Monday, April 15, 2019, Santiago, Chile


From My Work-in-Progress Basket

A Brief Answer to a Surprise Question: The 3 Cornerstones of Career Success

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After my speech, I found myself surrounded by a cluster of people wanting to say hello or ask a question. This surprised me because these were employees, not readers. Like matriculated students attending classes, employees attend company-sponsored lectures under some degree of compulsion. They weren’t there because they were fans.

One of them, a young man who works as a telemarketer, surprised me doubly by asking a question so simple it seemed at once naïve and profound: “What do I have to do to be successful in my job?”

The thing is, this kid was serious. He believed I knew the answer. And I had the feeling that he was ready to put into practice whatever advice I was going to give him.

Other people were listening. The question begged for a long and complicated answer, but the moment demanded a brief and simple reply.

What to say?

As it happened, I’d been thinking and writing about a parallel question: What does it take for a social or cultural group to achieve economic independence? My answer to that question was about values and commitment.

To lift themselves out of poverty and acquire wealth, a social group (even a family) must place a high moral value on three ideas: hard work, saving, and learning. No amount of external financial aid will do the job if the group does not believe in and practice these values, for they are the moral and behavioral cornerstones of wealth creation.

So that’s what I went with: Hard work, saving, and learning.  READ MORE

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Thursday, April 11, 2019, Delray Beach, Florida


From My Work-in-Progress Basket

Two Vitally Important – and Completely Opposite – Business Management Strategies*

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Managing a growing company requires competence in two business strategies: centralization and decentralization.

Decentralization, as the name implies, is the process of spreading out the business from the managing core. It is done by developing multiple profit centers, each with its own management team, in different geographical/market areas and/or with different product lines.

Decentralization is usually a strategy for growth. But it is also a good vehicle for innovation, because you have more people separately working on similar challenges and problems.

Centralization is the contrary process. When you centralize a business, you reduce the number of independent operating entities, bringing them back under the command of a central core management team. You end up with fewer people in charge of more business functions and activities.

Decentralization is generally employed when the business seems to be slowing down because of bureaucratic bottlenecks. When there is a concern that growth has stalled because too few people have too much to do.

Centralization is generally done when the business seems to have lost its bearings. When communication and production and processes are breaking down. When there is a concern that profits are being lost due to redundancies and inefficiencies.

To centralize or decentralize? It’s a  critical decision that every CEO of a growing company has to make – and remake – at various stages. And most of the time, the answer is fairly simple. When seeking innovation, decentralize. When seeking efficiency, centralize.

From the perspective of our hypothesis, centralization can be seen as an exercise in concentration and decentralization as an exercise in expansion. But, in fact, decentralizing requires a good amount of relaxation (of control) on the part of senior management. Breaking up one marketing division into four almost guarantees that protocols and practices will begin to change. Some for the better and some for the worse.

To support decentralization, you have to be “loose” enough to accept some degree of unexpected and unfortunate outcomes for the sake of longer-term growth. To support centralization, you have to believe that the policies and practices implemented by the core management team will be better than the sum total of those that had been in place before.

Most managers arrive at their jobs predisposed to one or the other strategy. Those that favor control prefer lots of meetings, memos, monitoring, and “feedback.” They feel safest when the power structure is hierarchical and everything is regulated, so they do everything in their power to keep that order.

Other managers arrive with a more flexible disposition. They are not comfortable with rigid structures and formalities. They prefer fewer meetings and memos. And they provide employees with a good deal of freedom in deciding how to do their jobs. These laidback managers feel comfortable with a more horizontal power structure.

Of course what actually happens in most growing businesses is that there is an ongoing fluctuation between these polarities, depending on external market conditions and internal goals and resources.

Thus the challenge for managers is twofold: to understand their own preferences in terms of control, and to adjust their behavior when circumstances demand that they manage otherwise.

In other words, the concentration-prone manager must understand that there will be times when he/she must make an effort to loosen things up. And the relaxation-prone manager must understand that there will be times when he/she must tighten things up.

