Thursday, August 28, 2014

Why the experts aren't helping

In August of 2009, the CNN web page ran an article titled “How to get a job in 100 worlds or less. In almost every case the professional career consultants gave advice that presumed the candidate had skills that very few real life candidates have.
These 7 people gave great advice. The problem is that they gave half the advice – strong on what and short on how! While the article was written to be short and fast, the very structure of the article causes more problems than it solves. Since it is written in the expectation that the reader can actually use the suggestions, when the unprepared reader bumps up against the reality of their own limited abilities they are left more discouraged than before they read the article.
Each of you reading this article, by the very fact of taking the time to read this article, are outliers. You are not “average”. If your response to what I am saying is “learn those skills” it’s because by nature or education you’ve gone that one step farther than most people either know how to go or have been taught to go.
My point is that you cannot apply your standards for yourself to those poor souls who are floundering in their job search.
The key to economic recovery is people working at well paying jobs. Working people with good salaries have money to buy stuff and companies need them as customers to survive. The out-of-work people need help do each of the following:
  1. Not just discovering companies that might use their skills, but companies that need those exact skills AND have a current opening. This is key because having exactly the right skills, presented in exactly the right way on Monday is worthless if the job closed on the preceding Friday or doesn’t open until the following Monday.
  2. Help analyzing job requirements and matching them to their own skills. A lot of people have to change career fields in today’s market and have great skills that will crossover to other industries or jobs. Since their expertise is in the work they do and not in marketing their own skills, most won’t know how to discover or explain how their skills crossover into the new fields and industries.
  3. Help tailoring their resume to showcase how their skills match the job requirements. Most people try to write a resume only once every few years and thus are not very good at succinctly explaining their skills and abilities. Most people don’t have enough practice to tailor their resume to showcase their crossover skills.
  4. Access to a wider set of contacts and information about which companies have current openings and whom to contact, by name. The helper must become the referrer. The vast majority of jobs don’t naturally build large networks In fact; most workers don’t have networks and don’t know how to build them.
  5. Lastly the HR people must learn that many of the best candidates are not and need not be the best professional job seekers. Unless job search skills are job performance skills, the candidates that have the best job search skills are not really professional engineers or clerks or whatever; they are professional job seekers and once they start work, they will immediately start looking for their next job.
Before you say: “Hire one of the companies in this article to teach you and to supply the contacts you need.” Remember you are talking to someone who has just lost his or her job, thus has no income and really can’t afford to pay for professional help. These kinds of support are what the state unemployment offices should be supplying and rarely if ever actually deliver.
The solution will come from one of two sources. Either from someone within the system who recognizes the deficiencies and has the authority to make the necessary changes, plus access to the funds to pay for the extra resources. The other possible source is some “genius” outsider who can disrupt the existing process in some unexpected way.
Since genius is where (and when) you find it, the most likely solution will be a slow process of small changes within the system as lone individuals discover ways to place one candidate at a time and try to formalize the things that work.
Don't just toss this aside as just another rant. Remember that defining the problem is always the first step in solving it.w 

Tuesday, August 19, 2014

Startups are fundamentally different from anything else you can do in business.

