Posts Tagged Tom Peters

Don’t let a crisis go to waste

As was the case with millions of Americans, I had my own idealistic vision of what an Obama presidency might look like. One aspect of my view through the looking glass was a 21st century WPA.

In FDR’s New Deal, taxpayer money was put to work through a variety of alphabet agencies. One of these was the Works Progress Administration, which invested heavily in the development of American infrastructure, including hydroelectric power. The New Deal put Americans to work, injecting sustained cash flow directly into the economy, while simultaneously building strategically important infrastructure. The thinking was that, if you’re going to take on debt to finance stimulus, you might as well have something to show for it at the end of the day – like a 4 billion kilowatt-hour clean energy generator. While we now better understand the destructive environmental impact of hydroelectric dams, it’s still important to consider the offsetting benefit of saved carbon emissions. For example, Hoover Dam saves 3.6 million metric tons of CO2 annually as compared with a coal-fired power plant.

I’m not arguing that America build more hydroelectric dams, though I do believe that stimulus would be well spent on strategic clean energy infrastructure that offers the following potential benefits:

· Job creation

· Energy independence

· Reduced carbon emissions

· Development of American clean energy technologies and industries

It has been estimated that a 100 square mile thermal solar generator could replace all the fossil fuels now burned to generate electricity in the entire U.S. That’s about half the size of Tucson, AZ. Of course, the thing only works when the sun is shining, but point is that clean energy independence seems well within the scope of possibility of the country that landed men on the moon over 40 years ago.

When the $787 billion stimulus package, officially known as the American Recovery and Reinvestment Act was unveiled, I hoped to see many of the kinds of great public works projects produced by FDR’s WPA. Unfortunately, only $150 billion, or 19%, of the package was actually carved out for public works projects for transportation, energy and technology.

And, as LA Times’ Robert Simon reported in “Obama stimulus: More old school fix-ups, less New Deal grandeur,” much of the money allocated for public works is being spent on infrastructure repairs like fixing potholes as opposed to great new WPA-esque projects.

Robert Poole, director of transportation policy at the Reason Foundation, a Los Angeles-based free-market think tank, said: “Obama’s early statements on the stimulus, comparing its impact to that of [President] Eisenhower’s interstate highway program, created a false expectation that it would be comparable to the New Deal in building great new public works. The sad reality is that the bill Congress wrote and Obama signed is mostly make-work stuff.”

“Few of the [stimulus] projects are transformative,” said Joseph Schofer, professor of civil and environmental engineering at Northwestern University.

No doubt, America’s infrastructure is badly in need of repair. In its 2009 Report Card for America’s Infrastructure, The American Society of Civil Engineers gave the nation’s infrastructure and overall grade of D, concluding that $2.2 trillion was needed in repairs and upgrades over the next five years in order to maintain “adequate conditions.” Investing in the proper maintenance of America’s current infrastructure is necessary and will yield an economic dividend, however, America needs to go beyond merely maintaining its 20th century public works. It needs to build 21st century infrastructure.

Rahm Emanuel said: “Don’t let a crisis go to waste.” No one understood this better than FDR, who leveraged the crisis of the Great Depression for America’s long-term benefit. Over half a century later, the green hydroelectric power spawned by the New Deal still drives a surprising portion of America’s economic engine. A New New Deal would project a successful vision from America’s past toward its 21st century future, creating an America powered by clean energy, independent of foreign oil and its associated baggage, an America which incubates green technologies that will propel the next wave of innovative industry, and transitions an army of labor into a new generation of green energy manufacturing jobs.

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Rollerball and the Public Option

I’m a sci-fi movie fan, and “Rollerball” is a favorite of mine. Mind you, I’m not talking about the disposable 2002 retread, but instead the original 1975 classic with James Caan and John Houseman, in which an oligarch of giga-businesses have done away with archaic traditional governments and now run the world, well, like a business. To maintain their employee citizens’ contented complacency, the corporate regents have provided a modern bread-and-circuses in the form of Rollerball, a violent fusion of roller derby and basketball. Rollerball starts as an action flick, but it quickly peels away deeper layers, revealing the corporations’ evil mass social management agenda. Rollerball’s opening music, Bach’s Toccata and Fugue, sets the incongruous tone, intertwining levitas and gravitas as we watch the stage set, literally, for the movie’s first rock ‘em sock ‘em Rollerball match.

The oligarch seems pretty scary in Rollerball, invisibly pulling the strings that control the commoners’ visible universe. But it’s not the notion of businesses running the world that I find most frightening. What really scares me is the fact that those businesses don’t have any competition. What history has shown us countless times is that when companies coalesce into monopolies, wringing out competition along the way, their priorities pivot away from creativity and innovation, twisting instead toward entrenchment and status quo.

