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May 2010

The Mistaken Perception of Mistakes

We all make mistakes. Companies make mistakes, too. We can try our best to prevent them, but it’s often how we rebound from our mistakes often that ultimately defines how others view us and shapes our success.

 

78322016_Mistake

I thought about this as Facebook responded last week to its apparent misstep of exposing too many personal details of their users while not offering them easy-to-understand privacy controls. After a few weeks of negative feedback, the company unveiled a new, simpler privacy policy, but it has yet to say it made a mistake.  The months ahead will tell if Facebook can regain its reputation as a safe place to network.

 

There are several classic examples where companies have done a great job being upfront about mistakes or were even able to turn them into success stories.  For example, in 1982, Johnson & Jonson recalled and destroyed 31 million Tylenol capsules at a cost of $100 million when the product had been tampered with. The CEO appeared in television ads and at news conferences informing consumers of the company's actions. Tamper-resistant packaging was rapidly introduced, and Tylenol sales swiftly bounced back to near pre-crisis levels. 

 

Then there’s the well-known failure of New Coke. People remember that it infuriated long-time consumers, cost a ton of money and lasted only 77 days before Coca-Cola Classic was reintroduced. Still, New Coke could be viewed as a success because it reattached the public to the Coke brand and revitalized sales (back to the No. 1 one spot ahead of Pepsi).

 

In many ways, companies and individuals should adhere to the same set of principles when a mistake occurs. Amy Gallo, Harvard Business Review Best Practices writer, offers these solid guidelines in her recent article on mistakes:

 

Do:

  • Accept responsibility for your role in the mistake
  • Show you've learned and will behave differently going forward
  • Demonstrate you can be trusted with equally important decisions in the future

Don't:

  • Be defensive or blame others
  • Make mistakes that violate people's trust — these are the toughest to recover from
  • Stop experimenting or hold back because of a misstep

The last point is particularly important to remember in any discussion about mistakes. A key skill for businesses managers to acquire is identifying when it is acceptable to make mistakes. In the health care industry, mistakes in patient care are unacceptable. But it is still an industry that needs rapid innovation – particularly in the area of processes – and one that can benefit from some calculated risk-taking.

 

Paul J.H. Schoemaker, chairman and CEO of Decision Strategies International and research director for the Mack Center for Technological Innovation at the University of Pennsylvania’s Wharton School, says organizations need to make mistakes in order to improve and should be the least afraid of mistakes when:

  • Fresh approaches to a complex problem are needed
  • The potential learning from a failure far outweighs the potential cost

In a time when Six Sigma, Lean and other forms of process improvement are becoming more pervasive, the way we address our mistakes is an important aspect of business now more than ever.

 

When we view mistakes as learning opportunities and not something to hide, it’s possible to have an environment where accountability is balanced with transparency, and that creates an environment geared for success.

A quick check point on your brand

TimBCsm Yesterday, I was sitting at Caribou Coffee, chatting with a business colleague.  As it always happens at Caribou, several people that either knew me or the guy I was with walked in...and walked over to the table to say hello. 

Most of them were already with someone else and I got an awesome lesson in branding.  In almost every case, the person who knew one of us made an introduction that sounded like this:  Bob, this is Drew, he's THE (fill in the blank) guy in town.

Now, we've all heard about personal branding and having our :30 elevator speech.  But this is THEIR elevator speech about you.  Typically, it's much shorter than :30 (maybe we should take a cue?) and gets right to the point.  They are, in one sentence, summing up your unique offering.

Or not. 

If they just state your title or your name -- you probably haven't left that significant of an impression on them.   Start paying attention to this.  If you get the blaise introduction -- you need to do something different to plant in their head a stronger statement about who you are.

How do you do that?  Here are some ideas:

  • Start introducing yourself in a single sentence.  "Hi, I'm Sue and I'm the "how to save money on your health insurance" expert in town."
  • Have a title that makes it easy to remember and label you.  (Over at McLellan Marketing, we've got a Warden, Brand Warrior, Sgt. of Strategy, etc.!)
  • Change your e-mail signature to reflect how you want to be known.
  • Use the language in your company name (like local business that video guy), Twitter handle, or on Facebook.

