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HOW TO VETT YOUR NEXT BUSINESS IDEA

Entrepreneurs are people with big dreams and ambitious goals. They pour their time, energy, and resources into their business ventures in hopes of success. Unfortunately, the odds are stacked against most of them reaching their destination. Statistically, we know that most will fail within the first five years.  However, there are some people who defy the odds and somehow achieve success as serial entrepreneurs.   Are some people just born with the Midas touch?  What is it that people like Sir Richard Branson, founder of the Virgin Group, Ltd, have that gives them the ability to repeatedly strike gold in the cut-throat marketplace?

While there is no one magic bullet, there do appear to be some consistent themes.  One quality worth noting is the ability to critically vet business ideas to make sure the new venture has a fighting chance.  This takes rigorous analysis and the ability to honestly and objectively review the idea and the entrepreneur’s own ability to execute.

Clark Love, a native Mississippian, has achieved the goal that most entrepreneurs only dream about – he has successfully started a business, grown it, and sold out to a larger company. Love, a graduate of Ole Miss and Northwestern’s Kellogg School of Management, started Forest One, Inc. (later renamed Lanworth, Inc.) in 2000 at the age of 28.  Lanworth is an information technology company providing consulting services, applications development, and software to the forest products, environmental, and land management industries.  Love originally founded Lanworth with his college friend Dr. Henry Jones and grew the company to be a multi-million dollar enterprise with the main offices being in Jackson and Chicago.  In 2007, The Westervelt Company acquired Lanworth.

While Love achieved his goals for Lanworth, he has not remained idle.  His entrepreneurial drive has already rekindled as he in the process of launching several new ventures. Love’s analytical training as an engineer in college, his experience as a consultant with Accenture, and his “real world” experience with Lanworth and other startups has allowed him to develop a framework for analyzing new business opportunities.  His checklist for a new business venture includes the following requirements:

Have a Cause

The product or service offered by the business should move people.  Love added, “It doesn’t need to move everyone, just the segment of customers I plan to go after and the people I will hire.  You want a business people will put their hearts and soul into.”

Know Your First 3 Customer’s By Name

An entrepreneur should know by name the first 3 customers for the product or services the business will offer.   Many people have ideas about what will work in the marketplace yet they have never actually vetted the idea with a potential customer.  You need to know if anyone will actually buy your product or pay for your service.

Build a Recurring Revenue Model

A large majority of the revenue should be recurring so the business does not have to start from scratch each year.  Having a solid financial base of recurring revenue allows for more growth opportunities.

Be Passionate about Your Industry and Customers

Love noted, “Starting a company is incredibly hard, harder than most people realize.  Pay and economic reward are not enough – you really need to have a passion for the business and serve customers that you actually care about.”  This passion serves as the “pull through” that helps you get through the difficult times as an entrepreneur.

This checklist can serve as a useful tool in analyzing any new business opportunity.   I believe that serial entrepreneurs like Clark Love will play an integral part in Mississippi’s future in creating jobs and opportunities for Mississippians.  Hopefully, we can collectively make Mississippi, Tennessee, and the Mid-South attractive places for entrepreneurs to invest their passion and energy into creating world class businesses.

MARKETING YOUR BUSINESS

Marketing is a very common business concept, but one that I find is interpreted and applied very differently by business people. Marketing is often seen as a luxury, and not a necessity, so it is often first on the chopping block during budget cuts.  Hundreds, if not thousands, of marketing books are published each year trying to influence the way business leaders plan and execute their marketing strategies.  Over the years, Al Ries, Jack Trout, Robert Cialdini, and Seth Godin are a few of the authors and consultants that have risen above the pack to make a major impact on the way we think about marketing. For most entrepreneurs who don’t have a direct background in marketing, sorting through the various theories of marketing can be a difficult thing.  Part of the confusion lies in how we think about advertising, public relations, sales, and marketing.

I recently spoke with Bryan Carter, founder of thinkWEBSTORE.com, to get his thoughts on how entrepreneurs should approach their marketing strategies.  Carter has a very interesting background in design, technology, psychology, and business. His experiences include being a national consultant and speaker, authoring journal and industry articles, working for a large advertising agency, and developing award winning multimedia learning tools.  In 2007, he opened thinkWEBSTORE.com with a clear purpose in mind – to offer a “one stop shop” for businesses and their marketing needs. The services offered include marketing strategy, website design and hosting, search engine optimization and marketing, email marketing and advertising services for small and mid-sized businesses. Part of what makes Carter’s business model different is that he provides these services from a retail location versus a traditional office environment. Carter’s success is no accident. He knew his target market and designed a whole business around meeting the needs of that underserved market. Carter leveraged his experience and expertise in planning out the entire business concept in great detail and now has executed that plan diligently.

