Before You Can Multiply You Must First Learn To Divide

March 31, 2011

Not too long ago, I was having a conversation with an event organizer about his revenue model. He told me that he hires speakers, paying them a flat fee for their time, and then launches an aggressive marketing campaign to put butts in seats.

He also told me that most of his events lose money.

Why?

His business has significant fixed costs. Therefore, he needs to continually be at maximum capacity in order to just break even.

To assist him in overcoming this challenge, I shared some simple yet powerful advice that I had personally received while traveling in Asia a few years back:

“Before you can multiple, you must first learn to divide.”

Because small businesses are always trying to control costs, our natural tendency is to avoid sharing any of the profits. We want to keep it all to ourselves, since there is often so little profit to begin with. However, if you wish to be successful, find a way to take a smaller slice of a bigger pie.

In the example of the event organizer, instead of paying a fixed fee as his current model dictates, he could pay speakers a percentage of the ticket sales. This puts the speaker’s skin in the game. More attendees, equals more money for the presenter. He or she now has a vested interested in the success of the event potentially creating a bigger pie to share.

Instead of a high fixed advertising model, find a way of sharing ticket revenues with those who sell tickets. This could be done through online affiliate programs where the website that drives the traffic gets a percentage of the value of the tickets sold. Or you can give commissions to people who make the sale.

In another example, a friend of mine runs a successful family-owned restaurant. Although she had been profitable in the past, her margins were razor thin. For the last couple of years, economic conditions have reduced her revenues, further eroding her margins.

What was her solution?

Instead of simply cutting costs, she found ways of increasing revenues by partnering with people who charge her only when her business is growing.

She uses iDine® and OpenTable to drive traffic to her restaurant. Although they take a percentage of every customer that they deliver, the extra traffic helps to cover her large fixed costs.

It is natural for a small business to be conservative with their finances. But sometimes the best way to make money is to first give some away. Unless your fixed costs are low and you are continually at capacity, it makes sense (and more importantly dollars) to find creative ways of partnering and sharing your wealth with others.

Read the rest of this article on the American Express OPEN Forum

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See Me In Action in Cambridge Apr 7

March 30, 2011

It is not often that I do events that are open to the public.  So I am thrilled to be partnering with The Big Studio to bring you a special Personality Poker session.

There is no cost to you.  In fact, the first 50 people who register will get a copy of my Personality Poker book at the event, thanks to a generous donation by The Big Studio.

If you will be in the Boston area on April 7th, be sure to register for this event at the Cambridge Innovation Center from 6PM – 7:30PM.

Register Here

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The Key to Overcoming Roadblocks: Innovation

March 29, 2011

In Wisconsin, the Republicans wanted to eliminate the collective bargaining rights of most public employees as a way of cutting the budget. This was hotly contested by the Democrats to the point where all 14 Democratic senators left the state, refusing to vote. They did this knowing that at least 20 senators needed to be present during votes authorizing the use of money. This meant that the Republicans would be one person shy of a quorum.

What was the Republican’s creative solution?

They met in a committee to strip several financial elements of the bill and argued that the quorum rule no longer applied as a result. The bill then quickly passed and was signed into law by Governor Scott Walker.

This caught the self-exiled Democrats off guard.

What did the Republicans so skillfully do that made this coup d’état a reality? They were innovative about the way they achieved their objectives.

Typically, when we think about creativity, we tend to focus on the result: the new product, process, service or business model. But sometimes it is incredibly powerful to innovate the means in which you implement your solutions.

Another recent example of this involves the National Football League (NFL). The NFL owners and players have been in arbitration, trying to resolve disputes over how to split the $9 billion in annual income. When the collective bargaining agreement expired, the owners instituted a league-wide lockout. As a result, the players no longer had health insurance, were not paid, and were banned from entering any team facilities or having contact with any team staff.

What was the creative response of the players?

They “decertified” the players union (the NFLPA). By eliminating the union, the NFL was then considered a monopoly. This allowed the players to invoke the Sherman Act, a federal antitrust statute limiting monopolies, which paved the way for the players to file a class action lawsuit seeking triple the amount of damages they’ve incurred.