Bottom line -- naturally, you will  influence the way someone introduces you the slow way (behavior, results)  but there's no reason you can't give it a purposeful nudge as well!



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Iowa's 10-year business sale tax break

Typical Iowa Farm, Muscatine County, Iowa.Image via Wikipedia

What do you need to hold for ten years?

If you run a business in Iowa and it goes well, you might be able to hang in there and stay in business for 10 years or more. If it goes really well, you might be able to sell out for a nice profit. If all that happens, you might get to cash out without paying Iowa tax on your capital gains.

Iowa has a special tax break for for capital gains of businesses when you meet two conditions:

- A 10-year holding period, and
- Ten years of material participation at the time of sale

You can qualify if you sell substantially all of the assets of the business in a single sale, or on any sale of business real estate, such as farmland.

But if you have owned the business for 10 years and you sell, do only the assets that you've held for 10 years qualify for the break? If you bought a new location seven years before the sale, will that qualify?  A newly-released letter from the Iowa Department of Revenue says it does:

The rule does not require each individual asset be held more than ten years. Since the asset was held more than one year, the deduction should have been allowed.

A few other things to keep in mind:

- Holding period rules follow federal holding period rules -- so holding periods of gifted assets, inherited assets and like-kind exchanges go back to the original purchase date.

- "Material participation" is determined under the federal "passive loss" rules.  That means for most businesses, you have to sell within five years after retirement to qualify.  A special rule allows retired farmers who have 10 years in the business to sell anytime.

- The exclusion is not available for a sale of stock or of a partnership interest, except for gains on liquidation for a corporation that has made a qualifying sale of substantially all of its assets.  

- It only applies to capital gains.  If part of your gain is from the sale of ordinary income items, like inventory, that will still be taxed by Iowa. This is another reason to pay careful attention to how you allocate your sales price.

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Mediation in Business

Cropped portion of Abraham Lincoln Photograph,...Image via Wikipedia

Most of my business clients see mediation as the thing you do when you are almost at the end of litigation.

Mediation can be a cost-savings tool if used early when a dispute is still minor.

Times to use mediation early:

1) You have a good business relationship that you would like to save

2) You suspect the other party "doesn't get it"

3) The other party says you "don't get it"

4) The best solution involves something other than just money

A mediator may help you find resolution while you can still afford it. You may use mediation to resolve issues with suppliers, contractors, employee and customers.

Find a great mediator the same way you find a great lawyer:

   a) Ask trusted advisors

   b) Research credentials

   c) Interview more than one and make comparisons

Getting to the solution may be easier if you have someone who specializes in facilitating calm meaningful negotiation. As Abraham Lincoln said, "Discourage litigation. Persuade your neighbors to compromise whenever you can."

-  Christine Branstad

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Building a Culture of Well-Being

Cover of "First, Break All the Rules: Wha...Cover via Amazon

You can count on the Gallup Organization to do good work. They gave us "First, Break All the Rules" and StrengthsFinder. Now, with "Wellbeing: The Five Essential Elements," they've once again come up with valuable insights into worker engagement and productivity.

Gallup researchers Tom Rath and Jim Harter studied people in 150 countries - from Afghanistan to Zimbabwe - to explain how people experience their days and evaluate their days overall. In other words, what makes people feel truly satisfied overall? Experience a sense of well-being? They analyzed hundreds of Gallup's global surveys involving millions of respondents. I mean, these guys were thorough.

A couple of key insights emerged. Here they are. Think about what these insights mean to you as a leader and to your role as culture-builder where you work.

#1. Five core dimensions are universal elements of well-being. Achieving nirvana in one or two at the exclusion of the others doesn't work. They require a holistic perspective in order for people to achieve well-being. Take a look. Is your work culture "well-being-friendly"?