In many ways a starting a company is just like raising a child. Everything is for the first time - new and untried. No matter how much experience the people have designing the product or servicing the customer; with a startup it’s still the first time that particular task has ever been done with those people in exactly that way.
Just as an established company has to build a relationship and reputation with a new customer, a new company has to build a relationship and reputation with every customer. An established company has staff interrelationships that are just being built in a startup and will inevitably impact how and how well those people work together.
Every new product or service will have problems to solve. Just think about the last time you bought a new TV or a new car. You had a learning curve just to figure out how to set the clock or the date since every TV or car has a slightly different procedure.
An established company has processes and procedures for most of its day-to-day operations. A policy for handling customer complaints and refunds, and a set dollar amount that the service person is authorized to spend without asking permission and so on.
The first key lesson for a startup to learn comes from the French philosopher Rene Descartes – Each problem that I solved became a rule, which served afterwards to solve other problems.
The takeaway from this is for you to keep close track of problems and successes to develop processes, procedures and guidelines to deal with future issues. This deceptively simple practice is the key to scaling your business and allowing you to add staff without losing the very things that set you apart from the competition.
Every startup begins with an idea and that must be turned into a plan to actually create a product or to deliver a service. Depending on the business that plan might be very simple or complex but just like planning a trip to the grocery store without a list you end up forgetting the lunchmeat!
While a better plan generally leads to better results, its far too easy for you to get caught up in trying to write the perfect plan and to account for every possibility, leading to the well known “analysis paralysis”.
The second key lesson for a start up is - A good plan implemented today is better than a perfect plan implemented tomorrow.
George Patton
Your takeaway this time is that while you must do enough planning to know were to start, what you need to start with and where you are going, you should start actually doing something as soon as practical. Just like that mythical trip to the grocery store I mentioned earlier, you can always add or subtract items from the during your shopping trip, but start filling your cart!
Reading the startup advice in most business magazines you will see the reoccurring theme to not let finance hold you back. While this is good advice in the main you still need some cash to get started.
I can start a ditch digging service with a car or truck (or a bus ticket) to get to the job and a $15 shovel. Without that transportation and the shovel I can’t start a ditch digging business! I specifically chose a ditch digging business since the cost of tools is just about as low as you can get, but as you can see there is a minimum you need to get started.
How many times have you seen a need for a service or product that you’ve thought “I could make a lot of money building that or doing that for that customer”? In looking at exactly how you could make the product or deliver the service you find that you need some cash up front to buy the raw materials and tools to actually build the product or deliver the service (and by the way feed yourself till you get paid) and decide that you just don’t have the cash to make it work?
Most of us have shelved the idea and moved on looking for something we can do with the resources we already have or use what we do have to get a sample together to get more funding.
Its OK to look for opportunities within your budget or skill set, it is also OK to look for ways to expand your budget or acquire new skills but to you really only have those two choices. My business experience has taught me that more ideas fail for lack of funding than funding is wasted on bad ideas.
The key to places like Silicon Valley and Austin, Texas is not the universities that turn out educated people, although that helps, Its not the co-location of research and development branches of big businesses although that helps too. The “secret sauce” is the people willing to risk their cash on new ideas!
The last takeaway is that you should never saddle yourself with so much debt that you lose control; but never borrow just enough to give yourself a case of the shorts. You've got to have enough cash to finish!

Sunday, July 20, 2014

Economics 101

My writing partner Bryan just posted our latest article on his blog Profit At Any Price.

I would have posted the article here, but he beat me too it!

Friday, May 2, 2014


I have been watching the new TV show Vikings and in the next to last episode, the king seems to have suborned all of Ragnar’s followers. I was ready to give it up as a dog-eat-dog the winner is the one who stabbed the most friends and followers in the back clone.

Imagine my surprise when SPOILER ALERT they all remained loyal to Ragnar!

Why did the writers end this season in that way? I’m not sure why they chose to tell the story in this way but they had really set this up with his character from the very first episode. Ragnar had been loyal and honest with all his associates.

Even his first wife who left him because he took a second wife – something that his culture permitted – came to his aid. She refused to “share him” but still respected his honor and integrity and saw him as the logical choice to lead the nation when the king tried to assonate Ragnar.

The moral of the story turned out to be that if you are loyal to your people and treat them with honor and honesty they will support and protect you when you need it; a lesson that most managers could stand to relearn.

Throwing your people under the bus to save yourself guarantees that when the time comes they will not put themselves in the slightest risk to save you!

There is no great concept here and nothing that takes a long time to explain. The simplest thing to do. Treat people the way you want to be treated and they will return that treatment. 

Not always or in every case but often enough that it really, really pays off in the long run.

Monday, April 28, 2014

Aereo versus ABC

Reading Freakonomics on the web and this morning their article is about Aereo, the antenna rental business in New York. The following is a quote from their article:

Aereo’s business model is clever and, potentially, very disruptive. As they have done since the dawn of television, the major networks – ABC, NBC, CBS, and FOX – broadcast their signals over the air. You can receive these signals with a digital antenna – the modern equivalent of rabbit ears – and millions of Americans who don’t subscribe to cable or satellite still do.
Click here for the full article.
I find this facinating as a child of the 1950 when TV was just moving from a rich man’s toy to everybody’s got one with antennas on every rooftop.
The broadcasters gave away the program to anyone and everyone to get the advertising base and into as many living rooms as possible. The original model was similar to print with the largest advertising fees going to the station with the largest reader / viewer base. Part of the reason that some TV show stars make huge salaries after the show catches on.
There was a theory from radio that was applied to TV broadcasts - “the right of capture”. The concept being that since there was a limited number of frequencies that the broadcasters could use and they were licensed by the government to use it, anyone with the appropriate receiver could “capture” the signal and listen or watch it.
Obviously no one knows how the Supreme Court will decide but the precedent of deciding that I cannot pay someone for the use of an antenna in a better location than my own rooftop (or a set of rabbit ears) will be the first wedge in removing all free broadcasts. Once the concept of my not being allowed to put up (or pay some one to put up) a remote antenna is accepted how long until putting one up on my house (or even using set-top rabbit ears) becomes illegal too.
The cable companies rebroadcast programs and pay a fee to the program’s owners but they get their signal directly from the broadcaster and we expect a much higher level of signal quality using that system. With Aereo’s antenna farm, I might expect a lower level of signal and so only be willing to pay less. And that seems to be Aereo’s business model.
ABC seems to be changing their business model from broadcasting the signal over the airways for free to the viewer and charging the advertisers for access to those viewers to one of charging the viewer for part of their costs and only charging the advertisers for part.
If the supreme court does decide in favor of ABC it should increase ABC’s income by the amount antenna farms have to pay for the right to retransmit the programing.