The most effective managers can do both.

* In this series of essays, which hopes to become a book, I’m exploring an idea I’ve been thinking about for a long time: that our knowledge of the universe and our experience of living can be understood by the metaphor of pulsation – of contraction and relaxation. And that such an understanding might be helpful in succeeding in life and accepting death.

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Thursday, March 7, 2019, Delray Beach, Florida


From My Work-in-Progress Basket

Breaking Up With William: A Misunderstanding of the Very Important Matter of Economic Fairness

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I knew that William was a potential superstar the moment we started talking. He was smart and funny and confident – real confidence, not bluster.

He wasted no time establishing himself as a valuable employee. He then worked in overdrive till he was put in charge of his own product line. He hired and trained a crew that grew that product line into one that was contributing nicely to the company’s overall profits.

As CEO of his division, William made a six-figure salary plus a bonus of 10% of the profits. As his business grew, the bonus was increased to 20%. And as part of his contract when he made CEO, he was also promised 20% of the purchase price if his division were ever sold.

Some years later, the division stopped growing. And because I had an interest in the business, I was called in by my partners to speak to William about it. He was gracious and appreciative of my concerns, but he ignored my suggestions. He was comfortable with the division running at that level of profitability.

I’m not comfortable with an idling business. Unless you are seeking to grow profits, entropy takes over and sales gradually recede (along with everything else). But when William’s sales began to recede, he didn’t seem bothered.

I was bothered. And my partners were bothered. So when an offer was made to buy William’s division, they thought: good timing. To be fair to William, I recommended that we allow him to have a voice in the negotiating process. That proved to be problematic, as he had an unrealistically high idea of what the division was worth.

Eventually, it was sold at the right price. And William received, as promised in his contract, 20% of the purchase price.

Instead of feeling good about it, he shocked us by asking for 40%. His rationale was that he deserved an additional 20% of the profits because, in his role as CEO, he had somehow “earned” an extra 20% in “sweat equity.”

“Sweat equity” is a term that is sometimes used with start-up companies. To persuade a CEO (or other key executive) to work for a salary much below market rates, they are offered the chance to receive equity as a trade-off. For example, instead of paying Sally the $150,000 she would normally make, she is paid $50,000 and receives (after the year ends) $100,000 worth of equity.

That is how sweat equity works. It is a deal the two parties make beforehand. And it is not merited simply because someone works hard or successfully. It is essentially bought with the compensation that the executive willingly gives up.

When both parties agree to it, it’s fair. What William was asking for was, in our view, completely unfair.

I’ve always said that what is fair in a business relationship is relative. It’s relative to the people involved and to the situation, which is always changing.

If, as things change, your view of fair is in a range that doesn’t overlap with mine, we have a problem. Sooner or later (in William’s case, later), we will be at odds. And because our views of fairness are so different, there is a good chance the relationship will be ruined.

If you are entering into a long-term business relationship – whether it be a partnership, a joint venture agreement, or an employment contract – it’s not enough to agree on terms and to put those terms on paper. You have to spend some time talking about how the terms might change in the future.

My partners and I never did this with William. We just assumed, since he shared our views on so many other things, that he shared our sense of what fairness would look like as his role in the business became more important.

Had we done so, we might have realized that, for one thing, he had a very peculiar idea about meriting sweat equity based on his own assessment of his work.  READ MORE

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Tuesday, February 19, 2019, Delray Beach, Florida


From My Work-in-Progress Basket

How to Maintain (or Regain) Control of Your Growing Business

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If you are in the fortunate position of seeing your business grow to the point where you have more than 50 employees, there’s a good chance the grip you thought you had on it will begin to slip away.

There is a good reason for this.

It has to do with the human capacity for attention. Experts say it’s basically impossible to manage more than seven or eight people. I can attest to that. There have been times when I’ve had more than a dozen people reporting to me — and it was problematic. I was not able to stay on top of their work, and they knew it.