Take health care reform, for example. Despite the fact that a clear majority of Americans want a public option, there is none in the Senate bill passed this week. Why? Because the industry doesn’t want competition. Insurance companies have spent a fantastic amount of money excising competition from their world. There’s no way competitors are going to be permitted back into the industry’s zany idea of a free market economy. Apparently competition, even that from an organization as uninspired, wasteful, bureaucratic, and inefficient as our federal government must look like a sleek rocket ship from the future in the eyes of Flintstone-era insurance industry execs.

Those executives don’t have a lot of incentive to rock the boat. The captains of the top three companies in this particular industry average over $15 million a year in total compensation and their shareholders are perfectly content with the status quo. There’s no real competition within the oligarch, so life is just about perfect. As a businessperson, the only thing I would note (besides the little detail that their business model is unconscionable), is that you don’t need to pay someone $15 million a year to maintain the status quo. For that matter, it shouldn’t require a full time job. Heck, I’d be willing to do it in my spare time for under a million.

What should you expect from a CEO that hauls in $15 million a year? Inspiration. You should expect a company to create innovative goods and services that people really need and want. Actually, for that kind of money, you need to go way beyond simple innovation. You need to provide brilliantly creative offerings that people love. I don’t often hear “love” used in customers’ vocabulary used to describe their health insurance experience. I do hear other four-letter words, though.

As a businessperson, I don’t have a problem with businesses earning a reasonable profit in exchange for the investment they make to bring quality products and services to market. As maddening as are their apparatchik bureaucracy and sphincter-like cheapness, that’s not what troubles me the most about the health insurance industry. What really disturbs me is the nature of their business model. At its core lays a fundamental conflict of interest between the needs of the customer and the needs of the company. It’s one thing when that conflict involves balancing customer demands for, say, better cell phone coverage, against the money required to make that coverage happen. It’s an entirely different thing when the conflict involves balancing corporate financial objectives against a human misery quotient. My bias for capitalism notwithstanding, I think that businesses that trade in human lives should not be left up to the free market. The irony is that an unfree market is precisely what we have in our 400 billion dollar Rollerball insurance industry, with that industry spending hundreds of millions of dollars to keep it that way. Bizarrely enough, their only real competitor is their customer, the American taxpayer, who has made not one, but multiple Herculean attempts at landmark, groundbreaking, game-changing legislation over decades to force an industry to do nothing more than what all businesses should do: give customers what they want.

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Coffee Klatch

coffee_cupDrive the length and breadth of Silicon Valley, and you’ll see lots of office buildings, homes to the biggest names in technology. Some are fantastic campuses, like the Googleplex. Some are garden variety leased office space. So what do they actually manufacture in these hi-tech HQs?

Coffee.

Bold, medium roast, espresso, latte, caf, de-caf, you name it. Silicon Valley makes really good coffee. But do they make anything else?

Well sure, they make software and design hardware, but in the 21st century, do you really need office buildings to do that? What is truly gained by requiring employees to devote an average of 2 hours each day to commute to a central location? Is the cost in opportunity, rent, and the associated expenses of maintaining an office offset by a boost in productivity and revenue that makes it all worthwhile?

No. There is compelling data that suggests the opposite, that traditional offices are far more expensive and less productive than their alternative: virtual officing. Yet, in the 21st century, businesses nonetheless cling to 19th century office practices. That businesses are slow to adopt new technology is not in itself unusual. Over time, the adoption of advancements like the telephone, voice mail, fax, email, the internet, software-as-a-service, virtual meetings, voice-over-IP telephony, web 2.0, social networking, viral marketing, etc, have been impeded by the previous generation’s management best practices. In the particular case of virtual officing, there is a strong visceral force at work against it – managers are simply uncomfortable with it and are willing to pay a very steep price to keep their bricks & mortar.

Nevertheless, the sober realities of this economy are forcing many businesses to consider creative options to keep the lights on and the doors open – even if keeping the doors open requires closing the doors. Virtual office service Officebroker.com reported a 41% increase in virtual office inquires in June 2009 as compared with the previous year. These businesses are finding that gains in productivity and opportunity cost are as great as 200% over their traditional counterparts, enabling them to not only weather the downturn, but prosper as well.

In a 2006 pilot project, the Arizona Health Care Cost Containment System (AHCCCS) sent 4 employees home 4 days a week to gauge the potential benefits of virtual officing. The results were astonishing. The AHCCCS found that the number of claims processed by their virtual employees grew from an average of 2,101 claims medically reviewed per month to a seven month average of 4,700 claims medically reviewed per month! The authors of the report acknowledged how fantastic these gains might appear: “These numbers may seem incredible, but private sector firms like AT&T have reported increases in productivity of 75%!”

