Your leadership is about the people you lead, it is not about you. People will not truly follow you until they know that you truly care about them and if they don’t follow then you cannot lead. It’s a pretty simple equation.

The challenge for Authentic Servant Leaders is not just caring for people that they don’t like, the ultimate challenge is caring for people they actually dislike. President Abraham Lincoln once said, ‘I don’t like that man, I must get to know him better.'”

 

 


Soap powder

August 22, 2016

By  via squawkpoint.com   Article

Sex and Soap Powder, Trial and Error

“There is a soap powder factory near Liverpool. … In that factory they mix a bunch of ingredients together: water softeners, enzymes, bleach, detergent, and water.  Then they pump the resulting slurry at high pressure and temperature through a spray nozzle.  When they do that the water evaporates and leaves a powder that looks a little like snow. Finally they take that powder and put it in a box and sell it for a chunk of change.

But the people who do this for a living had a problem. The nozzle kept blocking. The powder that came out was too big or too small, too dry or too wet. If you make soap powder the last thing you need is a nozzle full of lumpy, gunky, almost but not quite, soap powder. …

The solution to a problem like this is to find some experts.

The first set of experts were chemical engineers.  They had qualifications in heat exchange mechanisms and applied mathematics.  If fluid dynamics was top of your list, these were the men to have in the room. …

The second set of experts were evolutionary biologists.  For my sins I was once an evolutionary biologist.  People like me know all about sex, but only the theory, not the practice I’d hasten to add. …

The engineers … Investigated the problem, wrote equations and held meetings.  Then they designed and built a solution and implemented it.  It was a better nozzle.  I’d love to tell you how much better, but I can’t find a reference, so let’s go with not much better.  The problems prevailed.

The biologists … Took a different tack.  They weren’t experts in making soap powder, but they did know about evolution.

They took the nozzle and make 10 copies of it, but no copy was exactly the same. Some were fatter, some were thinner.  Some were taller or shorter.  Some had notches in them, others had grooves.  They were all slightly different. Then they pumped soap slurry through the different nozzles until they blocked and looked at the results. They measured the quality and volume and worked out which of the ten nozzles was the best.

They threw away the 9 failures, took the best nozzle and made ten copies of it…  Repeating the trial and error process for 45 generations. … After they had failed four hundred and forty nine times, the biologists stopped.  They had developed a nozzle that was (allegedly) hundreds of time better.

The lesson … Mistakes are inevitable.  We live in a complex world.  We can’t hope to understand everything.   So don’t worry about making mistakes.  Just make sure you have a way of capturing and learning from them.”


The 1 best question

August 22, 2016

By Jim Schleckser via inc.com   Article  

The 1 Best Question to Use in an Interview  

“If I was to hire you, how would I know if you were doing a good job?” This is a great question because it forces the candidate to put herself into the job and be thoughtful about how she might be measured by you, her boss. The answer you get will tell you a lot about the candidate’s maturity and comfort level with having her performance measured.

If you ask a C player this question, for instance, you might get some stammering followed by some noncritical metrics such as he will show up for work on time and not take extended lunch hours.

A players, on the other hand, will give you exactly what you’re looking for. Let’s say you are hiring a software engineer. When you ask an A player the magic question, he might respond by saying you will know whether he is doing a good job by using three metrics: the total volume of software code he produces on a weekly or monthly basis; the quality of the code based on a limited number of bugs; and his on-time delivery rate in which he hits the targets he said he would.

This would be a great answer because each of the metrics is measurable and quantifiable. You know if you had a group of engineers who were all willing to be measured on those metrics, you’d have a high-performing team.

Similarly, if you were hiring a salesperson, you might want to hear her answer the magic question by saying that you could tell she was doing a good job if she was exceeding her quota and selling profitable business, and her customer satisfaction rating was off the charts.

A key point here is that while you might know what you want to hear from a candidate, leave some wiggle room to be surprised and to learn something new about the position from an A player–someone who might think of a metric you’ve never considered.

The beauty of asking the magic question is also that, after the candidate gives you his answer, you pause for a second and say: ‘Let me write these down because, if I hire you, this is exactly how I will measure you after you start your new job.’

In other words, you can use the answer to the magic question as a great onboarding tool in which you have eliminated any chance that your new hire will be surprised about what is expected of him after he starts his new job.”


The Audi race team

August 22, 2016

By  via linkedin.com   Article

How Constraints Create Space for Innovation

“The Audi race team had the goal of winning the prestigious Le Mans race. Both their closest competitors, BMW and Mercedes, had won the race before which made the goal particularly worthy of pursuing.

The obvious way to win a race is by building a faster car. However, building a significantly faster car is non-trivial. The chief engineer at Audi instead posed a different question to his team: ‘How can we win Le Mans if our car cannot go faster than anyone else’s’? Audi won Le Mans that year. Can you guess how?

Constraints Create Space for Innovation

They won the race, not by building a faster car, but a more efficient car. The Le Mans is a grueling twenty four hours race. During that time, cars have to be refueled multiple times. By putting diesel technology into their race cars, Audi reduced the number of pitstops their car had to make which was the edge they needed to win.

Constraints Are Gifts

The word ‘constraint’ evokes a negative feeling in most people.

Constraint (noun): something that limits or restricts someone or something.

When people face a constraint, they either fall victim and revise their ambition downward, or confront the constraint head-on and look for ways to lift it.

From a systems perspective, however, constraints are neither good nor bad. Every system always has one and correctly identifying that single constraint holds the key to practicing ‘right action, right time’.”