8 Alternatives to Working Harder

It's remarkable to me how badly "working harder" works. I know hundreds of business owners, many through the membership of Chief Executive Boards International. The more I get to know these people, the more it becomes obvious that those who are successful "work" less than those who are just doing OK. By "work" I mean the less successful are working every day, rarely take time off, and spend most of that time working "in" their businesses. They seem to believe that the harder they work the more successful they'll be -- and it turns out that the reverse is actually true. 

Working hard is an ethic and a value. Working harder isn't a strategy.

I'm engaged on occasion as a business coach, and one of the first questions I ask a client is, "What will it take to run this business at 2x or 3x its current revenue?" Why? Because if I ask, "What will it take to grow this business at 15% to 20% per year?", I almost always get a "work harder" strategy. Many people, faced with a question of incremental proportions give an incremental answer. "We'll just sell 20% more, deliver 20% more, and I'll just work 20% harder." If executed, that would double the business in 3 1/2 years. And absent a different plan, the owner will be running his wheels off. 

That's why companies with a "work harder" strategy rarely grow at 20% a year for any sustained time. Everyone runs out of gas, including the owner. 

The alternative? Working less. Yes, working less -- particularly working less "in" the business. Selling, managing, following up, solving problems etc. Being the "go to" guy. That's a bottomless pit of effort that will consume you and return very little -- in fact the return diminishes as you burn out. There's no residual effect. Like lions and gazelles, you have to wake up and kill something every day or outrun someone else who's trying to kill you. 

Some people think "If I can work harder in my business, it will become more successful and I can take more time away from it." They have the cause and effect backwards. Working harder is a sinkhole you can't get out of. If that's the whole plan, you'll NEVER get time away from your business, either to work ON it and actually make it better or to just enjoy the money you're making doing something pleasurable. I talk to a lot of people in this mental trap, and they just can't extricate themselves. 

There are 250 days a year when you can go to the office, call on customers, and do the things you regularly do in your business. If you really want it to be better, here are 8 alternatives to working harder "in" your business. Try some time working "on" your business: 

1. Find a volunteer organization about whose mission you're passionate -- Put in some meaningful time on a project. You'll be amazed at the ideas and different perspectives you'll get working on something with other volunteers. You'll also be surprised at the value of expanding your business network.
     
2. Find a Peer Advisory Group of business owners and CEOs -- This is, by definition, time working "on" your business -- getting ideas, insights and knowledge of how to do things differently, in order to get a different result. Be sure it's a group who will be honest and direct with you.
     
3. Hire a Business Coach or outside Advisor -- Get someone who can help you visualize the business at 2x-3x its current size and can then help you surround yourself with the people you'll need to get there. Find out what's getting in the way of your further success. The time spent on these activities count as working "on" your business.
     
4. Form an Advisory Council for your company -- A standing group of people who are resources, not friends, and who will be honest with you.
     
5. Start building a Management Team -- Imagine the business without yourself. You're totally disabled and still need the income but can't go to work. What kinds of people would it take to run it for you? Can't afford them? How can you afford not to have them?
    
6. Read -- If you've made it this far in this article, you're on the right track. There's a wealth of subscribable content on the web, not to mention those old-fashioned things like books and magazines.
     
7. Attend (not exhibit at) Seminars, Workshops, Shows and Conferences -- Take off your "exhibitor" hat and put on your "attendee" hat. It's rare that you can spend 2-3 days at a workshop, show or conference and not get several ideas, any of which are worth the price and time of attending. Especially if you're not entangled in manning a booth.
     
8. Keep Track -- If this is a brand-new behavior, keep track of the time you spend working "on" your business. Set a goal, and then set another. 

How will you know when you've "arrived" with this strategy? When someone comes up with an unexpected trip, project or event you'd like to do that takes 3-4 days - or maybe a week, and you say, "Sure, I can rearrange things for that." Now you own a business -- not a job that owns you. 

Finally, here's a video that explains how all this works -- how you get "slow hunches" from each of these sources, and how those eventually culminate into your next "big idea". The likelihood of finding your next big idea heads-down in your business is almost zero. 

Remember, "Chance Favors the Connected Mind"

It's little wonder CEBI members are more successful than their non-member peers. They've chosen to put themselves regularly in a place where business owners can connect as each other's catalysts -- providing the missing piece -- so that, in Steven Johnson's words, "Chance Favors the Connected Mind." 

Do you have a Connected Mind, or are you trying to come up with good ideas all by yourself? Chief Executive Boards International could be a great resource for you, as it has been for thousands of others.  

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Terry Weaver


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

Incentive Compensation Not Working? Try Plan "B"

I recently had a conversation with a business owner about some troubles he was having with a sales person's incentive compensation. Not surprisingly, it wasn't working -- most don't.