Additionally, the AHCCCS found that by offering telecommuting services to these four subjects, it saved each individual an average of $7,000 per year in vehicle costs. It also found substantial quantifiable benefit to the community as well – a total savings of $15,764.83 from commute-associated costs, such as traffic services, roadway land value, roadway costs, and crash damages. Finally, though not specifically addressed in the study, in can be reasonably assumed that the project yielded a compelling green dividend in the form of reduced CO2 emissions.

Given the potentially spectacular gains in productivity and cost savings, why aren’t captains of industry abandoning their corporate coffee clutches with greater, well, abandon?

Though virtual officing offers a relatively cheap and easy way to realize extraordinary efficiency and productivity gains, it is often dismissed due to management’s visceral discomfort with the notion of a company without walls and visible people. Managers don’t like it but, in my experience, they can rarely backup their feelings with rationale. At the top of the list of management excuses is that virtual employees can’t be supervised. This begs the question: “why would you want to hire employees that require supervision?”

Duh.

Though many companies are being driven to virtual officing by today’s tough economy, many believe the trend toward virtual officing will persist beyond the great recession.

One of these is j2 Global Communications’ CEO Hemi Zucker, who has presided over the company’s year over year growth in the outsourced fax, voice and email services categories, such as eFax.

Mr. Zucker summed it up this way: “businesses that have seized on technology advances have demonstrated a decisive advantage over their traditional competitors.”

Perhaps General George Patton said it best when he declared “Fixed fortifications are monuments to the stupidity of man.” Though his words were intended more for the Maginot Line than the Googleplex, they are still relevant over 65 years later, as there has never been a time when the when economic necessity and the tremendous capacity of virtual technology have had greater convergence. Those who choose to surrender their forts of industry today may well prove tomorrow’s corporate titans.


Note: this article is also available on San Francisco Chronicle’s “City Brights”

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A Virtual Office and No Need for VCs

This is Part 2 of my podcast interview with ZDNet’s Phil Wainewright. In it, I discuss our  virtual office and other lean & mean business practices that enabled gwabbit to achieve profitability within 6 months of launch in a major recession with $0 venture capital. You can hear the podcast at http://www.ebizq.net/blogs/connectedweb/2009/09/a_virtual_office_and_no_need_f.php

The transcript of the interview appears below:

—Transcript—

PW: Todd, we talk a lot about software as a service here on the Connected Web and one of the things, of course, with Gwabbit is that you don’t provide it as a service — because that doesn’t make sense for something which actually runs in the inbox client. It has to be there on the client to do its job. It would run in the cloud, obviously, if the client was running in the cloud — if, for instance, you were working with Gmail. And we were talking also about the potential to aggregate contact information in the cloud, with these Gwabbit clients reporting back to a sort of Gwabbit cloud, which I thought was a very interesting idea.

But one of the things that I think is quite prevalent these days is that when software companies are getting established, this ability to reach volume very quickly is very front of mind. Now, you’ve taken, not a novel approach, but one that is a little bit out-of-fashion with your product, because you charge for it, I believe?

TM: Yes, we actually charge money for our product, which is apparently an extraordinary, or novel, concept within the industry.

Do you ever meet people who try and talk you out of doing it that way?

Oh yes, absolutely. And I’ll just tell you a quick story. When we introduced the product at the Demo conference in March, a VC walked up to me and, without introducing himself, he just got in my face and said ‘Where do you get off charging 19.95 for your product?’ And I was really taken aback. I mean I did —

These VCs are quite parsimonious, aren’t they? They don’t like to pay $20 for a software product.

[laughs] Well, I think that this really had less to do with the pricing of our product. I think it had more to do with trying to get a pantsload response out of some young hungry entrepreneur. I’m neither young or hungry and so I didn’t give him the response I think he was looking for. So instead I just replied to him, ‘I’m not looking for money.’

His response was interesting. He literally took a step back. It was as though somebody had sucker-punched him. And then he started making some small talk and — I think he was looking for his own exit strategy — and then he just walked off.

So what is your model? What’s your — the strategy you’ve got for growing the business?

You know the — our model is pretty fundamental. We make a product. It costs us money to make the product. We charge money for it. We believe that the pricing of the product is commensurate with the value that we’re offering to the market — and fortunately, we’re finding that, in fact, appears to be the case.

So in terms of growing the business, our plan is to fund the growth of the business out of the operations. And so far, that appears to be coming to pass.

So how are you managing to keep your costs down?

Well, that raises another very interesting point. We have taken, I think, a very different approach than the norm on Silicon Valley, where I think that normally what you do is you go out and you raise a bunch of venture capital and then you spend it. And I think that there’s a tendency to promote waste in that kind of model.

