workplace culture

8 Leadership Articles from a Whirlwind Year

January 30, 2018by Mike Chalmers Mike Chalmers No Comments

As we race through the year, we look back at ten significant leadership articles. It’s been a whirlwind politically, economically, and socially—locally and internationally. As world events rage on, we’ve tried to keep you informed of how to operate your business with excellence under every scenario.

We’ve also looked at some of the more important leadership issues of our day, like the modern recurrence of antisemitism and the necessary response, in the workplace and in every domain. This week again reminded us of our responsibility as leaders, of the dire consequences of inaction, as International Holocaust Remembrance Day was marked around the world.

1. Take Five and Outlast the Competition

Jazz piano was a key component of the Brubeck sound

A leader’s Work-life balance is something we all know is important, but all too often the busyness of life, making deals and completing projects place family and relationships on hold. We squeeze out even downtime with a book or a stroll through downtown because we think our stress will only be eliminated if we just press on and work harder. But the research shows otherwise. See how you can do better by making time for things that matter.

Read: Take Five and Outlast the Competition

2. The Myth of the Ideal Customer

The fairytale image of a common legend

There have been both helpful and unhelpful trends in every era of market strategies, and sometimes it’s important to step back and ask some basic questions about the validity of how we reach real people and solve actual problems. We’ve all heard people tell us about the great relevance of targeting the all-important idealized customer for our products. Is the approach legitimate?

Read: The Myth of the Ideal Customer

3. Don’t Just Dream Big

SwivelBlog article on Dreaming in Reality

In a year of big promises and big problems, we wrote about the need to do more than just dreaming great big dreams. The world needs more people who can connect their dreams to reality.

Read: Don’t Just Dream Big

4. High Performance Entrepreneurship

How to perform at a higher level.

It’s a wonder business schools don’t have required courses to study the musician’s approach to high-pressure performance. Leaders have much to learn from musical artists about how to do excellently, consistently.

Read: High Performance Entrepreneurship

5. How Not to Over-Promise and Under-Deliver

Don’t Over-Promise

It never ceases to amaze how many people are experts at promising the world and amateurs at delivering. It doesn’t have to be that way. And it shouldn’t. Little erodes trust more in a business relationship than the inability to achieve the minimum results agreed to in a deal.

Read: How Not to Over-Promise and Under-Deliver

6. Holocaust Remembrance and the Leadership Dilemma

Auschwitz (Holocaust Remembrance and the Leadership Dilemma)

Auschwitz-Birkenau Memorial and Museum

In 2017, this article was posted for Holocaust Remembrance Day in Israel. Only this past week, with the marking of the international remembrance ceremonies, politicians and celebrities like Israel’s own Gal Gadot took to social media with the #WeRemember hashtag. It’s critical to learn, to remember, and to educate others about the leadership role in such dark events.

Read: Holocaust Remembrance and the Leadership Dilemma

Today is Holocaust Remembrance Day. A day to honor the Holocaust Victims. May we never forget. #WeRemember pic.twitter.com/iinponofd2

— Gal Gadot (@GalGadot) January 27, 2018

7. Tesla’s Value Proposition is a Lesson for the Airlines

Tesla Model S at a Supercharger station

Time will tell the ultimate outcome, but when the United Airlines debacle unfolded last year, CEOs of major companies the world over were trying to determine how to position their own customer service levels and commitments. Even now, this article is one of our more read pieces. Is it because of the challenges airlines face? Is it because of the continued excitement around Tesla? Let us know what you think.

Read: Tesla’s Value Proposition is a Lesson for the Airlines

8. How to Find a Great Domain

What should your domain name be?

While the world faced many challenges in 2017 one thing was steady and strong—since 2014 the number of new founders has increased substantially and going into the last year the Bureau of Labor Statistics put the number of self-employed workers at 8,602,000 in the US alone. That activity is mirrored in Canada and elsewhere around the world, especially with the growth of several new industries (see our piece on 10 Emerging Markets as Big as the Internet). One of the greatest founder challenges is naming a firm or product and choosing a web domain. So we produced this article to help with searching for and finding a gem worthy of your brand.

Read: How to Find a Great Domain

Succeeding in 2018

Take the best lessons of the past year and apply them in 2018 as it unfolds. Remember to be diligent, but take the time to reflect and regroup. Lead with character, insight and wisdom. Avoid the sinkholes of moral and political dilemmas and build a brand your grandchildren would be proud to call their own.

Learn, teach, lead, adapt, and share the road ahead.

Take Five and Outlast the Competition

November 6, 2017by Mike Chalmers Mike Chalmers No Comments

Take Five is one of the great jazz hits of the 20th century. It’s also a good phrase to remember for project-consumed managers, geniuses, and entrepreneurs.

Work Beyond Work

Leaders often face problems others don’t understand—especially related to evenings, Fridays, holidays, and days off in general.

Most people look forward to finishing up their workday or workweek and taking the evening or weekend off to spend time with friends and family. But innovators typically enjoy some of their most productive hours after others go home. It’s when they can think and process the day. And work more.

The problem is that this leads to a lack of any real time out—any break to be spent with real people outside the corporate enclave, any respite, or even personal growth in other areas. It results in work from early morning to late at night with no letup. Such individuals even dream about the tasks at hand, or don’t dream at all because of a lack of adequate sleep (you know who you are).

The Model Leader

There are some intuitive reasons for this pattern. Leaders can’t always plan when those they lead need direction and accountability. The best leaders don’t micro-manage their workers, but if they’re good at what they do, key players want access to them during critical workflows. Their knowledge and insights concerning important decisions, or during crises is often seen as critical.

