April 5, 2013
Here is the transcription for my Monday Morning Movie…
The other day I was at Mohegan Sun, which is a casino about an hour and a half outside of Boston. And while I’m there I love to speak with the gamblers because each of them believe they have a system. They believe they have a method to ensure that they win. And they’re all convinced they’ve won more money than they’ve lost.
Well, of course, this is not true. Casinos are not in the habit of giving money out to people. The house always wins. We know this to be true.
Why do people believe that they win more than they lose? It’s something called confirmation bias, and confirmation bias is the brain’s processing mechanism by which it finds evidence to support its belief structure. Whatever you believe, you will find evidence to support that, and you will subconsciously ignore anything that refutes your belief structure. That’s why we can have such powerful beliefs in spite of evidence to the contrary.
It’s very important for innovators to understand this concept, because every person is convinced they have a billion dollar idea. They’ve got the next big idea that’s going to change the world and make them rich. But what happens is their confirmation bias only allows them to see the evidence that supports their belief that they have a great idea. Their brain doesn’t allow them to see all the evidence that proves it’s actually a bad idea.
There’s a reason why 70 to 90 percent of new innovations fail. It’s not because these aren’t well intentioned, motivated, or excited people. But they’re people who, like all people, have confirmation bias. As a result they will subconsciously ignore the evidence that proves that what they think is a great idea, is in fact not such a good idea.
As innovators, as entrepreneurs, as individuals it’s important to recognize this. Now how do we counterbalance this?
It’s difficult for us to find evidence that refutes a strongly held belief. So what we need to do is, when we’re working on something, partner with a devil’s advocate. Find someone who’ll be the contrary point, somebody whose sole purpose is to find evidence that proves your idea is a bad idea.
Now it may be hard to hear what that person has to say. You will want to reject what they have to say. But if you can open up your mind and be willing to hear the contrary points of view, you may be able to refine your product, service, or idea, and come up with something that’s better. Or you may learn it’s just such a bad idea and you shouldn’t invest the time and money in this one. Find a different one.
This is really important for all organizations (big or small) and individuals.
We know that every gambler doesn’t win more than they lose. And we know that every idea is not a great idea.
The question is, “What are you going to do to make sure that you invest your time, money, and energy in the things that have the highest likelihood of paying off?”
March 27, 2013
I subscribe to the 20/80/80 principle. The idea behind this concept is to focus your energies on the 20 percent of those activities that create 80 percent of the value. This can mean concentrating on the customers that create the highest revenue potential or on the products that provide the greatest leverage return. Once mastered, you can spend your 80 percent on other activities that produce even more long-term value. But how do you know what those activities are?
In my book Best Practices Are Stupid, I describe a model called “The Innovation Targeting Matrix,” which helps business owners evaluate their business activities and put each into one of three categories: support, core and differentiating. Doing this helps them determine which areas are worth focusing their 80 percent on.
Activities that fall into this category are those that help you run your business, but are not the business itself. Although many assume that human resources and finance fall into this area, the reality is that there are parts of every function that are “support” in nature. What distinguishes these activities is that customers don’t pay for or value them, and they don’t create direct value for your business either. Therefore, your strategy should be to outsource these activities to a low-cost provider. Or, if they are truly low value, eliminate them altogether where possible. For example, I hire someone overseas to handle my audio transcriptions. Although I could eliminate this activity, I have deemed enough value to continue with it.
The next level represents your “core” activities, which are any activities that create direct customer value. They typically range from shipping and customer service, to sales and new product development. For core activities, consider simplifying, automating, improving (e.g., Six Sigma) or, in some cases, outsourcing to a strategic partner. If outsourcing, look to hire organizations or individuals for whom this work is a differentiator. For example, I’m not a marketing expert and my clients don’t pay me for my marketing expertise, so I retained an Internet marketing company because its results set it apart in the marketplace. In this case, strategic outsourcing makes the most sense. It’s important to note that just because something is a core function—like sales—does not mean that everything a salesperson does is core. Related administrative work may be a support function, while other aspects of sales may be differentiators.
