Fail Fast, Fail Cheap

Here's an interesting business axiom. If you're looking at a new initiative within your business -- say, a new market segment, new product line, new territory, etc., adopt a "Fail fast, fail cheap" strategy. When I first heard this from a Chief Executive Boards International member, it sounded negative to me -- somewhat pessimistic.

On second thought, however, it meshed with another idea I'd heard years before from my friend Ravi Sastry, "You've got to play to win -- not play to decide."

Translated, both these ideas can be summarized in three words: "Go for it". If you're considering something new and non-traditional, go flat out. No reservations, no limitations, take no prisoners. And, at the same time, bound your risk. Determine in advance how much time, how much effort and how much money you're going to risk before making a "go/no-go" decision. Bet an amount that should be sufficient for success, but not enough to swamp the company if it doesn't work.

If you're going to fail, fail fast, and get it over with. Play to win -- go flat out with all guns blazing. And if you fail, fail cheap -- with as little capital at risk as possible -- with a bailout plan in mind. That way, you've ensured your ROI if it works, and you've limited your risk if it doesn't. Know what success looks like, and establish a hard deadline for making that call on whether the effort is successful or not.

If you've had experience with this type of decision (whether haven't yet made it or it just happened), please click "Comments" below and share it with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Don't Forget the "Why" When Initiating Change

Are you trying to redirect your company, with limited success? Perhaps you see a strategically critical change in direction that would set you apart from your competitors. Maybe it's a company culture that you've decided just can't prevail. Whatever it might be, it requires a change to the hearts and minds of a number (sometimes a lot) of people.

A Chief Executive Boards International member brought up such a challenge at a recent meeting. He said, "I'm trying to get my employees to see that we have to make a change in the way we do business, and they seem to be working harder to keep it from happening than they are to make it happen." Frustrating, to be sure, but common. And built into the human condition. People don't like change, and if they think they can resist it, they will.

One member offered an interesting perspective, asking, "How much time have you spent on helping them understand why this change is essential?" Good question. Many of us spend most of our time communicating what we want. We presume the why is obvious -- it usually is to us. Yet most employees don't have the same tune playing in their head as you do, so it's difficult for them to clap along. Their tune is on radio station WIIFM -- "What's In It for Me?" That's where the why comes in.

When you're communicating ideas that require your employees (or spouse, or kids, for that matter), to make a change, be sure you include the why along with the what, and that the why connects to their self-interest. Even if not fully convinced to go along, they'll be far less likely to be pushing back, and they'll see your wisdom over time.

If you've either been particularly successful or had a lot of trouble with change management, click "Comment" below and share your experiences with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Your Bank may be Your Critical Relationship for 2010

Believe it or not, your banker, not your customers or suppliers, could be the critical success factor for your business in 2010. In the last two rounds of meetings with members of Chief Executive Boards International, I'm hearing some appalling stories of banks bailing out on small business customers. These are CEBI member companies whose banks have told them their credit lines, never late, never in default, will simply not be renewed in 2010 ("we're just not interested in that type of business").

One member quoted a banker as saying, "We'd rather have one $2 million line than ten $200,000 lines on our books". And similar nonsense abounds. These are rock-solid businesses owned and run by rock-solid people. Something is bad wrong with the underwriting criteria that's turning these customers away. I don't know what happened to the TARP money, but I can assure you it's not being loaned to small business customers.

In most cases the bank's excuses have nothing to do with you -- it's something that's changed on their side. Maybe your banker and former advocate left. One member cited a bank that had suffered a $3 million default the prior week -- suddenly they pulled back his already-committed loan and he's shopping again. Maybe their marketing strategy changed. Who knows?

Those members whose banks haven't flatly refused their business are tightening the loan covenants on renewals -- higher equity requirements, higher depository minimums, etc.

So, what can you do? Go wide. If you're under pressure from your own bank, you need to put a package together -- company overview, strategies, etc -- just like you'd do if you were selling the company. And, of course, the traditional 3 years of financials and tax returns. You might as well stack it into one huge PDF -- you'll be sending it a lot of places. Then, contact dozens of banks -- not two or three, and do it in parallel, not sequentially. Your "bank package" will limit your initial contact time investment to a phone call and an email.

If you're not under pressure from your own bank yet, get to know as many bankers as you can -- you may need an alternative quicker than you think. Somewhere out there is a sane banker looking for opportunity. They're apparently few and far between, so it's a numbers game to find them.