Many service professionals suffer from the “cobbler who has no shoes” problem, but Carter has certainly avoided that and done an excellent job of marketing his own business. Even though the economy tanked soon after it opened, thinkWEBSTORE.com is ahead of its goals, and Carter anticipates executing soon on his plans to expand the concept regionally and nationally.  According to Carter, “Marketing is how you put all the pieces together of advertising, PR, and sales.  It is your overall strategy which should be consistent and well thought out.”  Carter described advertising as the tool that gets people to your door and sales as a delivery mechanism.  Marketing, he emphasized, is where you “think through the details of your business including such things as pricing, positioning, and delivery ability.”  He also noted that while marketing is comprehensive, it does not have to be complicated.  Carter also believes that a company’s website, regardless of the type of business, is really the core that should be used as a guide for all other aspects of marketing.

Operating a service business, Carter noted that he emphasizes quality as they key.  In order to do that, he has a simple credo for his employees:  Be aware; Think things through, and Own it! He pointed out that when you are aware and think things through, owning the issue is usually not a problem.  I see many businesses where a lack or “ownership” is a major problem. Lack of ownership leads to no accountability which usually results in disastrous results both for both customers and the company. Ultimately, Carter’s passion and business is about helping entrepreneurs help themselves.  Many business owners come to thinkWEBSTORE.com with ideas and dreams, and Carter and his team help them accomplish them.

I am inspired by the detailed thought and planning that Carter puts into his business. For entrepreneurs and business people, I think we can all do better at being more diligent in thinking through the details of our business.  This type of planning is a fluid and ongoing process, and one which is important for the long term success of a venture.  For me, it involves a bit of a paradigm shift to try and clearly see a business through the eyes of the clients and prospective clients.  Truly great businesses see this view. They design not only their products and services, but the entire experience to maximize it for their clientele.  I am sure that we will continue to see the impact of Carter’s attention to this detail in the success of his business and his client’s businesses in the years to come.

BUILDING A CUSTOMER SERVICE CULTURE

After an unplanned hiatus from much airline travel, I have recently begun once again frequenting the “friendly skies.”  As with many service businesses, I am struck by the wide variance in customer service among the airlines.  While some companies acted like they were doing me a favor to let me travel with them, others actually made traveling fun.  Having been involved with service businesses for almost twenty years, I am fascinated by how some companies seem to make customer service look so easy while most others glaringly fall short.

Shining examples of stellar service include Chic-fil-A, Southwest, and, of course, Disney.  In fact, a friend recently shared with me a classic Disney experience.  After several tense minutes at the front desk trying to check into their room, they were shocked to find out that they had been randomly picked to be upgraded to a luxurious suite for their weeklong stay.  That’s service!  No telling how many people they have shared that positive Disney experience with.

What’s the secret? Why do some companies just seem to do it better than others?  On individual basis, it obviously starts with great people.  I read an article in the Wall Street Journal about an airline pilot who displays exemplary customer service. Capt. Flanagan routinely takes pictures of stowed pets to let the owners know they are on board and safe; calls the parents of children traveling alone to reassure them; and writes notes on his business card to first class passengers to thank them for their business.  In fact, when storms detour his flights to unplanned destinations, he will often call ahead and order food for his weary passengers. If only the rest of United Airlines’ pilots shared his passion they would dominate the market.

Secret Service

John Dijulius in his book Secret Service  gives us some great practical guidance.  Dijulius has studied many of the great customer service companies and applied their best practices in his multi-location spa/salon business located outside of Cleveland, Ohio.  Using practical illustrations, he examines what truly allows some companies to excel.  He describes how every company has their own customer experience cycle. For example, how does a prospective customer first interact with your business? How is your product or service delivered? What follow up occurs with each customer? Diagramming this process will allow you to see what your particular business’ customer experience cycle looks like and who plays the critical roles in its success.  Only then can you design a world class customer experience cycle that you can implement in your business.

Creating the Experience

Almost every business can benefit from enhancing their customer’s experience.  Think about your own interactions as a customer. Where was the last place that made you say Wow!  Where did you last stop and take note of the outstanding service that was being provided?  Was it at your physician’s office or car repair shop? Was it maybe during your last dining experience or retail excursion?  Think further about who consistently Wow’s you.  Where can you go time and time again and feel like you are truly appreciated and taken care of as a customer?  Disappointingly, in my experience, there are too few of these. The key for business owners is creating a quality and repeatable customer experience.

Moving Past Good Intentions

Most business owners I know want to please their customers. They know that their customers are the lifeblood of their business.  The problem is that great customer service is great in theory but tremendously difficult to consistently execute on.  I see many companies that start off with high aspirations and great intentions regarding customer service.  However, for many business owners, the day to day demands of payroll, rent, and staffing tend to overshadow proactive customer service activities. Before losing hope, remember that it can happen – you really can have great customer service.  The key is to put yourself in the shoes of your customers and truly understand your company’s unique customer experience cycle.  Once you design a great customer experience, then it takes good hiring, lots of training, and accountability systems to make this a reality.  Customer service can’t be left up to chance but must become a non-negotiable systemic part of your business.  Applying these and other customer service best practices will help you create a competitive edge in the marketplace.