Career Well-Being: Feeling appreciated as a person and not just as an employee, respecting management, looking forward to going to work each day, enjoying the company of co-workers, feeling pride in the organization you work for

Social Well-Being: Having good relationships at work, friends, a support system for weathering tough times

Financial Well-Being: In control of finances, frugal but not pinching pennies, aware of costs and in control of expenditures

Physical Well-Being: Lots of energy, healthy eating, getting sufficient rest as well as regular rigorous exercise

Community Well-Being: Being actively and productively engaged in the community and neighborhood groups, being part of meaningful activities like Crime Stoppers, homeowner association, PTA, Red Cross, et cetera.

#2. The secret to a happy life is rooted in interactions with co-workers and the boss. Remember the saying, "People don't quit a company; they quit a bad manager?" Gallup's latest research supports that.

Good managers know what their employees care about, see them as individuals, know what's going on in their lives and are interested in their career development.

Good managers see their employees as unique individuals, know their strengths, celebrate their successes and are clear about expectations so their employees know what they're supposed to be doing on a daily basis.

Good managers understand the importance of socializing at work. Productive employees are engaged employees and they likely have a best friend at work with whom they chat and interact.

Intrigued? Each copy of the book has a unique ID code for Gallup's online "The Well-Being Finder," a program designed to help you track and improve your own well-being, as well as gain insight into supporting a culture that supports the five elements. Check it out.  

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Using OPM or Sweat Capital to buy a business


I receive a number of calls and e-mails from individuals who would like to buy a business. Typically, they are very talented individuals who have made a great deal of money for other people and would like to start making money for themselves. 

Their problem, generally speaking, is a lack of capital. As most of us know, buying something without the “cash” requires credit in some form. I usually take the individual through a process to help them explore their options:

First, you must have a proven history of success in business and with people.  If so, you now have a saleable benefit.

Two easy options to explore are:
OPM (Other People’s Money): Do you have or know of people who would be willing to invest in you?  If you have a proven record of success along with a great business opportunity, you will be amazed at how many people will be willing to invest. Just remember, you still have to report to the investors. And you can’t make all the rules, until you own it.

Sweat Capital: There are many businesses that are in need of proven management, specifically businesses that have fallen on hard times; not because it is a bad business, but just poorly managed by the owner. For whatever reason, the owner has lost interest, the business out grew them, the employees are no long motivated, et cetera. These are ideal situations for someone with a proven track record.  Generally the owner and the potential buyer (you) agree to let the potential buyer come to work as a (a possibly unpaid) consultant based on agreed to criteria. And if you prove yourself  - let’s see what you got kid - then you will be awarded a position with the company. Naturally, to go along with your new position, would be an agreement spelling out the terms and conditions which would allow you to buy into the company by using your “Sweat Capital”.

Sweat Capital may be a unique way to buy a business if you lack investors; it may be the only way to accomplish your goal.

Feel free to contact me if you have questions or would like to have a discussion.

- Steve Sink

Who are you?

98139762 No, not “The Who” as in the recording artists, but who are you when it comes to your business? Take Willis Auto Campus and Karl Chevrolet here in Greater Des Moines.

Arguably, they are two of the largest and best auto dealers in the area; yet it is very unlikely that a customer of Willis will change to Karl for a like purchase (or vice versa). Remember I said “like purchase.”

The same client will buy a Chevrolet truck from Karl and a Lexus RX from Willis. So should Willis sell Chevy trucks or should Karl sell Lexus cars?  Not in the same business location with the same team. Why? Customers hate to be confused.

The process and motivation for a Chevy truck purchase are entirely different than that of a Lexus purchase. Sure, both dealers employ car sales specialists, mechanics, service advisors and the like. Sure, those from the industry can argue the processes and training are the same at the core.

The thing is the customer expects the experience to match the product. The very best sales specialist will tell you that their entire approach, demeanor, dress, pace, style and advice will be dramatically different in each dealership. The best owner-operator of a dealership will tell you the same when it comes to the look of the dealership: the experience upon entering the store, the way the service department greets the customer and just about every other detail involved in purchasing and maintaining a car or truck.

So is one wrong and one right? Not at all. Each is focused on who they areas well as what their customer expects, wants, desires and will react to in a positive way. What happens when the Chevy truck buyer goes into the Lexus store and is overwhelmed or priced out of the market? The smart dealer knows that was not its target customer.