Innovators lead by example, demonstrate excellent habits and routines, and show what it means to contribute. So they can’t be seen slacking or dropping the ball. The perception is that if a leader pauses, the result is a loss of productivity.

Self-Adapting Teams

The truth, however, is that leaders who can’t pull back from the action, haven’t trained their teams to self-manage, self-regulate, anticipate and adapt. They haven’t modeled good leadership. They’ve taught people that they are indispensable, rather than a guide along the way.

Sometimes leaders do this intentionally because they want to feel valued, but teams have the greatest respect for leaders who develop the entire group’s capacity. Such groups are far more capable even if left alone.

The best leaders plan and determine direction a few steps ahead of their teams. They do this so they can delegate responsibility and back off. They work to show their teams the big picture, and give them the space to find a way to achieve a shared vision.

Great leaders also don’t overvalue themselves or care if they receive the proper praise. Organizational researcher Jim Collins has ably demonstrated that what he calls “level 5 leaders” are less concerned about public accolades than they are that the companies they build thrive. They’re concerned more with fact than perception and outperform their competitors.

The 24/7 Entrepreneur

Recently making the rounds again on social media is a reputed quote from Bill Gates, which goes something like this: “I never took a day off in my twenties. Not one.” I’ve also seen it attributed to Richard Branson.

Perhaps some billionaire tycoon out there said it. While you can find it in tabloids and quote sites, the factuality of it is in many ways irrelevant, because it’s crazy.

If you teach your people to never take a break—never have a day off—you are teaching insanity and paving the way to burnout. You’re advising people to throw away the very friendships and family ties that make success worth achieving.

Medical Risks

It’s no secret that beyond damaging relationships and missing out on real life, there are physiological and psychological effects from overworking.

Is it true that some people work 24/7 and make millions—billions even? I don’t care. And you shouldn’t either.

Success achieved by being unethical, habitually unsafe, or self-destructive (as in leading to your or others’ untimely death), is not success.

The underlings in this equation have little control; overwork cascades from the top of the organizational pyramid to the bottom. —S.G. Carmichael

Sarah Green Carmichael in her Harvard Business Review article outlines they cyclical nature of bad managerial habits: “Managers want employees to put in long days, respond to their emails at all hours, and willingly donate their off-hours — nights, weekends, vacation — without complaining. The underlings in this equation have little control; overwork cascades from the top of the organizational pyramid to the bottom.”

In other words, leaders not only mess up their own lives but impose the cycle on everyone around and under them.

Is Hard Work and Balance a Paradox?

Too many managers believe that it’s impossible to get ahead unless you work yourself and your teams into the ground perpetually. But research continues to show that this, just like the idea of the ideal customer, is a myth. As reported by Yale School of Medicine, a study in the Journal of Occupational and Environmental Medicine in June 2016 demonstrates that “working long-hour schedules over many years increases the risk of heart disease, non-skin cancer, arthritis, and diabetes.”

Beyond 50 hours per week, men and women both suffer negative effects over time.

In a study of more than half a million participants in the US, Europe, and Australia, researchers “found that those who work more than 55 hours a week have a 33% increased risk of stroke compared with those who work a 35- to 40-hour week. They also have a 13% increased risk of coronary heart disease.”

Long hours has also been linked to depression.

Don’t Replicate Reckless Abandon

Carmichael points to several issues including a “mix of inner drivers, like ambition, machismo, greed, anxiety, guilt, enjoyment, pride, the pull of short-term rewards, a desire to prove we’re important, or an overdeveloped sense of duty.”

A sense of purpose is important but an overinflated arrogance leads people to prove to themselves and others that no one can do what they do. They are “essential” to everything in their care.

But great leaders develop other thinkers and doers and help them to see their own purpose within the organization. They often do this by being intentionally absent for one or more days, and leaving a project in what they trust to be capable, if imperfect hands.

Over time, the greatest managers can be gone for longer periods of time, or be focused on completely different efforts, even while present. When their leadership teams fail at something, they don’t immediately castigate them for poor performance. They debrief, regroup, and induce the kind of critical thinking and ingenuity of others that fosters real personal growth and trust.

As a consequence, the individuals they mentor don’t need to be told where they went wrong. They accept their own failures and own the path to reinvention and success.

Go Where the Data Lead

The corporate world is beginning to realize that as the general public learns how unhealthy it is to work incessantly, promotion of a new work-life-balance is actually an incentive to attract and retain new hires. In 2010, Netflix was among the first to offer unlimited vacation time to its workforce, and the trend has continued.

Virgin more recently followed suit saying, “Flexible working has revolutionised how, where and when we all do our jobs. So, if working nine to five no longer applies, then why should strict annual leave (vacation) policies?”

This is not to say you need to have unlimited vacation time for your employees. Some now rather have mandated vacation time, where the company removes the stigma of a “break”, and people are required to take time off. Others incentivize vacation time—One company provided $1,000 to workers to seize the opportunity and take a break.

As a leader, it starts with you. You could implement any plan you want for your employees, but if you don’t model it, they won’t believe that they really have the latitude to rest.

Plan to Reboot

It’s less about your particular strategy than it is about having a strategy, and a way to recharge, and nurture your people—even protect them from physical or mental health issues.

The research is clear: the human frame will break down when abused. Don’t destroy the body you have, and don’t permit those around you to suffer either.

Like a car without engine oil or coolant, so are people without the reinvigoration of fresh air, downtime, and social interaction.

So reboot every now and again. Take five throughout the day, take a day or two each week, and take a week or two every so often to recalibrate and resume your work with increased energy, focus, and purpose.