And something else you can do -- a defensive strategy. If you even suspect your bank may be getting ready to pull the plug on you, make sure you have a second depository account in another bank (that the bank holding your note or line can't get their hands on) set up and ready in case you need it. If they really get the claws out, you don't want your operating capital within their reach. There's probably a covenant that says you're not supposed to do this, but if your bank with whom you've been a good customer for years suddenly turns on you, fair is fair.

Don't lose your nerve. Keep in mind they probably won't shut you down. These guys are not fools. They know that if you're dead you can't pay them anything. So, it'll start with threats, escalate to "workout", where they step up the principal repayments, etc. You don't have to go along with every demand. Stall, balk and resist, therefore buying you time to keep shopping for a bank that wants your business. The first "go away" date they give you is just for talking purposes.

PS: If you're a banker and reading this, be aware that if you want to, you can own the small business market in your city. The opportunity is there to bank good companies who have had years of successful track records, temporarily impacted by a lousy economy. They're still good people and they're still good businesses. The mainstream banking industry has abandoned this market, and it's yours for the taking.

If you have some interesting or bizarre stories about your recent encounters with banks, please click on Comments below and share them with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

The #1 Thing to Know About Addiction

Perhaps you have an alcoholic or drug user in your family or your company. Perhaps you've tried to help that person. If so, this article is for you.

I regularly marvel at the things I learn in meetings of Chief Executive Boards International. In a recent Board meeting, a member was looking for some help with a family situation. He had just learned from his daughter that his son-in-law had a serious drug problem, which she had discovered through some cash withdrawls from the household checking account.

He had already thought through many of the possible ramifications -- not only relative to his daughter and the survival of their relationship but also the son-in-law's employment, was he perhaps stealing on the job, and a host of other concerns. And he had formulated several ideas of how he might help with the situation. That's what he wanted to know -- what could or should he do to help this person?

One member brought up a somewhat relevant experience with a relative's addiction. Then the inevitable happened -- a second member said, "As an alcoholic who's been sober for 14 years, I can tell you there's absolutely nothing you can do to help him. In fact, almost anything you do is likely to hurt. Your only option is to get yourself, your wife and your daughter to an Al-Anon chapter."

He went on to teach the Board that the "wiring" of an addict's brain is different than that of the rest of us. We can't understand that person, his problem, or contribute at all to his recovery. It's a matter of something bad enough happening to him that he decides he has to find help for himself. Then he'll get cleaned up, and then he'll probably stumble again. And, hopefully, he'll come to realize that his only hope is total abstinence from drugs and alcohol.

The value of Al-Anon is the combined experience of millions of people spanning 5 decades learning to cope with the addiction of a loved one. People come to understand that they can become as addicted to the alcoholic or drug user as that person is to alcohol or drugs. And to understand how to find happiness for themselves whether the user quits or not.

If you have a friend, family member or loved one who is an alcoholic or drug user, consider the advice of a recovering alcoholic -- "get yourself to an Al-Anon meeting." This is similar to the advice they give you on the airplane, "Secure your own mask first before helping others."

If you have an alcoholic or drug user in your company there are a variety of resources available, including the U.S. Office of Personnel Management's Handbook for Supervisors: http://www.opm.gov/Employment_and_Benefits/WorkLife/OfficialDocuments/HandbooksGuides/Alcohol/index.asp A key sentence from that publication is, "The most effective way to get an alcoholic to deal with the problem is to make the alcoholic aware that his or her job is on the line and that he or she must get help and improve performance and conduct, or face serious consequences, including the possibility of losing his or her job." That's part of the "realization that something bad enough can happen that he'll decide to find help for himself."

If you've had an experience with alcoholism or drug abuse in your family or your company, please click "Comments" below and share it with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Make Everyone's Emails Sell for You

What if you could make a sales call on a customer, with no expense of either time or money?
One of the worst surprises to most sales people is when they discover that a customer has bought something they sell from someone else. This happens a lot more often than you'd think.

I've never quite understood the reason, but customers have a way of "boxing" their perception of your company around the initial products or services they bought from you. I think it's part of the general human tendency to want to remember things in the simplest of terms.

Overcoming this "box" the customers have drawn around you isn't easy. It requires not only reminding them of who you are, but also what else you do besides what they remember you once did for them. In that respect, they're almost like a new prospect that doesn't know you at all -- perhaps worse, since they already have a notion of what you do and, by exclusion, what they think you probably DON'T do.