What we’re doing instead is, we’re growing the company organically. And the way that we keep our cost under control — or the principal way that we do it — is through virtual officing. And this is something that I picked up through my previous company, which I sold last year. That company and this one are 100% virtual offices. So there’s no bricks-and-mortar whatsoever.

So everyone works from home and you don’t even have a reception desk with a receptionist and a meeting room somewhere?

Exactly right. It’s 100% virtual. It’s interesting. I think that when I tell most people about virtual officing, their comeback is, ‘Well, you must save a lot of money in rent.’ And certainly, that’s a benefit, but I would say that it’s not in my top ten list of benefits for virtual officing.

The great big benefit for virtual officing is really productivity. So we find that we’re about twice as productive as a traditional office. And what we have found by looking at other companies and organizations that have attempted virtual officing, they’re reporting similar kinds of numbers.

For example, I’m writing an op-ed piece right now. And in the course of doing this research, I came upon a study from an Arizona healthcare co-operative. They sent four employees home for seven months, and what they found was that these employees — they would normally produce, or process, 2,100 healthcare claims — and while they were virtual officing, they actually produced 4,700 healthcare claims. So they more than doubled the number of healthcare claims that they processed.

And they couldn’t believe those numbers. So they actually went out and they started studying other companies and organizations that had done the same thing, and they were reporting similar kinds of numbers. For example, AT&T did a pilot study and they actually found productivity boosts of about 75%.

But why is that? What are people — how are people able to find so much more time, or work so much faster, just through being at home?

It comes from a variety of sources, I think. One is that certainly, they’re not wasting time in commute — and then the preparation for commuting, getting ready for work — which can easily chew up a couple of hours each day. You find that virtual employees tend to spend more time on the job, simply because it’s convenient to do that. So they might tend to start work a little earlier. They might tend to work a little bit later.

Virtual employees typically do not have nearly as many distractions. So they don’t have people dropping into the office to chat. They don’t have as many watercooler conversations. They tend to have fewer meetings, and the meetings that they have tend to be more productive; they don’t tend to last as long, they tend to get over much more quickly than in the traditional office.

So added up, it makes a tremendous gain overall in productivity and a huge savings in opportunity cost. My company could not be profitable at this point, if we were running a traditional office.

And do think the model scales? Do you think you can become a big company and still operate virtually rather than needing to bring people in to some kind of location?

Yes. And my experience with my prior company, WebFeat, suggests that the model does scale. We were not a huge company. At the time that I sold the company, I think that we had about 40 employees. I saw no reason at the time that the company could not scale to 100 or 1,000 employees. And it’s interesting you bring that up, because that’s one of the chief complaints or arguments against virtual officing that I get, that, ‘Well, it just can’t scale.’ But I just don’t see it. I haven’t seen any reason why the model can’t scale into a large company.

So Todd, one final piece of advice for our listeners. If there was one thing that you could pass on about how the Web is changing business, especially the software business, what would you say?

Well, I think that the biggest thing that I would recommend to entrepreneurs and to business people is — as we’ve seen in recent years — circling back to the revenue model. In recent years, I think that advertising has borne the burden for revenue in the software business. And I’m not quite sure where that changed, in time. Back when I got started in the industry — and this is in the prehistoric days, back in the Comdex era — it wasn’t something that you thought twice about. You made a software product and you charged for it.

Yeah. I think, to be fair, advertising — in the Web 2.0 space and the start-up space, people have been attracted by it. But I think the companies that are more in the business space tend to look to more traditional mechanisms. But I think — I would certainly concur with you that — now that we’ve got to an era where people are thinking more carefully about the value for money that they’re getting and the reliability of the products that they’re using, then they’re looking for products where they hand over an amount of money and they get a contracted amount of value back.

Yes. And circling back to your question and any advice that I could offer. I think that the advice would be, when making decisions about a revenue model, I would encourage business people to evaluate the revenue model based on what is appropriate for the product or service in the market — as opposed to being swept up in the inertia of whatever happens to be fashionable at the time. I think that, certainly, an advertising revenue model makes sense for certain kinds of products and services. But at the end of the day, it’s simply another option in the revenue matrix that is available to business people. It may be appropriate for some products but it’s not appropriate for others.

And in any event, I think that it would make good sense for business people to make evaluations based on what’s best for their product and services, as opposed to what happens to be trendy or in vogue at the time.

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I Haven’t Grown Accustomed to Your Face

myfairladyI rarely meet people before I hire them.

Seriously.

The reason why I lead off this installment of Virtuality with this particular factoid is because, in some 12 years of virtual officing, this is the one that has consistently drawn the greatest surprise from others. Actually, I would never have given my blind recruiting a second thought if not for the shock and awe reaction I typically receive in response to this particular revelation.