At the highest level are your “differentiating” activities. These are what separate you from the competition, and they represent the unique reasons why customers buy from you and not someone else. What makes you different? Is it some particular aspect of your service? Do you have a unique pricing model? Are you able to give customers access to something they can’t get elsewhere? Do you provide a feature no one else can offer? Any activity can be differentiating. There are aspects of HR, for example, that enable your organization to stand out. Identify these activities in every department. Spend your time on those activities that set you apart from your competition, and innovate where you differentiate.
In addition to using the Innovation Targeting Matrix, entrepreneurs should ask themselves the following questions to help focus their energies on the most important tasks:
- Am I the best person to execute this activity? If not, get someone else to do it. When possible, only engage in activities that you deem to be your strengths. I hired a branding company because branding is their strength, not mine.
- Is this activity something I enjoy doing? If not, consider having someone else to do the work. Creating strategic partnerships is essential to my business, but I find the work exhausting, so someone else handles this responsibility on my behalf.
- Is this activity something I need to do? This is often a tough question. From my experience, much of the work we do provides negligible value; however, we convince ourselves it is necessary. Surfing the Internet, being sidetracked by emails all day long and other distractions disguised as opportunities should be eliminated.
- Does this activity give me leverage? This is a critical question. Think about it this way. For some activities, an hour of work rears an hour of value. When my income is based solely on speaking to groups, there isn’t a lot of leverage. I’m limited by the number of hours in the day. Personal/executive coaching often has even less leverage because you’re having an impact on only one person at a time. When I license my work to others, there is greater impact as they do the work and I make the money with minimal effort. In this case, one hour of work on my part can lead to hundreds of hours of value. Selling can be leveraged too. Instead of selling once and making one sale, find a channel whereby they can create dozens or even hundreds of sales for you.
Why invest in activities that don’t yield the greatest return? There are only so many hours in a day, so focus your energies on activities that you enjoy, that are differentiating and that create leverage. Using these strategies will help you stay one step ahead of the competition.
March 27, 2013
Here is the transcription of my interview with Theo Androus on the “Voices of Experience” CD, which is sent to professional speakers around the world. Alternatively you can listen to the audio recording.
THEO ANDROUS: We kickoff this month’s edition of VoE with speaker, author, and innovation expert Steve Shapiro. Steve’s latest book is titled “Best Practices Are Stupid,” which has me questioning the title of this segment, and VoE, in general. Steve is an innovation evangelist, and has done some pretty innovative things with how he delivers his message and how he leverages his content. Join me now as Steve Shapiro shares with us how he does it.
STEPHEN SHAPIRO: I do my speaking a little different, even though I’m a keynoter, I’ve gamified my speeches, if I can call it that, so we actually play.
THEO: Steve, you can call it whatever you want. Be innovative. You’ve gamified your speaking. What does that mean?
STEPHEN: When I do a speech, instead of it being me up there talking and people sort of falling asleep in a dark room, we’ve created a game, in fact multiple games, multiple experiences, multiple things people do. One of them is called Personality Poker®, as an example. So imagine a room with a thousand people, everybody shows up and they get five poker cards. They look like regular poker cards.
THEO: Sounds like my kind of party.
STEPHEN: No betting, you can’t lose.
THEO: Oh, no.
STEPHEN: Well, you can lose if you don’t have a personality. What happens is on these poker cards, they’re specially designed, there are words that will describe particular behavioral traits, attributes, innovation styles, and we get people standing up, trading cards with the objective to get five cards where the words best describe how you see yourself. You can also gift cards to other people so they get to see how others perceive you. When you’re done with the trading, based on the five cards you have in your hand, the combination of the suits, the colors, and the numbers will tell you all about your personality. We spend the rest of the time having an interactive conversation about the difference styles, the different colors, the different numbers.
THEO: Audiences must love this.