TOP GRADING YOUR TEAM

Topgrading® is a recruitment and interviewing philosophy developed by Bradford D. Smart.

It is a highly structured approach which is designed to ensure that only the highest performers – what Smart calls “A” players are hired. According to Smart, Topgrading is “the practice of creating the highest quality workforce by ensuring that talent acquisition and talent management processes focus on identifying, hiring, promoting, and retaining high performers, ‘A’ players, in the organization.”  When you Topgrade, you are packing your organization with high performers at every level. 

In surveys, companies report that only 20-25% of their hires are high achievers.  By design, Topgrading is designed to improve this to 90%.  From an organization’s standpoint, that is a huge difference.  For a typical medical practice, if each staff position was filled with an “A” player then patient care, employee satisfaction, and financial returns would be significantly enhanced.  Topgrading has been used for years in organizations like GE, Honeywell, and the American Heart Association.

The language of Topgrading refers to A, B & C employees.  An “A” player is defined as someone who is in the top 10 percent of the talent available for the job; “B” players are the next 25 percent; and “C” players are in the bottom 65 percent.  The reality is that “A” employees won’t work for long for “B” and “C” players, if at all.  Therefore, you need to make sure your leadership and hiring team are “A” players themselves.

Smart’s book “Topgrading” is a 650 page fact and example filled read.  His son, Geoff who works with him, has written a more easily digestible book called “Who.” In this book, Smart and his co-author Randy Street lay out their process for hiring “A” players.  In this disciplined approach, there are four key components –

(a) Creating a scorecard for performance for the role

(b) Sourcing for the slots to fill

(c) Selecting the right employee through structured interviews

(d) Selling “A” players on the opportunity.

In developing a scorecard, you want to define the mission of the job.  This is an executive summary of the job’s core purpose.  The scorecard should also define the outcomes which define what must get done by the person in this role.  This is like a job description but focuses on outcomes versus activities.  Finally, the scorecard details out the competencies needed in the job which define how you expect a new employee to operate in fulfilling the job and achieving the outcomes. This process should also include an analysis of the culture of the organization so you know if someone is going to be a good fit.

Sourcing quality candidates is a key component of Topgrading.  The first choice is to source through your personal and professional networks. “A” players know other “A” players so ask them first.  Smart and Street encourage employers to make sourcing of quality candidates part of the responsibilities of employment. This helps turn your team into talent scouts.  Smart and Street also encourage employers to think about their sourcing on a regular basis.  Like many other things in life, if you wait until you need it then you are probably too late!

The interview process itself is obviously a key part of the Topgrading methodology.  Smart and Street recommends in “Who” a four step process of a screening interview, a Topgrading Interview, a focused interview, and a reference interview.  This is a very structured process.  For example, in the screening interview, Smart recommends the following questions: (a) What are your career goals? (b) What are you really good at professionally, (c) What are you not good at or doing professionally? and (d) Who were your last five bosses and how will they each rate your performance on a 1-10 scale and when can we talk to them?

One of the key aspects of this system is that you ask interviewees to coordinate reference conversations with prior employers.  This creates a reality check and it allows you to actually get meaningful information from prior employers versus the typical employment confirmation only.  This “threat” of reference check helps ensure honesty in the interview process.

Smart and Street suggests that after your interviews you want to decide if you want to continue with the interview process.  They recommend evaluating candidates on both their skill and their “will” for the job. They suggest that you know you have the right hire when (1) you are 90 percent or more confident that a candidate can get the job done because his or her skills match the outcomes on your scorecard, and (2) you are 90 percent or more confident that candidate will be a good fit because his or her will matches the mission and competencies of the role.

Finally, you sell the potential “A” employee on the what Smart and Street call the 5 F’s of selling – fit, family, freedom, fortune, and fun.  They encourage employers to make sure that they are consistently selling potential “A” candidates through the process and are purposeful in what they are communicating about the opportunity.

While all of this may seem time intensive, it is consistent with the philosophy of “hire slow and fire fast.”  In reality, we tend to do the opposite.  We have an interview or two, maybe check a reference, and hope for the best.  Once hired, even “C” employees tend to linger around because of the headache involved in firing people.  In your business, every role is important, regardless of wage.  I encourage you to learn more about Brad and Geoff Smarts’ work in Topgrading and invest the time and energy and creating an all-star “A” team.