Change the rules of the game

I’m not making a statement for or against either side or the actions they took. Nor am I an attorney, so there may be subtleties of the laws that I am missing.

Regardless, in both of these cases, the parties involved recognized that they could “alter” the rules of the game. In doing so, they took actions that might have otherwise been unforeseen. The Republicans caught the Democrats off guard by removing the financial elements of the bill. And although this was expected, the NFL players took steps that allowed them to take legal action that was not previously allowed.

This is a powerful lesson for businesses of any size…

Read the rest of this article on the American Express OPEN Forum

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Is It OK to Marry Your Work (part 2)

March 24, 2011

Last week I wrote an article for American Express about “marrying your work.” Unlike the “ball and chain” picture that tends to pop into our heads, I espoused the merits of loving your job, just like you would marry a spouse you love.  Be sure to read that article before reading on.  I’ll wait.

OK, now that you read the first part, here is, as Paul Harvey would say, the rest of the story…

I’m on vacation this week in Mexico and I just had an epiphany.

Tonight while cooking up some steaks on the barbeque, I looked through the window and saw everyone else on their computers working. In fact, all day long while I relaxed in the pool with my Kindle, everyone else was busy working away.

Admitted, I work a lot, but I love what I do. I truly do. Regardless, I have not taken a “real” vacation in 2.5 years and I work 80+ hours a week. I use this “dedication” as a badge of honor.

But tonight, while watching everyone work while vacationing in paradise, I realized something important.

You can be married to someone, yet not spend 24 hours a day with them. The best relationships are often those where each individual has their own life in addition to their marriage.

Kahlil Gibran’s “The Prophet” is one of my favorite books. In his poem “On Marriage,” he so beautifully says:

Love one another, but make not a bond of love:
Let it rather be a moving sea between the shores of your souls.
Fill each other’s cup but drink not from one cup.
Give one another of your bread but eat not from the same loaf.
Sing and dance together and be joyous, but let each one of you be alone.
Even as the strings of a lute are alone though they quiver with the same music.

For me, this always described the ideal relationship. A deep closeness that is not TOO close. There is space.

Last night I reread the poem through the lens of “marrying your work,” and it took on a whole new meaning.

You can love your work. In fact, you can be married to your work. This is a good thing.

But just as you do not need to be with your spouse 24 hours a day, you don’t need to be with your work around the clock.

Ok, now I need to get back to my vacation…

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Is It OK To Marry Your Work? (part 1)

March 23, 2011

I was talking to a Thai friend of mine recently; someone who knows that I work a lot. She also knows that I love what I do.

She said I am, “Thang kub ngaan.” This literally means “marry with work/job.”

We sometimes jokingly say that we are married to our job, but we tend to mean it in a negative way. But in Thailand, this expression is used in a loving way, the same way we would refer to being married to a spouse. When they say you are married to your work, they mean that you are in love with what you do.

Why don’t we have an expression like that here? Maybe because it is culturally not acceptable to love what you do. If you are enjoying your work too much, you are probably not working hard enough. Or perhaps it is viewed as unattainable. We have succumbed to the fact that work is just that, and play is what we get to do on the weekends.

Western expressions here are more akin to diseases. For example, a “workaholic” is someone who works long hours to satisfy a deep-seeded need to prove oneself or become wealthy and successful.

Even the word “work” is defined as to “exert oneself by doing mental or physical work for a purpose or out of necessity.”

With that as the definition, who would want to be married to their work? But is there a way to love your job?

First, figure out what you love. It is important to note that this is very different than what you are good at. Our society places more emphasis on overall skills, than on natural skills and passion. We take strengths-based tests to determine our aptitude. But it is much more difficult for us to determine what comes naturally and what gives us energy.

Read the rest of this article on the American Express OPEN Forum site

[Tomorrow, I will post part 2 of this article here on my blog.  Part 2 will not appear on the American Express site]

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Tap Into Your Inner Innovation Child

March 17, 2011

I recently had the privilege of speaking to a group 400-plus senior executives from a very large organization. During my allotted 90 minutes, I conducted an activity used to demonstrate the power of divergent thinking. At the conclusion of the exercise, I asked for solutions to a specific problem. Twenty hands went up, if that. And, of those, most were only halfway raised.