Why do I pass on face interviews? I think the better question is: “why conduct face interviews?” My rationale is this: if the employee is not going to have a public face, what do I care what they look like? My primary interest is in results. If an unattractive person gets the job done, that’s terrific. In 12 years of virtual officing, I can say with confidence that there is no correlation between looks and job performance.

Of course, there’s much more to our virtual recruiting practices than what doesn’t meet the eye.

For example, we not only don’t care what our employees look like; we don’t care where they live either. When we recruit new employees, we don’t constrain our net to a particular area, we draw from the entire 50 states. This enables us to search for talent in less competitive places, which substantially drives down our payroll expense, while driving up our retention. For example, we have successfully recruited from small college towns with little local industry. Graduates may love the town, but may find the local pickings slim. They’re often willing to give up some premium in compensation in order to enjoy college town life rather than pick up and move to the big city and swim with the sharks.

Another factoid: I never look at a software developer’s resume until they’ve passed a test.

When we place a job ad for a software developer, it’s not unusual for us to receive hundreds of applications. Over time, I found that there tended to be an inverse relationship between a software developer’s job-hunting skills and their development skills. The slicker the resume and the smoother the interview, the worse the code. After getting burned a few times, I asked my developers to assemble a test to probe the skill sets we needed from our recruits. Our job ads informed prospective employees that their applications would be screened by test results. Overnight, our world changed for the better. From the hundreds of respondents that applied, only a dozen or so would bother to take the test. From that number, only 3 or 4 would deliver satisfactory results. Suddenly, instead of spending dozens of hours vetting resumes only to be disappointed with the eventual hires, I might spend 30 minutes reviewing resumes, another hour or so in interviews, and I was almost always happy with the new additions to our team.  It’s worth noting again that I have never met a software developer before hiring them.

Job jumpers need not apply

Early in my virtual management career, I was confounded at the number of resumes I received from job hunters who, although relatively young, had already had scores of jobs on their CV. It was rare for these people to last a year at a job, yet it did not seem to be a particular impediment to their career. People kept hiring these job jumpers despite the long odds against them being around to celebrate a single anniversary. Why invest in someone who is going to leave, either voluntarily or involuntarily?

Then it finally dawned on me: the people who are hiring them are job jumpers too!

These managers may rationalize their hiring behavior – perhaps they actually believe that those who exhibit loyalty and longevity are complacent or even lazy, when the reality can usually be filed under one of the following categories:

  • The employee left voluntarily for a better opportunity – i.e. a shortcut to better compensation and status
  •  The employee left voluntarily because he/she just didn’t like the job
  •  The employee left involuntarily because he/she did not perform well on the job

Which of these would you prefer as your dream employee?

Of course, there are situations where things just don’t work out – the company downsized, the job was a bad fit, etc. However, if I see a consistent pattern of short-lived job experiences, it instantly hoists a big red flag for me. It costs money to recruit and train. Moreover, there is enormous opportunity cost associated with the organization trusting an employee to be on the job and supporting their proportionate weight of the company workload. It is extremely disruptive to an organization (and, therefore, costly) to replace an employee in midstream.

No adult supervision required

As I’ve written previously, one of the principal objections to the virtual office is management’s inability to physically supervise employees. My response to this is: why would you want to hire an employee that requires supervision?

Duh.

Professionals will deliver professional results without the additional overhead of constant supervision. If you treat employees like children, you can expect childish behavior in return.

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gwabbit Achieves Profitability Within 6 Months of Product Launch!

http://www.marketwatch.com/story/gwabbit-achieves-profitability-in-august-2009-08-31

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Virtuality — Part 2: Strategy and Technics

Virtuality part 2: Strategy and Technics

gettysburg “Muzzle-loading weapons sound awful primitive. They didn’t seem primitive to them. They were a new kind of infantry rifle that is deadly at 200 yards. That was a tremendous step forward. And the tactics were based on the old musket, which was accurate at about 60 feet. And they lined up shoulder to shoulder and moved against a position, and got blown down because they were using tactics with these very modern weapons. They were using the old-style tactics with very modern weapons. A few of the men realized that, Bedford Forrest for instance. He would never make a frontal attack on anything with this new weapon in their hands. But too many of them, including Robert E. Lee and U.S. Grant, followed the old tactics against these modern weapons. That’s why the casualties. There were 1,095,000 casualties in the Civil War. If today you had that same ratio, you’d have something like 10 million casualties, to give you some idea of what happened.”

- Shelby Foote, Civil War Historian

“They were using the old-style tactics with very modern weapons.” History has demonstrated again and again that military strategy and tactics lag the available technology. This is also true in business, where the adoption of advancements like the telephone, fax, email, the internet, software-as-a-service, virtual meetings, voice-over-IP telephony, web 2.0, social networking, viral marketing, etc, have been impeded by the previous generation’s management best practices.