So, you need a way to regularly remind customers of your full line of products and services. One member of Chief Executive Boards International suggested that you build into your automatic Email signature a short "commercial". Perhaps bulletizing your range of products and services or promoting something specific every month, rotating the email signature block message on a regular basis.

Not bad -- you'll be emailing customers and prospects anyway, why not let a bit of promotional material go along with it, including a hyperlink to that product or service on your web page? You could go as far as to institutionalize this, perhaps "rotating" that message across everyone in your company who emails customers or prospects. With a little practice, this could become second nature (of course, it has to be someone's job to get it done).

Give this a try, and let us know your experience with it -- just click "Comments" below.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

7 Steps to Turn a Complaining Customer into a Raving Fan

Most organizations hate handling customer complaints, partially because they're not very good at it. In fact, customer complaints are an opportunity to do either of two things -- convince the customer that his complaint is justified, and that you're even worse at what you do than he already thought, or turn the customer into a raving fan. Unfortunately, poor training and human nature conspire so you rarely accomplish the latter.

This conversation surfaced in a meeting of Chief Executive Boards International members where we were talking about vendors of which we're raving fans. One member said, "You'll never believe what happened the last time I called one of our vendors about a problem -- I felt so important." Wow -- a complaining customer felt important. Then she explained how that happened -- including 7 critical steps for turning a customer complaint into a good customer experience.

1. Listen -- Humans have the ability to think, listen and talk -- but only 1 at a time. Most people, when first receiving a complaint call, are spending none of their time listening and all of their time thinking about what they're going to say next. Pay really close attention to what the customer says, and he'll tell you what needs to happen to make him happy.
   
   
2. Apologize -- Whether it's your fault or not, apologize. Most people who have been married very long know how to do this. Even if it's entirely the customer's fault, you can still apologize for the fact he's had a problem.
   
   
3. Let him you know you believe him -- You'll catch a complaining customer completely off-guard if you acknowledge the fact that they had a problem -- even if you're just acknowledging that they believe they had a problem.
   
   
4. Let him know you'll work it out -- You're not saying you're opening the company's checkbook to them -- just say,"I'm sure we can work this out to your satisfaction."
   
   
5. Ask a lot of questions -- Open ended questions are the best. "When did you discover the problem?" "What happened then?" "What have you tried?" "What can we do to help?" Again, taking an active interest in the problem and in a real solution path totally disarms most complaining customers. Make sure you have all the facts, and give the customer every opportunity to vent everything he's saved up before dialing the phone.
   
   
6. Outline the next steps -- If you can fix the problem right away to the customer's satisfaction, tell them how you'll do so. If it requires some lead time, be honest about how long it will take. And, if you need to, what other resources or analysis will be required to make sure the problem gets solved for good.
   
   One vendor of whom I'm a raving fan, American Express, has a fascinating way of handling problem calls, usually in 1 pass, even though another person or department may be required. They say "I'm going to get the _____ department on the line and they'll take over from here." Then you find yourself in a 3-way "handoff" call, where the first Amex operator introduces you to the second, makes sure he understands why you're calling, and then excuses himself from the call.
   
   Bank of America, on the other hand, sometimes offers to transfer your call elsewhere, during which 50% of the time your call is lost and the other 50% of the time you end up talking to the wrong person. Other times they just give you another 800 number ("you're in the wrong department" -- like it's your fault) and you're on your own through another voicemail purgatory.
   
   
7. Let them know you'll be following up on the problem with whomever needs to take the next steps. And then do it.

Reading through this formula, you might say "that makes a lot of sense", but precious few companies do anything like this. Why? Because they're populated by humans, and several millenia of conditioning turn on the "flight" or "fight" response to a complaint call -- they get defensive. And they start doing further damage.

Note in the above, nowhere does it say, "Tell the customer what he did wrong or who else's fault it was at your company (of course, it's not yours)." When you call Bank of America about a nuisance service charge that's not supposed to be on your account, they usually say "the computer does that sometimes." It's 2009 and they think you'll believe that computers just "do that sometimes"?? Actually, what they think is you won't notice, and you'll just pay the nuisance fee.

The key to this strategy is training -- it's not instinctive. You'll need to train your staff to walk through a customer complaint call "by the numbers", rather than rely on their own instincts, which will usually fail the average person.

If you have similar experiences where your complaint call turned into a good experience, please click "Comment" below and share them with us. If your company has an especially effective customer complaint management process, please click "Comment" and share that, as well.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com