LEADING BY EXAMPLE

Leadership is such a commonly used term that its meaning has become quite nebulous.  I can identify with the quote about leadership, “I can’t define it, but I know it when I see it.”  During the recent economic downtown, I have seen first hand how important real leadership actually is.  When times are tough, it is easy for morale to slip which only compounds problems in an organization. It takes real leadership to keep management and employees focused, aligned, and working hard to succeed.

According to an extensive study conducted by Hay Group, a global management consultancy, trust and confidence in top leadership was the single most reliable predictor of employee satisfaction in an organization.  When you read military histories, there are countless examples of soldiers continually risking their lives to follow leaders they trusted.  Even when times are tough, great leaders will have people that will follow them into “battle” because of the trust and confidence that they have in their leadership.  This kind of trust and loyalty does not happen accidently.  It is the result of leaders who continually invest themselves in their people. One of the most impactful ways to develop this type of employee commitment is to lead by example.  As any parent knows, the old saying “do as I say and not as I do” is a recipe for poor performance.

Don Primos is a 3rd generation entrepreneur and restaurant owner in the Metro Jackson area.  His grandfather Angelo “Pop” Primos founded Primos Bakery in 1929 and the Primos restaurants have been a part of the community ever since.  When 60% of restaurants close within five years of opening, it is worth noting the long-term success of the Primos restaurants.   While there are several factors that have contributed to the success of the Primos restaurants, one of the key reasons is the “hands on” leadership style of the Primos family in their restaurants.   While the days of always having a Primos at the cash register are gone, you will still find Don Primos most days working side by side with his staff. As Don describes, “I don’t ask my employees to do anything I would not do myself.” Don grew up in the family restaurant business and learned first-hand this type of leadership style.

In 1977, at the age of 22, Don formally entered the family business with his father Kenneth and his brothers Will and Ken to operate the Northgate Primos which was a popular restaurant and meeting place for many years until its closure in 2001.  While his brothers and father eventually exited the business, Don has continued the family enterprise.   According to Don, “As my family left the business, I knew I needed to surround myself with a loyal management team to help me meet the demands of the restaurant.”  Don’s leadership by example and personal interest in his employees has led to the creation of a family atmosphere amongst his staff.  Building a loyal team allowed Primos to successfully open a new concept restaurant, Primos Cafe, on Lakeland Drive in 2001 and a similar style restaurant on Lake Harbour Drive in 2006.

Don’s leadership by example sets a great model for his staff and encourages a team atmosphere which he emphasizes.  A good leader helps set the pace and tone of the organization.  I continue to be amazed at how much employee’s gear their performance around the expectations and example of their leaders.  Noted leadership guru John Maxwell aptly stated, “ A leader is one who knows the way, goes the way, and shows the way.”   I am sure that Don Primos will be showing the way for his team with his hand-on approach for many years to come and continuing to build upon the Primos entrepreneurial legacy.

ARE YOU CONTINUALLY IMPROVING YOUR BUSINESS?

Is your organization getting better all the time? 

Most business owners would like to think that their business is always improving; however, very few people are willing to actually do the heavy lifting to create an enterprise that is systematically improving on a regular basis. In the world of manufacturing, these concepts have been around for awhile.  American consultant Edward Deming was a pioneer in  quality improvement with Japanese industry post World War II. The Japanese term kaizen has become synonymous with continues improvement and this method was popularized by Masaaki Imai in “Kaizen: The Key to Japan’s Competitive Success.” In his book which was first published in 1986, Imai introduced the “LEAN” philosophy to the world and shared the secrets behind the success of Toyota and other Japanese companies.

The core principle of continuous improvement is the “self reflection” process.  This is essentially a feedback loop that requires a willingness to be brutally honest about your organization. The purpose of this process is the identification, reduction, and elimination of poor processes. Using a commonsense approach, minor improvements are continually made in small, incremental ways in the organization with a strong emphasis on the customer.

As a company successfully embraces continuous improvement then it moves from being a best practice to becoming part of the fabric of the organization. While these concepts may have originated in the manufacturing sector, they are rapidly being adopted by service businesses, particularly in health care and technology.  There is a tremendous opportunity to gain a competitive advantage by committing your company to a path of continuous improvement.

Mississippi entrepreneur Jill Beneke formed Pileum Corporation in 2002, and she has successfully built a management consulting firm by relentlessly focusing on improving her organization. Beneke worked for over twenty years in financial services, and she was Senior Vice President of the Capital Management Group for AmSouth prior to forming Pileum.  Her father was an entrepreneur as well as her husband, so it was a natural shift for Beneke to launch her own venture when the timing was right. Pileum acts as a trusted partner to companies in multiple industries to help with their information technology and their most important asset – their data management.  Because of this critical role the company plays for its customers, Beneke and her team have to stay ahead of the constant evolution of technology and meet the real time needs of their customers.