*Inspired by the song “Take Five” by the Dave Brubeck Quartet, recorded in 1959. A jazz masterpiece, the track is eponymously named for its unusual 5/4 time signature.

AI and HI: Why Human Intelligence Will Remain Invaluable

August 29, 2017by Mike Chalmers Mike Chalmers No Comments

There’s a lot of fear surrounding artificial intelligence these days and that fear is warranted—in part. Jobs will increasingly be replaced by highly capable robots. But human intelligence—the thoughtfulness and creativity of a personal mind—will always remain invaluable and sought after.

Ancient Technologies and Their Impact

Don’t simply look to the industrial revolution for analogical precedent. Humanity has always maintained a certain tension between technologically aided activities and those performed by humans alone. Consider the simplest kinds of assistance humans enjoyed even thousands of years ago.

In the ancient world, animals and ingenious contraptions assisted in the pressing of olives for oil, the transportation of individuals and even groups of people, and the building of massive architectural structures.

The Fears of Hard-Working People

One can imagine even then, that hard-working people feared that the machines, and the introduction of organized labor and machinery threatened past ways of life.

Certainly things changed. But no one ceased to walk because of horsepower innovation. Ordinary human bipedal transportation has continued to be an enjoyable, and productive form of mobility. Handcrafted works have continued to be valued despite machine-enabled productivity. And mechanical innovations—in ancient or industrial times—did not remain in the hands of a few wealthy individuals or corporations.

The Upside of Innovation

The same innovations that generated wealth for governments and organizations of all kinds, made their way into homes and privately owned operations for greater ease and increased wealth. Farms were expanded through mechanical devices and horsepower or ox-power, and households were run more efficiently.

The difference between then and now, is that we aren’t talking merely about about magnifying human braun—increasing the speed of productivity and improving the quality of products on massive scales. We’re talking about human aided intelligence, and even independent intelligence, able to operate autonomously. Machines are being taught to think and learn. Eventually machines will make decisions independently of humans.

While job displacement is the first major concern on the horizon, this latter point on autonomy is a further issue that requires much debate. But the fear factor related to machine assistance, improving the lives of people everywhere, should be distinguished from machine autonomy which threatens the same.

From Simple to Complex Advances

Today we are looking at the value of human intelligence in contrast to what has already arisen in machine intelligence, and what’s on the way.

For decades in some measure, machines have aided human intelligence. More primitively, calculators improved the accuracy of computational work. More recently, desktop computers have made it possible for individuals to run entire multimillion dollar firms from very small offices. Today, businesspeople around the globe travel and maintain frenetic schedules using smartphones, often as their primary device.

The Musician’s Model

Machines have long aided in music production. Music is particularly illustrative here because, as an art form it has been dominated by human composition and development. Consider the case of MIDI (musical instrument digital interface) and drum machines, popularized in the 1980s.

The mechanical sounding timbres and rhythms of electronic music even became part of its charm and contributed greatly to emerging urban sounds and chart-breaking hits. Rap and hiphop, and virtually every major pop genre seized on the opportunity to introduce the innovations of machines to albums and live performances. That is a positive example of how forward-thinking innovators have risen above the threats of obsolescence.

And none of it made old-fashioned instruments outdated. If anything, machine-aided music provided enough of a competitive platform for new music genres that the very addition of acoustic guitars or drums to tracks made such contributions seem fresh and vital.

Freedom from Old Structures

Even independent record labels emerged as a result of new media and technology. Rather than continuing to sell-out to major labels who earned a lion’s share of the artist’s revenues, musical entrepreneurs increasingly broke free of that cycle, spreading the wealth around.

It was human intelligence behind the application of new technologies that was the difference maker. As much as it is true that nefarious purposes have been contrived to oppress individuals with technology, it has often been the case that technologies have aided people in freeing themselves from that same fate. This is why competition on all levels is important.

Focus on Productivity and Quality

There’s a well worn adage that the ends don’t justify the means. This is often said to prevent people from doing something unethical in order to accomplish something good, resulting in a continuing moral dilemma. As long as we realize that improved productivity is often good and not unethical, we can embrace new means—new ways of getting more done, and achieving greater levels of excellence.

From a jobs perspective it’s true that many jobs will be displaced by AI. However, welcoming innovations will only mean that newer jobs with greater capacity will emerge. If my goal is simply to use a mechanical plow in a field, then I will be threatened by automated machinery that replaces the old plow. But if my goal is to plow more fields in one day, and with greater efficiency provide better products for my customers, the new way will become my preferred way.

This doesn’t answer the question of whether artificial intelligence will one day take over the world and rule humanity. That’s a question for another article. On the question of jobs however, it seems evident that those willing to embrace new technologies will have a greater hope of contributing to the new economy.

See also the article, Market Highlight: Artificial Intelligence, for broad details about the emerging horizontal market and where the opportunities are arising.

Keurig vs. Verismo vs. Nespresso

June 22, 2017by Mike Chalmers Mike Chalmers No Comments

Which single-serve coffeemaker is right for your office? It helps first to understand the function of coffee in the workplace and then weigh the pros and cons of the major systems. While more than three options exist, today we’ll focus here on Keurig, Verismo, and Nespresso systems.

The intent of this article is less about which one of these three stands taller than the rest in a lineup, and more about which is best for your workspace. With a 36.5 percent share of the total US distribution of coffee in 2017, single serve coffeemakers are no doubt on your list of options for at least some of your teams.