What you may do is spend more time with some of the people who report directly to you and ignore the others for long periods of time.

If your top people are ignored, you are not doing the best job of managing them. You are not provoking them enough, not keeping a close enough eye on their performance, and not giving them the feedback and support they need to be successful.

But even if you do limit your direct reports to, say, seven, you can still lose control when the payroll exceeds 50. Here’s what happens:

Your seven direct reports understand you and your vision. Their subordinates report to them and not you, but the size of your company is still small enough that they see and hear from you all the time. They know what you want even if their boss has different ideas.

But when your company grows to the point where the subordinates of your top people have their own subordinates, the connection to you is all but lost. So what do you do when you have 50 (or 100 or more) employees and you feel like things are falling apart?

First, you should open your mind to the possibility that you aren’t the manager you think you are. In fact, it’s possible that your business isn’t being managed at all.

As an entrepreneur, your attention has been correctly focused on growth and profitability, not management. Your style of leadership might have been formal or casual. Your frequency of communication might have been regular or impromptu. You might have been a nice boss or a bastard. It hasn’t mattered because the seven that reported directly to you adjusted themselves successfully.

Their subordinates made dual adjustments: to their bosses and to you. But now that there are so many employees, you have to find a way to make sure they all understand your business goals and your expectations of them.

For all you know, they are getting bad ideas and directions from their bosses. You can’t see it, because those managers don’t report to you.

So you were right to focus on growth and profits. But now your business is in a different stage. Now you have to introduce some level of formal management throughout the business… which may mean that you have to become a more formal manager yourself. That would entail focusing on three things:

  1. Controlling growth operations
  2. Managing maintenance operations
  3. Communicating your vision

 Controlling Growth Operations

Every good-sized business is sure to have multiple operating parts – marketing, sales, accounting, customer service, product development and fulfillment, data collection, etc.

When your business was small, you could give short shrift to some of them. Now they are all important. None can be neglected. So which do you take on personally, and which do you trust to someone else?  READ MORE

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Wednesday, February 13, 2019, Delray Beach, Florida


From My Work-in-Progress Basket

Are You An Information Addict?

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“Let’s have lunch,” DK said in his email. “There’s something I need to talk to you about.”

Two days later, we were eating chopped chicken salads at City Oyster on Atlantic Avenue. We talked a bit about family news, but it was clear that he wanted to talk about a question that was on his mind.

The question: Should he spend $100,000 on the highest level of an internet marketing program that he had been looking at?

“It looks really good,” he said. “But I’m not sure it makes sense for me to invest that kind of money.”

“A hundred grand is a lot of money,” I said.

“But you get an awful lot for it,” he explained. “They do all the technical stuff for you, which I’m not very good at. All I have to do is come up with the product idea.”

The waitress filled our drinks.

“So if you invest in this marketing program… what kind of products would you sell?” I asked.

“I don’t know,” he said.

“How about this: If you had all the money you could ever need, how would you spend your time? What would you do to give your life purpose?”

“That’s a good question,” he said. “Actually, I like the idea of purposefulness. Maybe I’d do something along those lines.”

I told him that if I were he, I’d not spend a hundred grand on a program that gave me marketing and operational tools until I knew what I was going to do with them.  READ MORE

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Monday, January 28, 2019, Los Angeles, California


From My Work-in-Progress Basket

Four Proven Ways That Employees Can Get Big Raises and Retire Rich

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It’s commonly said that you can’t get rich working for someone else. That the only way to achieve financial independence is to own your own business.

This idea feels true when you are stuck in a thankless job, working long hours for mediocre pay. But it’s nonsense.

It’s perfectly possible to become wealthy as an employee. You’ve just got to (a) be working for the right kind of company, (b) chart a course for yourself that takes you from ordinary to valuable and from valuable to invaluable, and (c) make sure you get the compensation you deserve.

I know this to be true for three reasons: I did it myself. I mentored at least a dozen employees that did the same thing. And I looked at a foot-high stack of research on highly paid employees that confirmed my experience.