In this case the problem was a "reimbursable draw". The way that scheme works is this:

• The job is designed as full commission. Most people initially can't handle that at home -- either they can't buy groceries or they can't sell it to their spouse. 
• Sales person comes to work in "training mode" at a base salary for, say, 6 months or so
• Then the salary changes into a reimbursable draw against commissions. Each month's draw is treated as an advance against commissions to be earned.  In this case, the commission plan was a "first-dollar" plan -- full commission is paid from the first dollar of sales (typical in straight commission)
• That's where the trouble starts. The draw remains in place, and any shortfall between commissions earned and draw paid begin accruing in an "advance" account. If commissions exceed the draw, they're applied first to any unpaid balance of the advance. Thus, the sales person doesn't really see her commissions in her monthly check -- until the advance is completely satisfied and commissions regularly exceed the draw floor.

The plan had become a demotivator, due the depth of the advance hole she had dug. Regardless of her success, this sales person was never seeing anything other than the draw, and it appeared it could be months, even a year, before that situation changed.

With some outside help, he redesigned the incentive plan. He changed it to a base salary plus commission plan, a variation on ideas described in "The #1 Incentive Compensation Plan Design Mistake"  The basics of the new plan:

• The base salary was reduced to a "subsistence" level -- about 2/3 of the former draw
• Rather than $0 commission for sales below a monthly "quota", sales below quota pay a small commission -- about 1/2 of the full commission rate
• At the monthly quota, commissions change to the full commission rate, and continue without any cap

There are several key success factors in this approach:

• The demotivating factor -- the "bottomless pit" of the reimbursable draw is eliminated
• There's some commission, although not a lot, paid every month, even if sales are below the monthly quota
• The commission steps up 2x for every dollar of sales north of the monthly quota

The result? Amazingly, that sales person "reignited". She began making more calls, resulting in more proposals and she's getting more orders. She's on track to succeed, whereas she had been on track to fail.

A couple of other observations. It happens that this plan is based on gross margin, rather than gross revenue. That's popular in businesses where the sales person has some pricing flexibility -- if she gives away gross margin, she contributes part of the discount in forfeited commission. That's insignificant in the overall plan design -- it only changes the commission rate (higher if gross margin based, lower if gross revenue based).

Oh, what about the pre-existing "advance" balance created by the draw scheme? He suspended that, saying it may be incrementally forgiven based on performance.

If you have examples of incentive systems that work (or don't work), please click "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


 

Just Say "Yes"

 
Nancy Reagan's answer to the drug problem in the US was, "Just Say No". Not bad advice for young people thinking about experimenting with drugs, and not bad advice for parents and business owners, on occasion. 

Probably not a good idea for sales or sales support people who are answering customer questions about a product or service. Technical people have the worst time with this. A customer says, "Can your product support 10 different users simultaneously?" Chances are he's been coached to ask that question by your competitor, who knows that your base offering supports only 8. And you know the average customer actually needs only 2 or 3. This is "killer feature" marketing -- your competition hammers away at fringe "features" where he believes he can divert a prospect's attention.

Technical guys, by and large, fall right into this trap. They'll answer this question with, "No, but if you needed to do that, we recommend an expander product, available from a third party." What does the customer hear? "NO", just what your competitor hoped he would hear. The solution offered, in technical circles, is known as a "workaround", and sometimes the technical guy will even say "we have a workaround", which perhaps even reinforces "No".

In a former life running a product business, I watched this happen, even in "command performances" in a headquarters Customer Briefing Center. We'd fly prospects in on private jets and then have a technical guy fall right into a "killer feature" trap our competitor had armed the customer with. I needed a fix for that problem, and one that was easy to train and propagate.

The fix was simple. Before the next Customer Briefing, I met with the technical guys who were going to participate, and explained the problem. These were bright guys -- they weren't trying to mess up. I said, "Guys, when those kinds of questions come up, I want you to give them the same answer -- just delivered a different way. Instead of starting the answer with "No" and then following "but" with the workaround, say, "Yes -- The way you would do that is...... and then explain the workaround"". Exactly the same information, and it has the added advantage of being true. The difference is in the customer's perception. So, the answer to the multi-user question is, "Yes -- The way you'd do that is with an expander, which you can add if you ever need that many simultaneous users."

They had no clue their native response was a problem. And they had no problem with the new script. Technical people won't misrepresent a product. Nobody should. What they will do, if coached, is present it in its best possible light.

This lesson isn't specific to technical people. Scripts are important -- in almost every job in your company. Don't expect people to "make it up on their own". When it's important what people say to customers and prospects (and it always is), script it. People will say and do the right thing if you define what the right thing is.

"Script the critical moves" is a change management principle brought to us in the book Switch, by Chip and Dan Heath. They say, "Don't think big picture -- think in terms of specific behaviors."  Here's a Book Review of Switch.

If you have examples of where you have (or should have) developed and taught scripts in your company, please click "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