Have lunch downtown Des Moines at Centro or South Union Bread Café. Both are open for lunch, both are owned by the same owner group. They probably share a few ingredients. Take five steps into either and you know what to expect. At Centro, you will dine. You will be served very well. You will choose from a wide variety of foods and you will probably be there for a while. South Union Bread, on the other hand, speaks “made to order’ quickly and correctly. Thirty minutes for lunch? Not a problem.

To start and grow a business that will last the test of time, stay focused on who your customer is and what the customer wants. Focus on a few niches and don’t try to serve all people from the same location or environment. Stay true to your customers’ needs over time. It costs a lot more to find a new customer than to take care of the regular, repeat customer. Do these things and your regular, repeat customer will recommend your business time and time again.

Mike @the Biz

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You Can Teach a New Dog Old Tricks

Betty-white-snl-host It was refreshing to watch Betty White host Saturday Night Live a couple of weeks ago.  It's been a while since I watched the show just because the writing has been a bit sluggish, and the current set of actors don't seem to keep pace very well.

With Betty White came a host of former SNL stars to save the day (and give her a comedic backdrop) for her brilliance.  The really great thing about it all was her age and experience served as an asset to the show.  One could tell both the writing and acting stepped up a notch for this grande dame of the small screen.

In your projects, are you tapping the experience of the ages?  It's interesting to talk to the "old guard" of project management vs. some of the newer PMs.  No, we don't sit around with our walkers commenting about how the PMP exam took all day to complete back in the day (well... it did) or how they drew their Gantt charts by hand (they did, too).

But experience in project management teaches you the same things any seasoned comedian knows:  rhythm and timing.  We learn when to be quiet until the opportune time for a punchline.  We know our blocking, where to stand front and center on stage and when to support somebody else in the limelight.  We know how to play off of the strengths of others to make the whole team look better.

There are a lot of really great project management blogs out there.  Heather Buckley was kind enough to consolidate quite a few of them that I visit... and these are some brilliant bloggers AND project managers.  Check out her post and her links.  There are some really amazing "old dogs" who know all the "old tricks" to project success.

So if you're a project management neophyte, before you try to wow everybody with your freshly minted PMP and your vast knowledge of all of MS Project's tools, stop and take a deep breath.  Check out some of the old dogs who have done it really well for years and years before you were even in the work place.  They may be able to teach you a trick or two on stepping up your game before you step on anyone's toes.

Live from Des Moines... it's Wednesday Morning!  (Ya know... it just doesn't have the same kick.)

Carpe Factum!

All the (Business) World's a Stage

William ShakespeareWilliam Shakespeare via last.fm

One of the most difficult concepts to teach front line customer service representatives is that the job sometimes requires you to act. I may be having a string of bad luck, a difficult life, or a bad hair day, but my job is to serve the customer with a smile on my face and to give that customer my best (even if I don't feel like it).

Disney has made their concept of every employee being a "cast member" a legendary concept. Business, however, has had a difficult time translating the concept into the call center, the cubicle, or the local strip mall.

One of my associates is a great coach, and she regularly tells her charges that their shift in the customer service role is "the 9-to-5 show starring you!"

The reality is that all Customer Service Reps have much to learn from good actors:

  1. Voice-tone. Your voice is a tool and you can control the inflection, power and pace. A great CSR, like a great actor, knows how to control their voice to communicate effectively in a wide variety of circumstances.
  2. Focus. One of the disciplines of stage actors is the ability to maintain focus on their role despite a myriad of things that may happen beyond "the fourth wall." Audience laughter, heckling, crying babies and cell phones threaten to distract them at all times, but they focus on the task at hand. CSRs can equally be distracted by any number of things, but great CSRs focus on their customers and resolving the issue at hand.
  3. Discipline. Great acting takes discipline to memorize lines and blocking. Even the art of improvisation (though it seems like a contradiction) is a well-honed discipline which requires effort and practice. The same can be said of great customer service. Learning procedures, processes and how to improvise in difficult conversations requires time, attention, training and practice.