The Three Contestants

To solidify these choices in your mind for what they represent, we’ll call them by fuller names:

Keurig the Incumbent;
Verismo the Contender; and
Nespresso the Swiss “Italian Job” (its Swiss origins and Italian flare strongly factor)

Keurig by Keurig Green Mountain with K-Cups (Now Recyclable)

Keurig was first introduced in the late nineties with its patented single-cup coffeemaker. It has been the most widely known in North America—at least in terms of commercialization. We’re often unaware of other inventors less fortunate to patent—much less successfully launch—their products.

Keurig certainly had first mover advantages that it still benefits from. It may not have been the absolute first of the single cup coffeemakers but it was first in the minds of many for being easy-to-use, fast, and just affordable enough to be better than going to a coffee shop for every cup.

Keurig machines have had numerous no-name or even brand name contenders over the years but the original K-Cup system has remained top-of-mind for millions for its simplicity, system quality, and the coffee choices available.

While for some time selection was limited, all the major coffee brands now make products for the Keurig. In addition to its own brands (Green Mountain, Van Houtte, Donut House, etc.), a full line of Starbucks brews and blends can be enjoyed, among others. Even Tim Horton’s provides a way for people everywhere to enjoy Canadian coffee.

While there was some controversy around the release of the Keurig 2.0 with limitations on third-party coffee, it has become an excellent new edition, besting earlier models. The ability to not only choose mug size but also strength (strong or normal), and its larger water tanks means it is a solid option for offices. It brews quickly and provides good customization options.

Upside

Machines and K-Cups available everywhere
K-Cups from Seemingly Unlimited Brands (Green Mountain, Starbucks, Tim Hortons, etc.)
Produces each cup quickly
Cost per serving relatively low

Downside

Beverage quality similar to regular drip machines

Verismo by Starbucks with Pods

Verismo came much later as a contender, with the help of a broad distribution system, AKA Starbucks stores in every city. It is Starbucks’ own coffeemaker using pods with its own coffee roasts and blends. With more than 25,000 coffeehouses internationally, there was little wonder the company launched its own system.

After all, Starbucks took coffee from being a commodity in the 1970s to being a boutique offering in the 80s and 90s at premium prices. If someone could raise the quality of the more generic single serve industry, Starbucks had a reasonable bet and the infrastructure to take on the challenge.

Verismo machines do make coffee that tastes very much like its store-bought beverages. While Keurigs make a solid cup of drip-style coffee, the Starbucks alternative does have a leg up with more espresso-based options. The combination of the machine process and the grind quality and freshness does tend to produce a hot cup with a good crema—that light colored froth on top of a freshly made brew.

Upside

Machines and pods available at virtually every Starbucks location
Pods from Starbucks’ most popular roasts and blends
Taste is nearly equivalent to a quality brew at Starbucks

Downside

Cost per pod is greater than for Keurig K-Cups
Pods from other brands are not available in Starbucks stores
Pod availability differs from location to location (e.g. at times, decaf will not be available; at other times, certain espressos are unavailable, etc.)

Nespresso by Nestlé with Capsules

By its own account, Nespresso began its journey in 1986 but did not enter its real startup phase until the mid-to-late 90s. While it may have been an earlier innovation than the Keurig, it did not enjoy first mover advantages in North America. It’s been the leader outside of the US however.

And Nespresso does have a similarly large brand behind it—Swiss conglomerate Nestlé Group. If one were to choose a company to produce a machine with clockwork precision, and a food product with European richness, Nestlé would be the prime contender. And, like Apple in a PC world, there is often room for higher-end products in large markets. In the world of coffee, the higher end of the market continues to encroach on the more commoditized alternatives. While Starbucks has positioned itself as more high-end than Keurig generally, it does not touch the Nespresso in terms of overall appeal to the espresso-drinking and higher end coffee consuming market.

As to the crema, while Starbucks produces a good froth, the Nespresso’s is perfect every time and distinctly unlike any of the American brands. The espressos and full-cup coffees are richer and more unique all around. I called it the Swiss “Italian Job” because it produces the ultimate Italian espresso and blends. If you’ve ever had a perfect cup of Lavazza at a genuine Italian-style café you will find the Nespresso holds its own.

As mentioned, Nestlé is a food and beverage manufacturer in its own right. As such, it’s able to compete with Starbucks on level ground for flavor consistency, while targeting a higher-end product. It likewise brings together Swiss engineering and innovation at the system level which further makes for a perfect cup every time.

While Nespresso is a later mover in the American market it’s certainly well-known and loved overseas, with some $3 billion in annual sales. The willingness of major celebrities to promote the brand has also positioned it as a brand with cachet worldwide. The company notes that it was its Nespresso Club members who selected George Clooney as brand ambassador.

Upside

The most high-end in flavor and consistency
Nespresso Club itself is a fun and engaging way to interact with the company
Will impress any client or customer as a genuinely boutique experience

Downside

Only in America: for American tastes it is high-end enough that many are not used to the full-flavored richness and some may not enjoy it for every cup (I would argue it’s good to get over this obstacle, but it may affect your decision to introduce it to certain workplaces)
Capsule costs are higher than most other single-serve coffeemakers (100 for $105 through the club)

Nespresso vs Keurig vs Verismo

Ultimately, the choice is up to you, and we live in a time where this is among the easier decisions to make. You get to choose based on what your team, department, or company will benefit best from. The reason these three were selected for review is because they are each very good options.

Some helpful tips:

If you have a large department (>100s of laborers) consider the Keurig for its robustness and relative flexibility. You can also provide a diverse selection of flavors to satisfy broad ranging tastes, from diner-like coffees to Starbucks-style offerings.