OK, now we should see the cost of the broadcast license increase since the public owns the airways and with those extra fees it just made that license a more valuable commodity.

Thursday, April 10, 2014

High Frequency Trading

High-frequency trading is when financial institutions, traders or brokers use sophisticated computer algorithms and high speed data networks to make lightning fast trades. The objective is to make a very small (sometimes only a penny or two) on a large number of trades because the algorithm spots trends before humans and can buy or sell faster.

Anyone reading business magazines is familiar with the concept and accepts it as part of the stock trading process. My question is what value does the stock market add to our society?

Stocks are a form of ownership in a company and business sell their stock to raise capital for buying real estate to house their operations, to buy equipment to improve productivity or maybe just so the owners can recover some of the money they already spent to create the company.

That’s the theory but very little of the stocks being traded today were sold by the company itself, most being re-sold by people who originally bought it when the company first sold it. Perhaps it has been bought and sold many times since the company it represents first sold it to raise capital.

So, how does stock in the secondary market benefit that original company or society in general? If I invest in a company and get stock shares instead of just an IOU then I can sell those shares to someone else when I need or want my cash back. The stock market acts just like a supermarket by putting all the different stocks in one place where buyers can find the ones they want.

That’s the value to the investor but what is the value to society? If I invest in a company and have to wait for them to buy back those stocks or for them to pay dividends I might have my money tied up for a lot longer than I might want and I might not invest at all.

The ability to cash out by selling on the secondary market makes the investment more attractive and helps companies that need the cash to create and make product that people want easier.

OK, I get that. But what value do these “high frequency traders” add?

The honest answer is very little since they are buying a stock for $10.03 and selling a minute later at $10.10 they have not added any value to the process. Yes the seller got a buyer at 10:01 AM. Without that HFT in the process they would have still sold the stock at 10:02 but for $0.07 cents per share more.

Most sellers aren’t selling huge numbers of shares so the seven cents is unimportant but the HFT is dealing thousands of shares and if they only touch 1,000 shares that means they pick up a $70 profit. Now seventy bucks is nothing but suppose they do that with 100,000 in 1 minute ($7,000) and repeat that every minute with yet another stock on and on?

Remember that this is a computer program that never get’s tired or takes a break. They really aren’t adding any value to the process but they are adding cost to the market and driving up the price by that fraction.

When the government imposes a tax we expect that we are paying for some service that adds value to our lives – sometimes it actually works out that way. Same for fees that airlines or banks charge – sometimes we actually get some additional service for that money. The fraction that HFT adds to the cost of stocks acts as a tax or fee, increasing costs but returns no addition value to the seller, to the buyer or to society at large.

Wednesday, March 19, 2014

GM Key Recall

Time magazine online had an article on March 18, 2014 about GM naming a safety czar .

The problem is not that they need a focal for safety but just like Morton-Thiokol, of the Challenger disaster, their whole system is designed to keep bad news from the senior managers.

If their or your system is not specifically designed to reward the first person to bring a potential problem to management it will get minimized and buried by the lower level managers. The next big problem is that any manager who takes a problem to his boss is judged incompetent because he didn’t handle it at his level. But as in this case most managers don’t have the authority to fix the problem at their level.

The last big stumbling block is the false concept that you should bring your manager the solution not the problem. Most lower-level managers are “lower level managers” because they are still in training for the next level of responsibility. That means they should be bringing their boss problems they can’t solve and the boss should be using that problem as a training exercise to mentor that employee and prepare them  for their next assignment where they will know how to handle those issues.

Remember Colin Powell’s great quote - The day people stop bringing you their problems is the day you have stopped leading them.

This is a fast and short post because this is a fast and short issue! If GM had a decent system of reporting that elevated issues to the proper level this would have been handled in a timely manor. 

From the information in the article timely would have been several years ago.