(In this essay, I’ll outline the principal ideas I’ve developed on this subject. I’ll present them just as I presented them to those I’ve mentored: as observations and advice. Sometime later this year, if I can get someone to help me, I’ll expand this essay into a book. But what you are about to read should get you going and keep you moving in the right direction, if you are interested.)

Nothing I’m about to suggest will be especially difficult. It will take time. And commitment. And the willingness to do some things that you are not doing now. But there will be no big scary leaps required of you. Begin where you are now, with the skills and knowledge you currently have. Then move forward, taking small, sensible steps, acquiring the skills and knowledge you currently lack.

There are 5 stages to this journey:

  1. Make sure you are working for the right company.
  2. Become extraordinary at what you do.
  3. Develop additional, financially valuable skills.
  4. Expand your reach so that your business can’t do without you.
  5. Move from employee to stakeholder.

Work for a Business That’s Right for You

There are basically three kinds of businesses that can provide the environment you are looking for, where you can become rich.

Big corporations

Big corporations will pay you serious money if you are at the top of their food chain. A senior vice president of a billion-dollar business can easily make $350,000-$750,000.

It’s not difficult to accumulate an eight-figure net worth if you get yourself promoted into one of those highly paid jobs quickly. But the competition will be strong. You will be competing with dozens (if not hundreds) of very smart, very hardworking, very ambitious young people. You will have to be not only outstanding at your job and then move yourself strategically towards the money side of the business, you will also have to be politically shrewd. Because all big companies suffer from some amount of corporate politics. And even if you have what it takes to rise to the top, it will likely take 10-20 years.

Financial service businesses

Brokerages, banks, and insurance companies are particularly good places for ambitious people that want to get rich as employees because they are designed to motivate and reward their employees with commissions and bonuses. And if you are with the right company, those commissions and bonuses can be huge.

There are probably a thousand such businesses in the USA that are happy to pay their best people $250,000 to $1 million or more – if they can perform. Career paths at this level include portfolio managers, marketers, and salespeople.

Becoming a high-earning portfolio manager is a matter of knowledge, skill, and luck. If you are highly intelligent, mathematically oriented, and mentally disciplined, this could be an exciting and rewarding path for you. But be prepared for the emotional challenges. It is difficult to keep an investment portfolio’s performance above the pack. When the performance is up there, you are a superstar. When it drops below – and eventually it will – you will be a pariah.

A less demanding (in my view) career path is to become a broker – starting out working under another broker, developing leads and then signing up your own accounts, and then eventually having a team of junior marketers and junior salespeople working for you. Brokering is 80% salesmanship, 10% customer management, and 10% knowing what you are doing. To succeed as a broker, you need to be very good at all three.

Small companies with big potential

The third type of business that offers employees the potential to become rich is the small, entrepreneurial company with big growth potential.

This was my choice as a young man, and I don’t regret it. Starting out with a small company, especially if you are young, gives you a fast track to making big money that you won’t get in a big corporate environment. You are not competing against dozens of hyper-smart and uber-ambitious colleagues. And there is no formal corporate ladder to climb.

With small businesses, it’s generally easier to take on more responsibility. It’s also much more likely that you will be working directly with the founder, who will be very conscious of everything you are doing to make him or her rich.

Plus, working for a small business gives you a much greater ability to shape the corporate culture so that you can become not just wealthy but also proud of what you do.

Becoming a Valuable Employee

Whatever type of company you choose, your journey to wealth begins by establishing yourself as a valuable employee.

Most employees go through their lives working for businesses they care nothing much about, dealing with problems they’d rather not face and getting paid very ordinary wages. They would like to earn more. They may even be willing to do more. But their ambitions are sporadic and fleeting. Most of the time, they are simply showing up.

Such employees are never going to get substantial raises. They can expect their salary to rise very slowly and very gradually. From 1984-2017, for example, the average salary rose by around 3.5%, according to the Average Wage Index.