If you have a small or home office (SOHO/SME) consider either the Verismo or Nespresso alternatives based on the palates of your staff.

If you are outside of the US, with discriminating tastes, consider the Nespresso; with less discriminating tastes, the Verismo; with indifferent or mixed tastes, the Keurig.

If your business is in creative or high tech sectors consider polling your teams to find out coffee preferences. Creatives, techies, and millennials enjoy dialog around decisions that affect them.

It’s possible to combine as well, by having large drip coffee machines alongside single-serve options, especially in environments where it’s important to have coffee already brewed and ready to grab. It’s also conceivable that a series of machines could be helpful to manage lineups.

What is not recommended is different styles of single-serve coffeemakers and pods in the same department. The combination of purchasing for multiple system types and troubleshooting the same could be problematic.

Let us know what works best in YOUR workplace.

(Above) Videos of the Keurig, Verismo, and Nespresso brands, respectively

Employee Perks: Better Coffee and Morale

May 21, 2017by Mike Chalmers Mike Chalmers No Comments

What’s better—brewing your teams better coffee in the workplace or leaving that task to Starbucks? Is it better to provide an onsite mini-cafe or let employees grab a joe on the way to work? The answer may impact your bottom line.

The decision is not particularly hard to make with the right information and an understanding of your own corporate culture. But companies can make the wrong choice and either spend frivolously and fail to impress, or go cheap and miss an opportunity to provide easy benefits for employees.

It’s really a simplified form of the outsourcing decision, where the product is for your employees rather than your customers. Will you provide your staff with the better cup or will someone else? The right decision isn’t always to do it yourself, but when it makes sense to do so, do it right.

The Place of Coffee In the Workplace

First, some background. Coffee is a staple of hardworking people everywhere. Bustling offices have for decades had famed (or infamous) water cooler conversations, and right there in the background on a counter by the sink, the humble coffeemaker silently brewed servings for entire departments at a time. These were the workhorses of coffee machines. They never complained, rarely broke down, and always obeyed the law of “garbage-in, garbage-out.”

Sawdust-like particulate and water in, stale hot fluid out.

The Introduction of Better Coffee

Along came premium and boutique coffee houses and the office worker was no longer satisfied with a five-hour-old cup of tar-colored juice. The everyman and everywoman had discovered fresh, flavorful servings of personalized cups. And as it turns out, employees will pay for their own perks (pardon the pun) if they believe it will help them do their job better or enjoy it more fully.

Entrepreneurs vs. Corporate Budget Managers

This is where smart employers come in and recognize that companies have for decades provided coffee for their people. But while they ditched their mainframe computers in 1984 and their glass brick office dividers in 1990, too many continue to brew toxic sludge while their employees go to Starbucks, Tim Horton’s, or a boutique roaster-brewer—even at some distance from the office.

When simply a budgeting matter, the ordinary manager will often resist change and continue the decades-old tradition of mass brewing for the simple utility of a brewed cup for the minions. However, entrepreneurial leaders will not approach the problem as though only the old way makes financial sense.

Happy workers make more productive workers, and more productive workers improve bottom line finances. This is not about millennials vs. baby boomers. It’s not even as much about coffee as it is about providing benefits to employees according to their preferences and in ways that improve morale. The same decision-making in this post could apply to numerous employee retention discussions.

A Holistic Perspective On Worker Perks

When viewing the problem more like an outsourcing question, some simple questions will assist in making the right decision based on the bigger picture:

1. Is there a high-end coffee shop in the building or within a 5-minute walk of the office?

If so, unless you can produce better coffee in-house (unlikely), don’t try to recreate that atmosphere. It’s good for productivity for everyone to get up and stretch about as often as they feel the need for a coffee. A basic coffee option with quality beans should suffice for those who need a quick cup in-house as desired but are willing to walk a short distance for something top-notch.

2. Is good coffee farther than walking distance from the office?

You might want to provide better options right where you are. If there are coffee shops within a short driving distance, you won’t necessarily need to build an on-campus Starbucks, but you’ll need to determine how high-end to go. The better your coffee, the less they’ll feel they need to leave for prolonged periods of the day to find a satisfactory beverage.

3. Are you a large firm or SME?

Larger companies will always save by having more advanced machinery and contracts for bulk coffee. Smaller firms at times can get away with Keurig-style single-serving systems. In both cases the quality of coffee is important. Remember, garbage in, garbage out.

4. Do many of your workers go beyond the hours of 9am-5pm?

This is huge. If you have an entrepreneurial, self-motivated workforce spending late evenings or abnormally early mornings serving your company, coffee and tea options that serve them well are essential. Again, it depends on your answer to #1, but consider that even if you have a coffee shop nearby, their hours of operation will partly determine whether you offer better options in-house.

5. Does your company depend upon teamwork and collaboration?

As mentioned, the water cooler has always been a conversation point in the building, and coffee has a way of connecting people also. Ask yourself whether you want to foster those kinds of conversations and how you want to facilitate them.

You Know Your People Best

Add to these questions the additional variables for your industry and you’ll make a more profitable decision every time.

In reality, you are more likely to want some combination of coffee services. For example, there will always be some employees satisfied with very simple coffee options and for them, the convenience of a basic, utilitarian cup should be preserved. On the other hand, some will only drink the highest quality at any time. Figure out how to achieve the best mix for the diverse teams you employ.

In Sum

Why such a serious analysis of the coffee-buying decision? By 2015, “The total economic impact of the coffee industry in the United States in 2015 was $225.2 billion” (National Coffee Association USA). In the US and around the world, coffee is part of each working day for most people.