As was the case with previous generations, today’s managers encumbered by yesterday’s vision face an insurmountable competitive disadvantage from those embracing the current technologies and practices available to them. At WebFeat, we were able to defeat companies as much as 100 times our size, simply because we were much more efficient and more productive than our bigger, slower, traditional adversaries. How was this possible?

Two words: opportunity cost.

When I attempt to recount the benefits of the virtual office to a stranger, I invariably am (preemptively) told that office rental is the #1 advantage. While office rent might make my top 100 list of reasons to go virtual, it is far from #1. Number 1 is the cost-effectiveness of my work force. Our virtual office easily yielded double the productivity of our traditional competitors. How?

strategytechnicstable1

This may not seem like a lot, but it adds up:

strategytechnicstable2

27.5 years lost in a 100 person organization. That’s the equivalent of 27.5 extra people!

In addition, in my own experience, I found that my virtual employees tended to work longer hours than those in traditional offices. Typically, this ranged from 20% to 30% more than traditional employee office hours. Apparently this was attributable to two factors:

1. Virtual employees tend to make less of a distinction between work time and personal time than traditional employees, and…

2. It appears I am a hard task master

Whatever the reason, in our 100 - employee hypothetical company, this would add an additional 20 - 30 years annually, bringing the total to 47.5 - 57.5 years of additional productivity — a virtual company is 47.5% - 57.5% more productive than traditional companies.

But wait, there’s more!

While at work, my virtual employees tended to accomplish more than their traditional counterparts. This was due to a number of factors, including:

We held only a fraction of the number of meetings held by traditional companies

When we did hold meetings, they tended to be more productive — why?

Because most of our meetings were held via teleconference, the attendees tended to find silence or “dead air” to be uncomfortable. Consequently, our meetings tended to be short, and they followed classic successful meeting techniques, namely:

  • An agenda was published prior to the meeting, informing attendees what to be prepared to discuss
  • Brief minutes were taken, with action items captured, as well as persons responsible and deadlines
  • If follow-up meetings were required, these action items fed into the subsequent meeting

The bottom line is that we didn’t hold very many meetings, and we got a lot done in the meetings we did hold. Additionally, because our meetings produced cogent sets of action items, the work resulting from our meetings tended to yield better results

Finally, no one “dropped in” to our virtual offices to chat. Granted, some of our more gossipy employees made effective use of online chat, but they had little time to waste at the virtual water cooler. The moral of the story is that the success of the virtual office, as well as the traditional kind, is determined largely by the effectiveness of the management team. However, an effective team in a traditional office will be no match for an effective management team in a virtual office.

While it is difficult to gauge the amount of time consumed in useless meetings and water cooler gossip, consider that if it averages only 1 hour per day per employee, our virtual productivity edge over traditional offices grows to 60% - 70%! How many employees do you know that give up a mere hour each day in meetings and gossip?

Clearly, I’m not talking about moving the corporate performance needle a couple of percentage points. I am talking about a great big game-changing, Earth-moving, paradigm-shifting fundamental makeover that can enable your business to not only weather the current storm, but enable it to prosper and handily crush its competition.

More to come in part 3…

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Virtuality — Part 1: News for the Hard of Hearing

snl-news-hard-hearingIn “My New Old-Fashioned Company,” I’ve discussed what’s old about my company. Is there anything new?

Oh yes!

My company, gwabbit, is a 100% virtual office (as was my previous company). No bricks & mortar office whatsoever. Seriously!

I went virtual with my previous company, WebFeat, in 1998. If we were not the first successful100% global virtual company, we were certainly among the first. I must admit that, at the time, my motivation for going virtual was driven more by finance than vision. My little bootstrap start-up was short on cash and we simply could no longer afford our cool New York City office flat. Now, 11 years later, I can’t imagine running a business any other way.

When I would tell Silicon Valley colleagues about my virtual company, I found that most simply could not bend their heads around the notion of a 100% virtual office. The conversations usually went something like this:

Silicon Valley Colleague: “Where is your office?” (note: I had already explained to colleague that we were a virtual office)

Todd: “We don’t have an office”

Invariably, my colleague would ask the question again, slowly, as though either my hearing or cognition was impaired:

Silicon Valley Colleague: “where - is - your - office?” He asked, slowly

Todd: “We - don’t - have - an - office.” I repeated, slowly

One colleague actually asked the question a third time, making arm motions as though he were drawing a real office (ironically, in virtual space) as though I did not understand the question the first two times it was posited. It reminded me of when Garrett Morris did the News for the Hard of Hearing on Saturday Night Live by simply yelling at the camera.