As an ordinary employee, that’s what you should expect. But getting a 3.5% increase every year will never get you rich. It’s barely enough to keep up with inflation.

Becoming a valuable employee, however, puts you on a different trajectory. Extraordinary employees can – and often do – get raises that begin at twice the 3.5% average and often jump by 10% yearly with periodic leaps of 25% or more.

That sort of arithmetic is why most college-educated employees starting out today can expect to quadruple or quintuple their salaries over a career span of about 20 years, whereas top-performing employees can easily double or triple that.

A valuable employee, earning only a minimum increase of 7% a year, will see his compensation grow from $50,000 to $193,000 in 20 years. At 10%, he will see his compensation break into the quarter-million-dollar range.

There are basically four ways to distinguish yourself as a valuable employee and see your compensation accelerate at a faster pace:   READ MORE

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From My Work-in-Progress Basket

How Good Are Your Products? Why It Matters Even If Your Customers Can’t Tell

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Thursday, December 13, 2018

Delray Beach, FL.- My family has a small interest in a Craft Beer Brewery owned by friends of ours. Because our interest is small and because they are friends, I do my best to limit my input to answering questions they ask, which are few and far between.

But that doesn’t mean I don’t have questions of my own.

Since the beginning, for example, I’ve wondered how much taste matters when it comes to selling beer. Is there a relationship between how good a beer tastes and how well it sells? Is there even such a thing as “good” and “not good” when it comes to taste?

I’m intrigued by this issue because I’ve had to grapple with something similar in almost every business I’ve worked with – questions about the relationship between product quality and sales.

In this particular case, my friends have spent a small fortune working on the quality of their brands. To them, there is a real difference between the quality of one pilsner and another.

They also believe – and this I don’t dispute – that consistency in taste is a very important factor in building a best-selling brand.

But is the taste of one beer really better than another? Or is it just a matter of personal preference?

And if so, why bother trying to make your beer taste “better” according to some expert standard of excellence? Wouldn’t it be smarter to simply find out which ones have the widest consumer appeal?

The fact is, I’ve been thinking about the question of quality in relationship to everything from cigars and wine to art and literature for most of my adult life.

And here’s what I believe: There is an absolute difference. Some Cabernets are better than others. As are some cigars. As are some books. As are some works of art.

But the number of people that can identify or even notice gradations of quality are small. Depending on the item in question, my guess is that less than 10% can tell the difference.

When it comes to cigars and tequila, I consider myself among the minority that can distinguish between, good, bad, and mediocre. I feel the same way about literature and art.

Beer? I haven’t a clue. And I’m willing to bet that 90% of the beer drinking market can’t tell the difference either. Actually, I’d say 98% of the mainstream beer drinking market and perhaps 80% of the craft beer market.

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From My Work-in-Progress Basket

Got a Tag Line? When It Makes Sense to Have a Personal Brand

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Tuesday, December  11, 2018

Delray Beach, FL.- A colleague refers to himself in his publicity as “the world’s most ___-ed man.”

Good idea or bad idea?

Epithets have power when they are short and apt and memorable. Like Honest Abe. Or Tricky Dick.

In my colleague’s case, the tag came honestly – borrowed from a book jacket endorsement. And he’s been repeating it lately in what looks like a strategic effort to carve out a “niche” in his market.

It’s an old but still interesting approach: Find an unoccupied knoll in the landscape of your industry, claim it as your own, and then do everything you can to remain king of it. If you can gain the reputation of being the smartest or most honest or most reliable person in your neck of the marketplace, you’ve achieved something very valuable.

Likewise, gaining a reputation for being a master of a particular business skill is immensely valuable. You will always have more work than you can handle. And you’ll be able to charge more for your time than your competitors will be getting. In fact, if you are smart in choosing customers/clients, you could make twice or three times the amount others in your field typically make.

And once you have the reputation, using an epithet is a super-efficient tool for establishing a personal brand.