While Pileum may not use phrases like kaizen or LEAN to describe their internal process, they are very much committed to the path of continuous improvement.  The management team and staff continually ask the question “How can we do things better?” According to Beneke, “our management team gets together frequently, and we are open and honest about trying to improve.  This means that we can’t be afraid to be self-critical.”  Pileum also provides a significant amount of in-house training for its employees and pays for its employees’ external training and industry certifications.  Their goal as a company is to be getting better all of the time.  For Pileum, this commitment to continuous improvement has helped separate it in the marketplace and establish the company as a leading technology consulting business.  The company now has over 30 employees and services a large number of clients in the Mid-South.

If your company is not embracing the principles of continuous improvement then time is of the essence because your competition probably will be soon.  As a leader, you can demonstrate a commitment to continual improvement and set the direction of the organization.  In order to be successful, you also need buy-in of the members of your team and for them to embrace this kaizen mindset.  While dramatic changes may not occur overnight, your team will daily be embracing a way of thinking conducive for long term success.

 

THE VALUE OF CULTURE

I must have looked lost as I was meandering down the food aisle at a Publix Super Market.  As I was unsuccessfully trying to pick up a few items off my “honey do” list from the grocery store, I heard the words from a friendly Publix employee, “Can I help you find something?”  I was a little caught off guard because I couldn’t remember the last time I was asked in a grocery store if I needed some help with my shopping.  I was prepared for some directions on where I could find the missing item; but instead, the employee insisted on retrieving the product for me while I continued my shopping.  WOW!  I was blown away.  As a business coach and consultant, I take note of great service.   I was also intrigued.  What kind of organization was this with employees who were so passionate about customer service?  As I was in the checkout line, I shared my positive experience with the checkout clerk (who was also very friendly).  I asked to speak to the manager of the store so I could report this excellent customer service.

I learned a lot in my brief exchange with the store manager.  This young man shared with me that this was normal behavior for their employees.  I learned that he had been with the company for over twenty years and started as a part time employee in high school bagging groceries.  As I pressed in for the secret sauce to the great service, he pointed my attention to their secret – THE CULTURE!  He shared with me how important the company’s culture is and how much attention they pay to cultivating and reinforcing it throughout the organization.  The focus on culture has paid off for Lakeland, Florida based Publix. It is the largest and fastest growing employee owned super market in the country.  With over $27 billion in sales, 1,056 stores, and 157,000 employees, Publix is ranked 106 on the Fortune 500.  What caught my attention though was that the company had been on FORTUNE magazine’s “100 Best Companies to Work For” for over 16 years.

Publix’s emphasis on its culture dates back to 1930 and the company’s founder George Jenkins. Jenkins held himself to the high standards he expected of others and created a culture of service “not only to the customer who came into the store to shop, but to every associate as a customer of another associate.” Jenkins and other leaders believed that “people want to help, and, if given the resources to do so will provide extraordinary service.”   One of the ways they create such loyalty is by promoting from within.  The current CEO and President each started out in Publix as front-service clerks over 25 years ago.  I also took note that, the average tenure at Publix for store managers is 25.1 years, retail hourly workers average about 5.1 years, and hourly support workers average about 9.1 years.

As I have studied companies like Publix, I have become convinced that building a great culture is absolutely one of the keys to building a great company.  It is particularly important for any company that wants to grow and expand with people.  For some, talk about culture may sound “soft” or of secondary importance.  These type naysayers may believe that having a great culture is a “nice to have” versus a “must have.”  Very few companies can afford to ignore their company culture.  If your company involves people interacting with people, then you should be paying attention to your culture.

 For definitional purposes, I describe a company’s culture as the shared values and practices of the people in the organizationThese are the common beliefs and habits of the organization.  Here is the critical part – your employees represent YOUR BRAND.  They are the living, breathing implementers day to day of what your company stands for.  In other words, they are the front line in creating your brand in the marketplace.  Companies can spend millions on positive advertising but one bad interaction with a representative can destroy the customer’s feelings about the company.

I was attending a conference at the Ritz Carlton in New Orleans recently, and as I was leaving a member of the housekeeping staff stopped me on my way to the elevator and wanted to make sure I had enjoyed a great stay at the hotel and wished me safe travels on my journey home.  She did not have to do that.  It was probably not part of her job description.   However, with a smile and genuine sincerity she made a point to wish me well on my way.  I have shared with dozens of people about this simple exchange and how that positively reflects on the brand of The Ritz Carlton.

Gregg Lederman, founder of Brand!ntegrity and author of the book entitled Engaged! Outbehave Your Competition to Create Customers for Life, travels the country helping companies realize the value of culture and how important it is in developing their brands.  He notes, “Branding is not part of the business, it is the business. Every interaction with an employee, with a coworker or a customer has the power to strengthen or hinder the brand image of your company.”  Lederman emphasizes that branding is about experiences and not logos and taglines.  He teaches companies that the little things that they do daily are more important than the big things they may say about themselves.  I believe and share with my clients that every day their doors are open is “Game Day,” and they should treat it with the opportunity for greatness.  Unfortunately, for too many companies it becomes like “Groundhog Day,” and mediocrity can creep in.