Once my colleague reluctantly accepted the fact that I was serious about my virtual office, he would proceed to inform me why it could never succeed. The reasons included:

  • Virtual businesses can’t scale
  • You can’t supervise virtual office employees
  • You can’t have too many direct reports

I’ll knock these down one-by-one:

Virtual businesses can’t scale — invariably, my critics could never explain why they didn’t think a virtual business couldn’t scale. It just couldn’t scale. Like many reactions to the virtual company, this was an attempt to assign a rational sounding argument to an uncomfortable visceral feeling — we’ll talk more about feelings in later installments.

Despite the very worst prognostications of doom, our business somehow managed to scale anyway. At the time I sold my company, we had 40 employees. Still a small business, but I see no reason why it wouldn’t scale to 100 or 100,000

You can’t supervise virtual office employees — this is probably the most absurd argument against the virtual company — the notion that management can’t keep a close eye on their employees. My response to this is a simple one: why would you want to hire people that require supervision? Whether your business is virtual or not, don’t you want employees that can work and produce without supervision?

Too many direct reports – another one of the sillier arguments against the virtual office. More than one of my otherwise brilliant colleagues assumed that virtual officing somehow translated into every employee reporting directly to the virtual corner office. My experience has been that virtual offices utilize similar hierarchies and numbers of direct reports as their traditional counterparts.

So I’ve discussed some of the arguments against the virtual office – what are the arguments in favor?

There are many, which I’ll discuss in future installments, but the most compelling is this: in my 11 year experience with virtual officing, I found that a well-managed virtual office is 200% - 300% more efficient and productive than its traditional counterpart.

That’s right – not 20% or 30% more productive – 200% - 300% more productive!

In my decade long experience with WebFeat, our virtual David went up against not one, not two, but three traditional Goliaths. These companies had up to 100 times the number of employees as WebFeat, with relatively vast cash reserves. WebFeat, with no venture capital, funded entirely from operations, and fielding a comparatively puny cast of dozens, smacked down each of its Gigantor opponents, gaining top market share.

How – you might ask?

For the answer, stay tuned for the next installment of Virtuality!

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My New Old-Fashioned Company — Part 3: Help!

helpHelp!

“When a customer enters my store, forget me. He is king”

John Wanamaker

1838-1922

This is an excerpt from a recent gwabbit product review:

“For the Support and Information on the app, I can’t say enough about gwabbit and Technicopia LLC’s support. They’re fast and helpful. I was very impressed by it. On the scale they’re a perfect 5. They’re really on top of their game and reading their emails. Great job!”

And an excerpt from a recent customer email:

“All I can say is WOW! I am impressed. Not only did a REAL LIVE person answer my email on the SAME day that it was sent, you actually read my questions, understood them, and provided logical responses and suggestions.

This is more than one can say for your competitors who have yet to respond to some product related questions that I have sent them, have sent me only “form letter” responses in other cases, took on the average 3 days to get back to me, and then never really read my question carefully enough to provide a logical or helpful response. Again, my compliments!”

These may seem unimaginable. Many under the age of 30 have never experienced truly great customer service in their lifetime. Many over the age of 30 may wish to forget the time when the “customer was king” because it’s too painful a contrast to today’s sorry state. Today, even if it’s possible to get real time customer support, the odds are high that it will be with an outsourced call basher. Many technology companies will offer support with varying degrees of competence, but you have to pay for it, even if the call was prompted by a product defect. I assume a bad customer support experience every single time I pick up the phone or place my hands on the keyboard to type a help email or chat. My feeling is that if I prepare myself for the worst, I can only be pleasantly surprised. I assume an eternity on the phone, an endless maze of auto-attendant junctures with early primate vocabularies, auto email responses with unfulfilled promises to respond within two or three business days, and uninterested, uninspired, uncaring customer support staff. Why are they uninterested, uninspired, and uncaring? This is typically because they are a direct manefestation of their senior management’s goals and objectives.

As evidence, I present Exhibit A: Why Google Bothered to Appeal a $761 Small Claims Case (and Won)

This is Think Computer Corporation founder Aaron Greenspan’s odyssey in which his company won a $761 small claims court victory against Google, which, astonishingly, Google actually bothered to appeal! The dispute focused on whether or not Google had the right to terminate Mr. Greenspan’s company’s Google AdSense account without providing a valid reason. In the course of the appeal, Google’s counsel appears to have used the usual unctuous courtroom tactics to discredit their opponent (in this particular case, the customer) in the eyes of the judge. The cost to Google of appealing the decision undoubtedly far exceeded the $761 originally awarded Mr. Greenspan’s company. The cost of the thousands of incredulous Tweets, blogs, and Facebook postings that followed the appeal?

Priceless.