STEPHEN: They do. Because we’re talking about them and it’s unlike most personality tests, if you want to call it that. You have to go take a test beforehand, or you go take the tests afterwards. Here, it is done real time, literally in five minutes every person has taken the test. And then the cool thing is it’s not just about the result but it’s about the process. So what we’ve found, especially with people afterwards, what they’ll do is they’ll take the cards and they’ll have conversations. “Hey, do you think I’m overly sensitive?” “Do you think I’m bossy?” “You know, I got five bossy cards when I played personality poker, is there something people should be telling me?” There’s just this great insight and epiphany that people have in a fun game.
THEO: What are the personality traits on the cards? How many of them are there?
STEPHEN: There’s 52 poker cards.
THEO: Are their 52 personality traits?
STEPHEN: It depends on how you slice it. So there’s four primary innovation styles which tie back to the four steps of the innovation process, which tie back to the four suits.
STEPHEN: Within those, there are actually two different versions. So, for example, the clubs are all about getting things done. Two types of clubs though. There’s one set of clubs based on the numbers which are much more about planning and being organized and being methodical, where another set of clubs, the 10 through ace of clubs are all about the action, result, the bottom line. So they don’t care so much about how it gets done, as long as it gets done. So the suits have meaning, the numbers have meaning, and then also the colors have meaning. The black cards are a little more what people would refer to as left brained, whereas the red cards are more right brained. And we do some things. We actually give the whole room reconfigured where on one side of the room are all the people with black cards, all the red cards on the other side and it’s a fantastic snapshot of what the organization’s makeup is. Instantly, we can see it visually. It’s very cool.
THEO: You wrote a book called “Best Practices Are Stupid“.
THEO: Let’s talk about that because our audience is speakers, and we are always looking at what’s working for other speakers, but I gather from your title of your book that you don’t support that idea, that strategy.
STEPHEN: I’m not so much against best practices, but there are two issues that I do have with them.
STEPHEN: The first one has to do with the fact that if you are replicating someone who, especially is a competitor, or is in a close enough space, and they’ve already done something, if you’re trying to do what they’re doing, by the time that you’ve implemented it, they’ve moved on to the next thing, so you’ll never catch up. It’s a game of catch up. But the bigger issue is that what works for one person may not work for another person, what works for one organization may not work for another organization.
You know, I want to run my business a very particular way. I listen to other speakers, and if I started to implement what they did, maybe I’d be successful, maybe I wouldn’t be but it might be a conflict with my personal values and beliefs in terms of how I want to run things. So it’s important to recognize that there’s not a one size fits all strategy. And I guess I’ll throw in the last point which is the breakthroughs. Breakthroughs are a fundamental game changer. The speaking industry needs some game changing right now. It’s been an incremental growth path and I think we can really do some massive change if we recognize the fact that these big innovations come from fundamentally different domains of expertise. Not from speakers, but could be entrepreneurs. I hang out with people in multi-level marketing. I hang out with people who are in real estate. I hang out with people who are in so many different disciplines because I learn more from them about how to improve my speaking business, than by hanging out with speakers.
THEO: What are the innovations that the speaking industry needs to adapt?
February 14, 2013
In yesterday’s blog entry, I suggested that (if you are an entrepreneur) putting less effort into your business would yield greater results in the long-run.
By focusing on the 20% of your business that generates 80% of the revenue, you can then invest your freed up 80% on new business models that have greater long-term potential. (please read this last sentence again…this philosophy is not about taking a pay cut in order to lounge around; it is about freeing yourself to create even greater income potential while having a more enjoyable life)
Many people (as expected) pushed back.
Their response, “That’s easier said than done.”
Well of course, everything is easier said than done! It is easier for me to say, “I’m going to tie my shoes,” than it is to actually tie them. But I still do it.
We look for excuses as to why we can’t do something. We blame our parents. We blame our circumstances. We blame the government. We blame our family. We blame our employer or boss.