I recently discovered Lederman’s company and work, and I have been impressed.  In addition to his thought leadership on this subject, his company has come up with something truly unique in my opinion.  They have created a proprietary software system that actually allows companies to better manage their brand by tracking and measuring customer satisfaction, employee engagement, and financial results. What they have accomplished is the linking together of these critical aspects of the business in a quantifiable way that encourages the right behaviors.  This use of metrics and creative ways to reinforce positive behaviors strengthens and builds the culture, and it is all tied back to the company’s profitability.   I believe in the future we will see more and more organizations focused on building powerful brands, and I think we should all start to consider what is our R.O.C. – Return on Culture.  

HOW TO BENCHMARK YOUR PRACTICE FOR SUCCESS

I grew up playing and teaching people how to play tennis.  Some players would practice and practice, but it was not until they actually played in a tournament that they got real feedback on how they were progressing. Similarly, as you work day to day in your medical practice, it is easy to operate in a vacuum.  However, you can solve this problem by benchmarking your practice against others locally and around the country.

Practicing medicine is data driven.  You spend years learning to quickly review and interpret data to improve patients’ lives.  This data driven mindset can help you optimize your practice as well.

There are four keys to successful benchmarking:

(i) The ability to produce accurate data in your own practice

(ii) Access to quality data on key metrics for comparable practices

(iii) Proper analysis and interpretation of the data

(iv) The will to execute on your findings.

Producing Your Own Data

How much do you know about your own practice?  It’s hard to make comparisons to others when you don’t know your own numbers.  This starts with creating sound accounting practices.  What type of accounting software are you using?  Can it track all of the detail you need?  Is the information easily accessible?  Work with your accountant or practice consultant to ensure you are capturing the necessary data.  As bestselling author Stephen Covey taught, “you want to begin with the end in mind.”  Therefore, think about the data you want to be able to review, and then make sure that you have the systems and data collection to give you what you need.

Comparable Key Metric Data

You want to look both at practice characteristics and productivity measures when analyzing comparable data.  For example, practice characteristics include:  size of patient base, number of exam rooms, hours of operation, number of physicians, number of staff, fees, and payor mix.  Productivity measures include revenue per square foot, annual revenue per active patient, gross revenue growth, patients per day, gross revenue per exam, staff turnover, percentage of gross income and net income for staff, marketing, insurance, etc.  It is also helpful to compare salaries, rent costs, and insurance premiums.

Where do you get this type of information?  There are associations such as the Medical Group Management Association that have a great deal of this type of information available.  I’ve also found that practice focused associations also generally have good data on practice areas. Finally, some of the medical industry vendors (e.g. pharmaceutical and device manufacturers) have very good data as well.

Analyze the Data

Your job is to practice medicine, not to be a forensic accountant.  Therefore, your practice reports should be clear and easy to understand.  You’re looking for trends and patterns in the data.  It should not make you cross-eyed to interpret the data.  I prefer nice graphs and charts to graphically illustrate the information.  This helps me to spot changes over time.  One additional point is to know the value of your time.  I encourage professionals to do the basic equation (income / hours worked) to know their “hourly rate.” This is very helpful when you consider how you spend your time and what things need to be delegated or outsourced.

As you know and understand your own data then you can better compare it to the benchmark data you review.  It’s important to make sure that you are comparing “apples to apples” in your analysis so be cognizant of distinctions based on urban/rural settings, practice size, and geography.  How does your practice stack up?  Are you managing costs appropriately?  Is your practice being productive with the resources allocated?  It takes time to actually compare this important data.  This is truly thinking “on your business” versus thinking “in your business.”  Take the time to set aside good thinking time to review the data.  I would recommend getting out of the office so you’re not interrupted.  You may want to get some of your trusted advisors or staff to review it with you.  Having more than one perspective can be helpful.  What is the story that the data is telling you?  Write down your conclusions and potential action items.

Act on What You Learn

I have spoken with many physicians who are disappointed when their patients don’t act on the valuable medical advice they receive.  As any physician knows, it’s not what you know that counts, but what you do with what you know.  Once you’ve taken the time to create the systems to produce accurate data in your practice, gather quality third party data, and to thoughtfully review and analyze the information, now it is time to act.  Create written goals and action items based on your findings.  Make sure you have action items delegated to those who can get it done.  Most importantly, you want to follow up and make sure your organization is accountable to complete the proposed changes. Finally, it’s important to remember that this process is an ongoing one.  It creates a positive feedback loop in your practice.  I would recommend at least annually making sure that your practice is on the right track!