There’s no shame in doing the right thing by your employees and being budget-conscious. This decision has to be as much about a return on investment as about benefiting your employees. Your profitability will enable you to provide better perks for them over the long-term, not just over one decision. So make your choice based on the needs of your people and your business.

Visionary Companies Boost Loyalty and Morale

May 9, 2017by Mike Chalmers Mike Chalmers No Comments

With all the customer service woes tearing through industries over the past year—from airliners to wireless providers—companies would do well to revisit a concept first published in 1994 by Harvard Business Review as “The Service-Profit Chain.”

Research by James Heskett and team shows that it isn’t merely good PR to excel at serving customers. It’s good business too. Further, profitability isn’t only achieved by focusing on end users. Engaged employees also contribute to positive customer relationships.

Links in the Chain Illustrated

The Service-Profit Chain emphasizes the value of people—both inside and outside of the organization.

Service Profit Chain @SwivelBlog from HBR

Image: © Harvard Business Review

The authors present the major links in the chain (above). Internal service quality is the first link, impacting employee satisfaction.

Next, employee retention and productivity link to service value. Customer satisfaction results from these.

Penultimate in the chain, customer loyalty (recurring business) ultimately drives revenue growth and profitability.

The Real Value in the Chain

Heskett and team note:

Customers often become more profitable over time. And loyal customers account for an unusually high proportion of the sales and profit growth of successful service providers. In some organizations, loyalty is measured in terms of whether or not a customer is on the company rolls. But several companies have found that their most loyal customers—the top 20% of total customers—not only provide all the profit but also cover losses incurred in dealing with less loyal customers.

Key to this discussion (and why you should care), companies that focus attention on the needs of the service-profit chain can realize increases in profit of 25-85 percent.

How will you improve your service-profit chain?

Further Resources

Read HBR’s “Putting the Service-Profit Chain to Work”: https://hbr.org/2008/07/putting-the-service-profit-chain-to-work

Read our article “Tesla’s Value Proposition is a Lesson for the Airlines”: http://new.swivel.net/2017/04/20/teslas-value-proposition-lesson-for-airlines/

Featured image: Getty/iStock

High Performance Entrepreneurship

May 6, 2017by Mike Chalmers Mike Chalmers No Comments

Professional musicians know something about performance under pressure that most leaders don’t. On stage or in the studio, artists must consistently perform with great skill and precision in order to succeed. How they prepare is instructive.

I’m not talking only about famous musicians. There are far more artists who earn their primary income with their craft than those who become household names.

Think of instrumentalists in a symphony orchestra or those playing on the soundtracks in your favorite movies. Most do not have their own albums or headline concerts. Yet the demands on them are essentially the same as for virtuosos, pop stars and festival headliners.

They must perform at a high level and do so consistently—day after day, night after night. They play well when the ‘recording’ light is on because wrong notes mean delays in production and longer hours for crews; or when in concert and a botched part results in disappointing a live audience, bad reviews, etc.

High Performance Entrepreneurship

If you’re working hard to advance in your career or grow your business, take note of the musician. Without understanding your own ability to perform at your highest level, you may be hindering your own progress. You may also be delaying the success of your teams.

You might think that you are the local expert in your field of business. Maybe you are. You may believe your company has a breakthrough product that could revolutionize your industry. Maybe it does. But that won’t happen if you don’t perform consistently well in various situations—especially when dealing with investors, customers, and the media.

We’re not talking about perfection—there’s always room for improvement—but rather excellence as a pattern.

Beyond Facebook and Twitter

Further, entrepreneurs today need additional skills—especially soft skills—like public speaking, socializing, entertaining and writing, among others. It’s no longer acceptable to be so specialized that you can’t interact in meaningful ways with real live people.

Social media is only one part of your communication platform. How do you do better in your core competencies and also improve soft skills for you and your team?

Seizing Opportunity

The answer is not to simply hire more people to make up for your shortcomings. A conductor can’t cover up loud, squeaky strings playing by adding a violin prodigy to the mix. Underperforming players will improve or be replaced.

Your weaknesses are still yours and they will surface at times. But if you own them and improve upon them, you will be more like the musician, dissatisfied with mediocrity, striving for excellence. It also shows to others, especially those you lead, that you’re a perpetual learner, never boasting that you’ve figured everything out.

The Method to the Musician’s Excellence

Musicians use neither magic nor rocket science to improve their skills. Generally speaking they have natural abilities combined with years of training. After this they continue to improve primarily in two ways. They practice regularly and they perform as often as possible. Some may argue that these are really one and the same practically speaking, but each is illustrative in its own right for entrepreneurs.

1. Practice Often

In the first case, musicians understand that “practice makes perfect.” Nobody wants a pianist to guess at a song they’ve never played and hope it sounds good. We all know that the one who mesmerizes audiences is the one who has played something a thousand times over until there is no one better at it.

There’s a saying among musicians that “amateurs practice until they get it right; professionals practice until they no longer get it wrong.” While the origin of the saying is debated, its validity is self-evident.

2. Perform Often

In the second case, musicians know that performance—doing what was learned in the safe confines of a home or practice space—adds a fear factor and risk level due to live pressures, increasing difficulty.

The more musicians perform live, the more those added factors are mitigated and the easier it is to perform under pressure.

How It All Applies

Think of any area of weakness in your sphere of business. Do you struggle to present your products well or to give product demonstrations? Practice much and present often.

Do you speak well but you don’t make new connections very often? Either put yourself in situations where you can network with others (e.g. local chambers of commerce or business associations), or make your own business gatherings and invite friends and clients. Do anything to improve and do so regularly.