Contrast that with a presentation I had given later that afternoon to a group of 200 high school students. When we conducted the same exercise, all 200 hands went up. In fact, half of the students had both hands up, so technically 300 hands were up. And, in an effort to gain my attention, a quarter of the students were jumping up and down on their chairs. The solutions provided by the high school students were off the charts. They were so creative that some ideas were beyond comprehension.

The difference between the adults’ and teenagers’ sessions were night and day.

My own observations, while not overly surprising, have been validated by research.

There was a study done a number of years ago by George Land. He found that 98 percent of 5-year-old kids tested as highly creative. By the time they were 25 years old, only 2 percent tested at that same level.

If children possess such a dynamic level of creativity, why aren’t companies hiring a collection of 5-year-olds to enhance innovation efforts?

The answer lies within the distinction between innovation and creativity.

What I admired most about speaking to the children was their passion, not necessarily their responses. They had a level of enthusiasm that was unparalleled. They all wanted to play. They all wanted to contribute. And no one was concerned about looking bad in front of his or her peers. In fact, it seemed as though the more they participated, the more it made them look good in the eyes of others.

Adults, on the other hand, are calculating and careful when responding. They are more concerned with saying something “stupid” and being labeled as a failure. As a result, they sit quietly — often with the best ideas buried in their minds — and resist participating fully. This robs teams of their full potential.

Read the rest of this article on the American Express OPEN Forum site

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The Performance Paradox on IdeaConnection

March 16, 2011

The second half of my interview with Vern Burkhardt from IdeaConnection was recently posted. Here are the first few paragraphs of this much longer interview.

“We can conclude that creativity is about being present, just as pit crews changing the tires on a Formula 1 car need to be present.” Stephen Shapiro

Vern Burkhardt (VB): While living in England for four years you worked with a Formula One race team. Would your Personality Poker playing card tool be useful in selecting the pit crew and drivers? (Vern’s note: see last week’s article for a detailed discussion about Personality Poker)

Stephen Shapiro: I’m not sure it would be useful in picking the pit crew members or the drivers, but I did learn a lot about how teams collaborate while watching Formula 1 pit crews.

There are some simple principles that pit crews use. One is each person is playing to their strong suit. Everybody understands completely what they must do. The person changing the lug nut on the front right tire does it better than anyone else. If I’m one of the two removing the rear left tire, we will do that better than anyone else.

The second principle is to make sure all positions are covered. If the person who is supposed to be fueling a car – back when they fueled a car in Formula 1 races – decided not to show up, you’ve got a serious problem that will cause the race to be lost.

The same thing applies to all organizations. They will have problems if they’re not “playing with a full deck” – that is, they don’t have all of the different positions or thinking styles addressed.

Another analogy to the card game we didn’t talk about last week is dealing out the work. It means we want to use a divide and conquer strategy. Everybody doesn’t do everything. They know how and when to pitch in.

Finally, from time to time we want to shuffle the deck to create some tension without having to have groupthink all the time.

The pit crew was a good model for creating high-performing innovation teams.

VB: The people who are the pit crew have to be present; they have to be focused on exactly what they are doing. Their brains can’t be wandering or thinking about anything else. Would that be fair to say?

Stephen Shapiro: That’s fair to say.

You bring to mind an interesting phenomenon that I call ‘the performance paradox.’ A study done by one of the pit crews found that when people did not focus on the stop-watch – on how fast they were working – but instead focused on being present, they actually completed the tasks faster even though the pit crew members thought they were going slower. They were encouraged to think about being ‘smooth’ if they were changing the tires or doing the other tasks.

We see the same thing happening inside organizations and, in particular, in the creativity space. When we tell people to be creative, and measure them on their creativity, the result often is less creativity. The process of focusing on the extrinsic measure of creativity paradoxically has the impact of worsening or lessening the level of creativity inside the organization. We can conclude that creativity is about being present, just as pit crews changing the tires on a Formula 1 car need to be present.