 

UNDERSTANDING YOUR MOTIVATIONAL DRIVERS

I have made my fair share of mistakes as a manager of people.  In my first business out of college, I co-owned a company that managed private and public tennis complexes.  One of our key staff members was the head tennis professional who was a leading tennis teacher in the area.  He had students lined up to take lessons from him which was great for our business.  In my brilliance, I went out and hired another tennis professional without consulting our long time head pro.  Within a few months, my long employee left and went to work for a competitor taking all of his students with him.  In his exit interview, I learned that he enjoyed being the sole head professional and that he did not get along well with the person I hired.  Ouch! This was a painful lesson in managing people and learning to communicate better.

Later in my career, I was apparently not much wiser.  I personally don’t like much oversight or micro-management when someone is managing me. Just point me in the right direction and let me go.  Therefore, my default is to manage that way as well.  Unfortunately, that style does not work for everyone.  I had a very talented law clerk that I hired to assist me with my law firm.  I would share some big picture ideas with him and turn him loose to work his magic.  Unfortunately, when we would reconvene, I would be very disappointed in the work product.  After several failed attempts, he finally said, “Could you please just tell me exactly what you are looking for, and I will be glad to do it!”  I needed to hear that as a good reminder that many people need clear direction and want more detail in how to accomplish a project.

I have had my occasional good moments as a manager.  In one work setting, I shared an assistant with another co-worker.  She was a very nice young lady who worked very hard.  The colleague I was working with had a very different management style than me. My colleague had a very stern approach and would become very upset if the work product was anything less than perfect.   I watched my assistant leave this person’s office many times in tears.  I personally believe you “catch more flies with honey than vinegar”, and I tried to be an encourager and challenge my assistant in a positive way to be her best.  What I learned from that experience is that my assistant would expend extra effort to get projects done for me, but would do the bare minimum not to get in trouble with my colleague.  In other words, she cared enough to give me her discretionary effort.  That lesson has stuck with me.

How we lead and inspire others in the workplace matters.  Gallup has some very interesting research on our workforce in the United States and the impact of employee engagement versus disengagement.  They have been tracking employee engagement since the late 1990’s, and they have administered over 25 million employee surveys to measure employee engagement.  In a recent report, they found that only 30% of the U.S. workforce is engaged in their work, and the ratio of engaged to actively disengaged employees is roughly 2-to-1.  For work groups with engaged employees, the results are phenomenal – “higher productivity, profitability, and customer ratings, less turnover and absenteeism, and fewer safety incidents than those in the bottom 25%.”  In addition Gallup found that, “Organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher earnings per share (EPS) compared with their competition in 2011-2012.”

However, in contrast those with an average of only 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.  Gallup also estimates that active disengagement costs the U.S. $450 billion to $550 billion per year.  These disengaged employees are more likely to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away.

What I have realized in my journey is that most businesses today are PEOPLE businesses.  We either win or lose based on how well we have engaged employees working together to accomplish organizational goals. That is how you build a great brand and create loyal customers.  As we continue to distance ourselves from the industrial age into the knowledge economy, it is paramount that we as leaders understand that our employees are not cogs in a machine but living, breathing people who have hopes, desires, dreams, and NEEDS.  If we are going to unleash the greatness in our organizations then we have to unleash the greatness of our people.  

In my work with organizations, I frequently use personality tests like DISC® or Myers Briggs®; however, my favorite tool is the Birkman® assessment because it helps you understand your “needs” as well.  If a person’s needs are not being met then they are unlikely to be a productive employee in an organization. The challenge is that people don’t walk around with their “needs” spelled out on their resumes.  They may not even be clearly known by the individual.  As a leader, we can learn how to inspire and motivate our team members by understanding what truly motivates them.

In my search for an efficient way to practically apply these principles, I discovered a tool to help streamline this process.  Dr. Carl Hicks, a native Mississippian, co-developed with Birkman International a new tool called Understanding My Motivational Drivers.  This assessment combines the objective statistical input from millions of people who have taken the Birkman with Dr. Hicks’ practical experience in working as a business consultant for several decades.

The assessment produces a short report which addresses five key topics for individuals:

(1) How to work with me

(2) How to talk to me.

(3) The biggest mistakes you can make with me.

(4) How to incentivize me.

(5) What motivates me.

I asked Dr. Hicks about this tool and he shared, “I believe that being your best requires that others treat you as you want to be treated. This report can serve as the vehicle that permits you to review, confirm, share and discuss your expectations in an objective manner.”