Instead of finding reasons why something won’t work, get creative about how to make it work. Ask yourself, “How can I apply the underlying principles to my specific situation?” Even if you can’t apply the concept in its entirety, look for the nuggets that you can use.
Don’t put the NO in inNOvation!
The point of yesterday’s blog was to get you thinking about your business and where you invest your time, money, and energy.
According to Jeff Olson, author of The Agile Manager’s Guide to Getting Organized, “Perfectionism costs 50% or more of the total effort to squeeze out the last 10% or so of quality.” Never strive for perfection. Avoid the 100% mentality.
Ditch your worst customers - Look at your customers. Instead of trying to get more customers, ask, “Which customers should I get rid of?” Admit it, there are customers that generate less income than others, yet take up most of your time. I find that the customers that are most price sensitive are also the most difficult. I spend more time with them than I do with my best customers. The solution? Ditch the 20% that are sucking up your time. This not only frees up some hours in your day, it frees up your mental energy. Stress is created by your worst customers, not your best. Ok, I realize that when money is tight, this can seem like a risky proposition. Well, it is! But admit it, you intuitively know that attempting to keep 100% of your customers 100% happy will keep you working 100 hours a week and ultimately limit your true growth potential.
Ditch your lowest return activities - Look at the work you do. Look at your to do list. You will never get 100% of the work done, even if you had 200 hours in a week. Regardless, we still strive to get 100% done. Again, this mentality limits your growth potential. Instead of asking, “How can I get as much done as possible?” ask, “What should I stop doing?” or “What are the things I must do?” Or better yet, ask, “What is the one thing that will unlock the greatest growth potential for my business? What gives me leverage?” Be honest. What would happen if you got one less thing done off your to do list? Two less things? Find the sweet spot of where you can get the optimal return. And as mentioned in yesterday’s article, delegate, automate, or eliminate. Only do what you need to do, and get the rest off of your plate. And no, you are not the only one who can do most of your activities. It might feel that way, but it is not true. And believing it will kill you.
Ditch unnecessary clutter and belongings – Worried about money? Look at your life. Instead of keeping 100% of what you have, ask “What can I get rid of? What do I really need?” My Monday Morning Movie provided some great tips for this. And tomorrow’s blog entry will share some interesting statistics on how clutter can be sucking up a lot of your time. Freeing up your personal life frees you up professionally, which in turn further frees up your personal life.
Freedom is the name of the game. Don’t let perfection be the enemy of a good life and a successful business.
August 23, 2012
“Work smarter not harder.”
This dreadfully overused phrase is meant to address the apparent lack of time, money and resources we experience in our work and personal lives. But how do we translate these words into something actionable? Here are three methods I have used in my business to accomplish this:
1. Focus on what matters. Over the years, I have studied numerous organizations and have found that only about 30 percent of the typical day is spent on activities that directly create value. For example, sales representatives devote on average only one-third of their day with prospects. The remainder is allocated to administration, travel, meetings, and other less valuable activities. The same is true for almost every other “knowledge worker” in an organization.
To get more done, focus on the critical tasks while eliminating, delegating, outsourcing, or automating less important activities. I have seen many individuals go from 30 percent to 50 or 60 percent with little effort using this method.
While working at a major computer manufacturer many years ago, I was able to cut my 80-hour a week workload to less than 20 hours simply by using this strategy. It took only a weekend of analysis and implementation. This allowed me to focus my energies on activities that really matter, while helping others find time saving strategies.
2. Leverage sales channels. The ultimate goal is to maximize results with the least amount of effort. You can accomplish this through leverage: generating disproportionately large returns with a minimal investment.
Let’s look at selling again. Traditionally, to sell more, you identify prospects, create sales collateral, develop marketing materials, and then directly solicit potential buyers. This is a linear strategy. If you make a sale, it is one sale.
To create exponential growth, consider working with businesses that already have the relationships you want to build. One partnership with the right distribution channel can lead to hundreds or thousands of sales, without any extra effort on your part…