Do a personal strengths and weaknesses analysis of your self (be honest!) and commit to to apply the ideas of Practice and Perform to every area of your career.

How Not to Over-Promise and Under-Deliver

April 30, 2017by Mike Chalmers Mike Chalmers No Comments

In life, one of the most common relationship strains is caused by over-promising and under-delivering. Most people don’t set out to offer what they can’t follow through on, but too many do it. Some learn from it. Some can’t seem to get out of the cycle.

The Problem

In business, over-promising occurs when a supplier believes the client company wants to hear certain things about cost, quality, and timelines. They work hard to prove they can meet even unrealistic expectations.

They know it will mean longer hours for their teams, time away from family and lower profits, yet their preoccupation with a sale overrides those concerns. In the end, the result even with herculean efforts is to fall short, and under-deliver.

The Alternative

But there’s a better way when you understand that most clients would rather an upfront and truthful conversation about the real costs of doing business with you, than to hire a firm that downplays the issues just for new business.

Don’t promise figures without knowing the real costs to your own company. Ask for more details so you can negotiate intelligently on the particulars. Offer what you know you can deliver at a price that’s worthwhile for you both. Then deliver with excellence.

Smart clients aren’t looking for a supplier that will forego profitability to work for them. They know that when you do well, there’s more opportunity for you to pass on benefits to them. Don’t cut out your own profitability thinking you are gaining a partner.

Your inability to pay your bills will not serve them or you in the long-run.

Three Key Differentiators

Clients are typically looking for at least three differentiators when first learning about your company, even if unspoken. These are just as important as cost, timeline, and quality and will greatly impact the perceived benefit they’ll receive from you:

1. Trust

They want to know if they can trust you with their business. They’re looking for signs of integrity and evidence you care about their success—not just your own profit. Trustworthy suppliers help companies grow and thrive.

If you over-promise, trust is one of the first things to suffer. On the other hand, sharing actual costs and issues up-front demonstrates trust is important to you. You’d rather lose a sale than pretend you can accomplish the impossible.

2. Value

This is a two-part evaluation. Clients want to know if you understand (a) their value, and (b) the value you bring to the table. When they know you understand value, they have greater confidence in your ability to add value to them. If you over-promise, by definition you are underselling your own value. You have promised more for less than your time is worth.

Additionally, your ability to receive better remuneration is tied to your knowledge of the value they bring to their own marketplace. If you can’t learn their value proposition well enough to know how to add value to it, your own value proposition has just diminished.

Take the time to learn about your client, their industry, and how they do what they do. Then see how you can maximize your value to them.

3. Investment

Smart clients always want ROI. They don’t have time to continually switch suppliers, nor do they want to waste dollars vetting new companies frequently because of bad partnerships. They want to know they’ll see returns for every dollar they spend with you.

When suppliers over-promise with hopes of charging more for future business, the client detects a diminishing return for their dollar. Conversely, if they know that you can dependably deliver consistent value, they have more opportunity to innovate and produce greater gains of their own.

The Bottom Line

Neglect these three differentiators to the detriment of your own success. They will help a company understand that your quality is better, that you are capable of executing on projects, and that your cost is lower for the true value you deliver.

Ultimately, being trustworthy, adding value, and being a sound investment for your clients takes more time than over-promising and under-delivering. But then, so does any legitimate business endeavor.

Financial Innovation Through Inventory Driven Costs

May 15, 2014by Mike Chalmers Mike Chalmers No Comments

The study Inventory Driven Costs by Harvard Business Review was written a few years after Hewlett-Packard fundamentally transformed its supply-chain logistics, based on accounting data it was previously incapable of tracking.^[1]

Writing Team

HP insiders, Gianpaolo Callioni, Xavier de Montgros and Linda Wright along with Insead faculty Regine Slagmulder and Luk Van Wassenhove, show how effective implementation of timely and relevant accounting metrics has lead to successful profit management by the PC maker. The team’s expertise is in operations (supply chain directors Callioni and Montgros at HP, and Van Wassenhove, professor of operations at Insead), and accounting and performance metrics (finance manager Wright of HP’s Personal Systems Group, and Slagmulder, management accounting and performance expert at Insead).

At Issue

The article details problems Hewlett-Packard was having with its PC business. No small concern, the article informs that, “by 1997, margins on its PCs were as thin as a silicon wafer, and some product lines had not turned a profit since 1993.” The commoditization of the PC industry was affecting all manufacturers, but HP sought opportunity to gain advantage over its competitors.

Key findings of HP’s Strategic Planning and Modeling (SPaM) group led to the company’s supply chain transformation, division by division. SPaM initially found that the nonalignment of supply and demand for the entire PC business was to blame for surplus inventory. Executives were insufficiently informed by antiquated management-accounting metrics, which “had failed to keep pace with the evolution of its supply chains.”

Inventory Driven Costs Breakdown

SPaM parsed at least five inventory-driven costs (IDC), four of which had not appeared on radar before as significant. Holding Cost was named as the most obvious, but one less significant in scope than the others. The four previously evading detection were:

1. Component Devaluation

First and foremost, Callioni and team show that devaluation was responsible for the largest portion of overall inventory costs. Decreases in component prices from suppliers, while inventories were high, meant that HP was eating losses.

2. Price Protection

Due to the nature of the PC business’ rapidly declining costs on items such as CPUs and RAM, HP was forced to reimburse channel partners holding stocks that had not sold. The article elaborates, “A channel partner might buy a product from HP when the prevailing market price was $1,000. But if the item sold five weeks later at a new price of $950, HP had to reimburse the $50 difference.”