I believe that tools like the ones that Dr. Hicks created are extremely important because they help individuals increase their self-awareness and leaders better understand how to unlock the greatness in their employees.  I encouraged leaders to follow the Platinum Rule which means that we treat people in the way that they want and deserve to be treated. The harsh reality in life is that the only person you can truly change is yourself.  Therefore, one of the ways that YOU can change is to make sure that you are seeking to understand what motivates your teammates and seeking to be a positive example of how to lead by helping people meet their needs. You may just be the catalyst for helping to take your organization to the next level!

THE POWER OF TRUST

I admit that I’m a nervous online shopper.  

Several years ago, a credit card number of mine was “stolen” online, and I had to sort through quite a mess to clean it up. Since then, I’ve been careful about doing business on the web.   If you’ve ever shopped online, you’ve probably noticed the checkmark logo from VeriSign that appears on web commerce sites utilizing their SSL encryptions services.

A recent case study demonstrated just how powerful this little logo can be. With more than 500,000 online and local stores responsible for more than 400 million products sold, TheFind is the world’s largest online shopping center. This virtual shopping mall has more than 17 million unique monthly shoppers. TheFind’s analysis showed that companies displaying the VeriSign seal received 18.5% more click-throughs than similar companies that did not display the VeriSign seal. Interestingly, Symantec, a software company known for its security products, and VeriSign recently announced a deal for Symantec to purchase VeriSign’s identity and authentication business, which includes SSL Certificate and Public Key Infrastructure (PKI) services, for $1.28 billion in cash. One of the key drivers in this transaction is the brand recognition of the VeriSign seal being acquired by Symantec.

What does that VeriSign seal really seal stand for? Trust! The web commerce sites using the VeriSign seal benefit from consumers like me, who trust that if I provide my credit card information, then I don’t have to worry about someone going on a spending spree of plasma TVs in a third-world country on my dime. This is just one example of the power of trust in business.

Upon reflection, you see how truly important trust is, both in the business world and life in general. If I don’t trust my wife, then I will make our lives miserable by always wondering what she’s doing.  If I don’t trust my employees, then I will micro-manage their efforts and keep them in a state of dependence and little self-confidence. If my business partners and I don’t trust each other, then we’ll waste valuable time and resources looking over our shoulders.  If my clients don’t trust me, then they won’t be willing to pay me for my services.

In leadership, trust is critical.  How inspired are you to follow someone you can’t trust? Conversely, when we trust someone, we’ll go to great lengths to sacrifice personally to support the cause of the leader.  Too often, we betray our trust through self-serving behavior.  Trust, like friendship, is something you have to be willing to give if you want to receive.  As George MacDonald noted, “To be trusted is a greater compliment than to be loved.”

While trust has always been important in business, I believe that it’s increasingly becoming paramount to success in business. Jim Burke, former CEO of Johnson & Johnson noted, “You can’t have success without trust.”   Similarly, Robert Eckert, former CEO of Mattel, stated, “As you go to work, your top responsibility should be to build trust.” There are confluences of factors that have increased the need for trust today in business.  First, we have a more dispersed workforce. Instead of rule-driven factories, we work in an increasingly virtual world.  Many employees work from home today and manage flex time schedules.  As managers, it’s more difficult to micro-manage employees that are 1,000 miles away.  More than ever, companies today have to center their corporate culture on shared values and trust.

We also live in a transparent world.  Companies used to be able to keep secrets.  Today, anyone with a camera phone or a computer can be a whistleblower.  Any customer with a problem can litter blogosphere with negative things about a company.  As Dov Seidman pointed out in his book, How, today it’s more important how companies operate than what they do.  His point is that the greatest strength of a company today is its trustworthiness.  In the wake of the financial collapse, financial institutions are having to go to great lengths to restore the trust with customers.

If, as leadership guru Warren G. Bennis asserted, “trust is the lubrication that makes it possible for organizations to work,” then perhaps we should start to consider how to increase our trust individually and organizationally. While trust can be a nebulous concept, it essentially means that I have confidence in you, and I’m willing to put myself at risk to “do business” with you.

Even though one can employ manipulative tactics to gain another’s trust, I believe we’re much better served by truly becoming trustworthy people. This means we need to act with integrity.  We can’t be saying one thing and acting out another.  We need to be reliable.  When we make promises, big or small, people need to be able to count on us.  We have to be capable. This means that we have to actually be able to deliver on what we say we can do.  Capable people are lifetime learners who are always striving to get better.  We also have to be “others focused.”   When we are simply out for No. 1, it shows through.  We genuinely have to increase our ability to know and understand the people we work with and desire to serve.

As we hopefully continue to come out of this financial malaise, we all have a level of fear and uncertainty.  As businesspeople, now is the time to truly help others work through their uncertainties and be known as a trusted resource. Becoming trustworthy is a noble journey with substantial long-term dividends. It’s certainly not an easy path, and we’ll all stumble along the way.  However, the bilateral transaction of trust is essential to success in life and business, so hopefully we’ll encourage one another on this journey and learn to trust each other more.