Building True Expertise

If the field you work in is crowded, it’s difficult to rise to the top. This is when it makes sense to narrow your brand to a small or neglected niche.

For example, 20 years ago, when I first started writing about business (in Early to Rise), there were all sorts of people out there claiming to be experts in internet marketing.

But within five years, the field had expanded so rapidly that it was no longer credible to position oneself as an Internet Marketing Master. So what happened then was a proliferation of people promoting themselves as gurus of particular aspects of internet marketing – like free-to-paid or VSLs or webinars or product launches. Dozens of individuals developed multimillion-dollar businesses by claiming the high ground in these niche areas.

To be successful as an internet marketer today, you have to get even more specific. You might, for example, develop expertise in product launch formulas for natural health products using YouTube as the medium. So if I were starting out now and wanted to enjoy the benefits of a personal brand, I’d certainly consider using the efficiency of an epithet. But I’d make sure that it would be a very, very narrow handle that I could justly claim for myself. Because if you claim to be what you are not, you will do the opposite of what you want to do.

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Notes From My Journal

Solo Fliers vs. Quotidian Pilots

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Friday, December 7, 2018

Delray Beach, Florida.- In every business, the golden current of wealth and power flows to the rainmakers. This is not a factor of ideology. It is a biological fact of the organism that is .- business itself. And, whether you like it or don’t, you cannot change it without killing the organism.

But there are two kinds of rainmakers.

There are those that take irresponsibly high solo flights that often end in wreckage. And there are those that check their gauges and follow proven flight plans.

The solo fliers, if unrestrained, will more likely kill your business than grow it. The quotidian pilots will never kill it if they can help it. They will put their genius to making the ETAs.

As a founder or CEO or whatever you are, you have to recognize that, on a daily basis, you cannot give control of your business to the solo fliers. You must employ the quotidian pilots to safely keep things moving.

But if you want growth from your business — and that means growth at any stage (whether you are looking to break the million-dollar barrier, the 10-million-dollar barrier, the 100-million-dollar barrier, or the billion-dollar barrier), you must allow your solo pilots permission to make their flights.

The masterful CEO/founder is the person who can figure out how to do that.

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Notes From My Journal

Steve Jobs on “Why Companies Fail”

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Tuesday, November 27, 2018

Sao Paulo.- I’m in Brazil, catching up on email before I get to work – and I came across a video by Steve Jobs that Sean MacIntyre sent me. (See the link to the video, below.) It’s very good. And Jobs was fundamentally right.

I’ve never thought of it in quite this way, but I’ve always had a gut feeling that product development should lead the business.

When you are just starting out, you have to focus on sales and marketing. That’s because until you’ve been in business for years, you don’t actually know enough about the kind of products your market really wants.

Jobs understood this. In launching his business, he was all about discovering what the market really wanted in terms of customer experience. He said so on many occasions. But as the business grows beyond the point where it is selling hundreds of millions of dollars of product each year, there is a natural tendency for the marketers to take over.

And that can be dangerous – even destructive.

Everything ultimately depends on customer experience. And customer experience is 50% the experience of buying the product and 50% the experience of using it.

The way I have dealt with this has been to preach what I call “incremental augmentation.” It is essentially a refutation of the old adage: If it ain’t broken, don’t fix it.

For me, a healthy business is one whose products are forever improving. And a smart founder/CEO is one that is never satisfied with yesterday’s product.

Jobs’ video provides a deeper insight into why that is smart.

One of the reasons I decided to rewrite Ready, Fire, Aim– my most popular business book – is because, since it was published,  I’ve had many new ideas about why some entrepreneurial businesses are incredibly successful, and some fail miserably.

I’ve posted the introduction and part of the first chapter of my rewrite here on this blog, and I’ll be posting the rest as I get each section finished. One subject that I’m quite sure I will include is the challenge of reining in a big and fast-growing company when its leaders are all very adept at creating profitable growth.

Take a look at what Jobs has to say about this https://www.youtube.com/watch?v=fuZ6ypueK8M

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