3. Product Returns

Similar to price protection costs, product returns were entire reimbursements by HP of its distributors on products they were unable to sell.

4. Obsolescence

Incredibly short lifecycles for PC products meant that in cases where demand and supply were poorly aligned, HP was forced to multiply write-offs.

Evaluation

When elements of inventory costs were taken together, it was difficult to know where to focus attention. In the article, the authors provide examples of the clear picture that emerges once costs are separated out. When three products are evaluated side by side (See Table 1), “the highest costs for product A are coming from goods whose prices have dropped after they’ve been shipped to retailers. But the greatest problem for products B and C are drops in component prices before the products ever get out of the factory.”

Analysis

With this new information, SPaM was able to work with HP business units, starting with the Mobile Computing Division (MCD). Former accounting metrics were exchanged for measurements operating on a more granular level of detail. MCD eventually opted to centralize manufacturing and configuration at a single location based on an opportunity comparison using the new metrics (See Table 2). The success of the initiative was so far reaching that the program was eventually standardized, and adopted enterprise-wide.

SPaM made known their findings about the true drivers of HP’s inventory costs in 1997. In 1998, after implementation, margins were already increasing for MCD. By 1999, the unit returned to profitability. In May of 2002, HP and Compaq merged and the new metrics were maintained.

Focusing on RONA

According to Inventory-Driven Costs, HP has catapulted forward through its shift in focus from a strategy of return on sales, to return on net assets (RONA), a change supported by new accounting metrics.

Applicability Beyond HP

Though the article focuses on HP, aspects of the full scope of changes acted upon by the company mirror that of others in the industry. Dell’s success through the 90’s, for example, was due in part to a strategy of minimizing the steps in its supply chain and managing the variability of supply and demand^[2]. Dell has utilized return on invested capital (ROIC), which similarly focuses on “high returns at very low asset intensity.”

While Inventory-Driven Costs points to IDC metrics as the catalyst for HP’s change, it’s possible to arrive at the general conclusions of management by other means. In fact, the authors concede, “Product group managers may well have known before, on an intuitive level, what they needed to do, but the IDC metrics have made it easier for them to convince senior managers that their particular situations require particular solutions.”^[1]

Management Culture

In light of this, another factor emerges—that of managerial culture and decision-making. In an organization such as HP, where management decisions are evidently more closely linked to accounting metrics, the inventory-driven cost method goes a long way to ensuring management objectives are carried out. This is especially true if managers are not otherwise empowered to make decisions based on what they know to be true. IDC has contributed to that empowerment, where previously a manager might have been reprimanded, even for making the right decision.

Carly Fiorina

When Carly Fiorina was installed as CEO, she sought to bring about major change to HP culture. Prior to HP’s acquisition of Compaq, she was convinced that dramatic improvements were still needed. “Only a major acquisition, she concluded, could disrupt entrenched routines and catapult HP into a commanding lead in the personal computer industry.”^[3] Indeed signs of successful changes at all levels continued with the merger. Susan Bowick, of the management team formed to lead the company’s integration of people, said of the experience, “To my knowledge, no global company of HP’s size had ever integrated their organization, all HR practices and HR technology in less than 12 months. Many of us felt that it was one of the best projects and best teamwork examples of our career.”^[4]

Exceptional Discipline

When speaking of the conditions for success at Dell, Thomas Stewart and Louise O’Brien wrote that “High expectations and disciplined, consistent execution are embedded in the company’s DNA. Dell is more than an efficient factory—it’s an organization that can turn on a dime and that has demonstrated impeccable timing in entering new markets.”^[2]

A Model for Other Companies

In addition to accounting efficiencies, any company must work to develop teamwork, management instinct and adaptability. It’s important to note the many changes leading to HP’s leadership in the PC business, of which a very critical element has been IDC. Providing managers with latitude along with the right tools to enact change is imperative.

In times of economic instability or recession, the IDC method, in the right management conditions, gives business units a lever to persuade senior managers of required changes, even dramatic supply chain restructurings like HP’s. Such adaptive strategies would hardly find favor in a poor climate based on intuition alone.

HP has won the battle to manage profits and inventory in several circumstances, but there have been challenges. In the first quarter of 2009, the company announced its profits would decline as much as 5% from the previous year.^[5] It will surely maintain its metrics and closely monitor results, ensuring that excess costs are avoided. Any organization evaluating inventory-driven costs however, would do well to contextualize HP’s success and recognize the compound drivers of effective decision-making.

Cause and Effect

Lastly, it is important to remember what the authors point to almost from the outset. That “Mismatches between demand and supply” are the cause and surplus inventory, the effect.^[1]

As long as IDC metrics are focused on decreasing that elasticity, it should continue to be effective. Overall, Inventory-Driven Costs is an impressive look at one very helpful tool for the 21^st century manager of any “highly price-competitive industry.”^[ibid]

Resources

1. Callioni, G., de Montgros, X., Slagmulder, R., Van Wassenhove, L. N., Wright, L. (2005, March). “Inventory-Driven Costs.” Harvard Business Review.

2. Stewart, T. A., O’brien, L. (2005, March). “Execution Without Excuses.” Harvard Business Review.

3. Nadler, D. (2007). “The CEO’s Second Act.” Harvard Business Review.

4. Pomeroy, A. (2005, June). “Orchestrating a Mega-Merger.” HRMagazine, 50(6), 58-59.

5. Vance, A. (2009, February 19). “Hewlett-Packard Will Cut 24,600 Jobs.” New York Times, p. 5.

6. Byrnes, J. (2003). “Dell Manages Profitability, Not Inventory.” Harvard Business School Working Knowledge.