No doubt Google has a byzantine rationalization for this stupefying move – perhaps based on a prescient fear of tipping over some precipice of a greater slippery precedent slope. Whatever the rationale, wouldn’t it have been better to: settle the case, make customer happy (or less unhappy), avoid the legal precedent inuring from Mr. Greenspan’s small claims win, avoid the horrible press, as well as the legal fees – please tell me if I’m missing something here. Is this something other than a completely avoidable colossal manmade disaster?

It appears that it is no longer sufficient to merely diss the customer. The company must now crush the customer’s will in order to truly realize today’s modern standards of support.

Many would find Google’s position to be enviable. Its market share and vast reserves enables it to neglect, even abuse its customers and still prosper. Regardless of whether the comparatively lame competitive landscape compels it to serve its customers, I would still encourage Google’s management to remain faithful to its increasing informal “Don’t be evil” motto. You just never know when you’re going to need to call upon your customers’ loyalty.

The conventional wisdom is that great, or even good customer service is too costly for today’s modern business. Moreover many business people assume that most customers’ presumption of service are the same as mine, therefore bad service is not substandard. Despair is the new standard.

This is a classic Tom Peters quote about customer service: “Whether your business is jet engines or whether it’s peddling hamburgers, if you simply treat your customer with common ordinary garden variety courtesy, you can have the lion share of any market because you’d be alone.”

The question is not whether the company can afford to provide excellent customer service. The question is whether the company can afford not to provide it. As my introductory messages illustrate, in the brief period of time we’ve been in business, our little company has already demonstrated that the service it provides its customers is a key competitive differentiator. We don’t just provide good customer service because it is the right thing to do. We provide it because it’s the smart thing to do.

My company is not Google. It does not have billions of dollars in cash reserves. But somehow our little company finds a way to serve our customers. How? It’s because we choose to. It’s simply fascinating that there is often a converse relationship between a company’s financial capacity to provide excellent service and its actual commitment to serve.

I’d like to close this installment with an outline of service standards we try hard to hit at our company. Perhaps you will find these to be useful for your company as well:

  • Support included. The cost of support (preferably the excellent variety) should be factored into the cost of the product. Additional charges should only apply if the customer is being assisted with custom configuration or development
  • Live support. It should be possible for a customer to talk to a human being during reasonable business hours. Support should be available via phone and email. Chat and blogs are also encouraged
  • Self help. Excellent self-help materials should be available, such as FAQs, Help database, documentation, or blogs. It is important to note that self help materials are not considered a substitute for excellent live customer support
  • Hours. Hours for live service for US products should be, at minimum, 9AM ET – 5PM PT (9AM – 8PM ET). Perfect world, hours should be 24×7, particularly if your company has an international presence
  • Responsiveness. Support should respond promptly to support requests. If a customer’s product or service is seriously impaired, the response time is ASAP, not the next business day. Support staff should be in regular contact with the customer (multiple times/day) keeping them informed of progress in resolving their problem. More routine problems and suggestions should also be acknowledged promptly and personally
  • Competence. Support staff should have sufficient training to be capable of addressing the vast majority (at least 80%) of customer issues without escalating
  • Tracking. Companies should have good trouble ticket tracking systems capable of logging and categorizing customer issues, good workflow to route tickets and ensure timely follow-up with the customer, and enrich customer issue databases
  • Support basics. These are some “A” Game support basics:
    • Listen. Tom Peters says that listening is the highest form of courtesy. Moreover, he says that support representatives should listen naively, not as experts determined to be right
    • Be friendly, courteous, and helpful. In short, support representatives should be genuinely nice people who are really interested in helping the customer
    • Empathize. Staff should make a real effort to empathize with and connect with the customer
    • Fix the problem. Oh yes, by-the-way, staff should make a real good-faith effort to resolve the problem
    • Follow-up. If the issue cannot be resolved real-time, and it is one that seriously inhibits the usability of the product, staff should escalate and give the customer a realistic timeframe of when a solution or update can be expected. Staff should follow-up on or before the deadline provided
    • Evaluate the true cost of your support decisions. All of us have those mind-boggling customer support stories in which a company expended far more in hard or opportunity costs to defeat a customer than would have been the case had they simply refunded the customer’s money or offered some other incentive to ameliorate the situation. In addition to quantifiable cost, businesses should factor in the cost of bad will. My companies will never do business with Allied Van Lines or Sprint as a result of horrific experiences I had years ago. Bad service can be expensive.
    • Don’t argue with the customer. Nothing good can come from arguing with the customer
  • Refunds. If an issue that renders the product essentially unusable cannot be resolved, the customer’s money should be refunded. Better to cut your losses and salvage some of the customer relationship than to drag the baggage of an unhappy customer along with your company. Accumulate enough grumpy customers and they become an anchor on the company’s progress – clinging to the customer’s money is simply not worth the associated downsides of drains on support time and company reputation

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