VB: Was it a difficult decision in 2001 to leave your job at Accenture, where you led that company’s Global Process Excellence Practice, to become a writer, speaker and consultant?

Stephen Shapiro: It was somewhat of an easy decision.

The launch of my first book, 24/7 Innovation, was on October 10, 2001 and my last day with Accenture was October 11, 2001. I had been speaking to audiences on behalf of Accenture for 8 years, and I felt it was time to try something different by promoting the book while still doing speaking engagements.

I quickly learned an important point about innovation when I launched my own business. There’s a difference between being a great speaker and having a great speaking business. I believe I was and still am a great speaker, but in the beginning I had no work. Just because I had a book published didn’t mean people were going to bang down my door so I had to be creative about how to find work.

For a lot of organizations you need to be creative about the way you market and sell because those are as important to the growth of the business as having a good product. Peter Drucker once said, “since the purpose of business is to generate customers, only two functions do this: marketing and innovation. All other business functions are expenses.”

I learned very quickly that he was right and marketing is king. The best product that no one knows about is not going to sell. Having said that, the ability to develop new products, services, and business models is also important and I don’t want to downplay their part in the success of a business.

VB: What do you do to psyche yourself up before you speak to a large audience?

Read the rest of this interview on the IdeaConnection website

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Open Innovation Book

March 15, 2011

Paul Sloane, an innovation colleague, approached me a while back to write a chapter in a book he was compiling on open innovation & crowdsourcing.  The book is now officially out. In it you will find articles from a wide range of experts in the area of open innovation.

Although the writing style of each author is quite different, and the points of view at times may contradict one another, the value in reading a book like this is that you will get a broad and diverse set of perspectives.

You can buy your copy on Amazon.com.

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Innovation & Poker Interview with Chris Taylor

March 14, 2011

I recently had the great pleasure of welcoming Chris Taylor into my condo.  He came with his video camera, an in depth understanding of my work, and an amazing interview style.  The result? One of my favorite video interviews…ever.  Be sure to check it out and learn more about Chris at Actionable Books.

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Your Customers Are Cynics

March 10, 2011

[This article originally appeared on the American Express Open Forum]

A large portion of my business is public speaking. And I know many others who make their living the same way. But to be perfectly frank, companies are often wasting their money when they hire a speaker. I say this not because there aren’t many gifted men and women who can deliver an engaging presentation. The problem is with the customers, not the speakers.

As Oscar Wilde once said, “a cynic knows the cost of everything and the value of nothing.” Using this definition, most buyers are cynics.

The truth of the matter is that your customers do not know what they truly need. And they certainly do not know how to define value.

This creates an opportunity for you to engage your buyers in new ways, generating more value for them… and greater wealth for you.

To test the hypothesis that my customers could not articulate what was valuable to them, several years ago I tried an experiment. I called it “PW3 – Pay What We’re Worth.”

As background, in determining the fees paid to a professional speaker, traditionally the speaker sets the rate before the work is done. With the PW3 experiment, I turned this model upside down. Instead of quoting a standard rate, the client would determine my fee after the work was done.

The plan was to send the client a blank invoice after I gave a speech, and they would pay “what I was worth.”

The only stipulation was that we would have a conversation about value up front. I wanted to learn the value they got from previous speakers. How were the concepts reinforced after the presentation? How were ideas implemented? How was value measured?

What I discovered was that Oscar Wilde was indeed right. Companies were unable to define value, at least in terms of tangible results. In fact, in nearly every situation, when I asked them how they would determine what to pay me after an event, they said, “Um, I guess we’ll pay you what we paid the last speaker.” In fact, with 90 percent of my speeches, the client asked me for my standard fee and just paid that.

How can you create exponential value for your customers? How can you in turn create greater wealth for your organization? Let’s first look at the way organizations tend to operate.

In my work, I have defined three levels of innovation:

Level 1: Innovation as an event
Level 2: Innovation as a process
Level 3: Innovation as a system

Read the rest of this article on the American Express OPEN Forum

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