A few businesses have discovered that CSRs have much they can learn from actors. After all, "All the world's a stage (even the business world), and we are all merely actors in it."

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Staying focused

98461833Recently, I had coffee with a friend and colleague with the purpose of discussing useful Twitter applications. Due to both the nature of the discussion and personalities of two people excited about the current and potential use of social media, the discussion went in many directions.

At one point, he asked a very important question: But who has time to do all of this?

Organizations recognize a need to dedicate resources – not only money, but an arguably more valuable resource: time. Then there is something else those making decisions about social and digital approach should consider: focus.

Establishing and maintaining a clear direction – both toward the goals of the organization and in the execution of social media strategy – is particularly important to those with the goal of managing an ongoing social media voice in-house.

We already had a degree of transparency online prior to the increased amount and widespread use of social media tools. With them there is a greater amount of visibility, which is fabulous on many counts. It also creates pitfall potential, such as a loss of focus.

How competitors are successfully using social media is a common distraction. It is smart business practice to be aware of what others in the industry are doing. Reacting to it, changing course because of it, and chasing what others are doing is what will eventually cause a business to build its own roadblocks. If you are running toward the plan of another, you are running away from your own and you will never be in the lead.

Other culprits of digital derailment are the many social media tools, applications, uses and platforms. Avoiding the scattered approach that comes as a result of chasing the latest and greatest thing will help keep the strategy on track.

Establish short and long term plans, with goals that coincide with the overall goals of the organization and with a timeline that provides enough time to fully develop a strong presence for each profile such – e.g. Facebook, Twitter, Google Buzz.

A social media approach headed for success is the one that knows and chases its own goals.

- Christine Stineman



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Your behavior is your true transparency

91355052 Everyone talks about social media and its amazing marketing impact.  And I'm the first one in that line.  I've seen the impact first hand, both for my agency McLellan Marketing Group, our blog and for our clients.

But...that impact is not one-sided.  While it can do remarkable things for a business, it can also do damage.  Here's the funny thing about transparency (the buzzword du jour for social media).

It's transparent.

Social media are a set of tools that expose you and your business -- good or bad.  But it's more than just the tools.  It is also a dramatic shift in attitude.  It's choosing to put yourself or your business on display -- call it the marketing equivalent of wearing your heart on your sleeve.

Unlike traditional marketing tools, such as print ads or direct mail pieces, you don't get to turn it on and off.  It's not a prescribed exposure.  You're either out there...or not.  But if you are out there, it's a 24/7 deal. 

  • Tout remarkable customer service?  Then, your tweets and Facebook updates had better demonstrate that commitment. 
  • Profess to be a blogger?  Then, your blog should be updated on a regular basis. 
  • Tell everyone that you believe your people are your greatest asset?  Then how they talk about your company in their own social media interactions better reflect that mutual respect.

Because social media tactics are ongoing conversations rather than one time exposures, it's much harder to sustain a fallacy.  Sooner or later -- the true you/your company shows through.  And that's the point. 

If you walk your talk, social media can offer you an incredible opportunity to create connections with raving fans who can and will actually come together to help you promote the work you do. 

But, if you're a poser of any sort -- they'll ferret that out too.

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Generations in the Workplace

Kudos to the Business Record and Merit Resources for bringing in David Stillman of Bridgeworks to Photo_david2 discuss Bridging the generation gaps at work. David's lively presentation covered the nuances of the four prevailing generations in the workforce, while at the same time providing insight and solutions that workplaces should be implementing. Stillman was in town to promote his new book "The M-Factor." Stillman's presentation analyzed each of the four generations their influences and traits, and pinpointed areas of engagement for each.

Traditionalist - Influenced by roaring 20s, Great Depression, World War II, patriotism, loyalty, conservative, and have faith in institutions. Stillman pointed out that most workplace culture is based on Traditionalist influences. The key take away was that the legacy of traditionalist can not be dismissed. While it may appear traditionalist don't like change, a look at their historic experience says otherwise. They can accept change if it is an evolutionary change rather than a revolutionary change, or something that builds on their legacy rather than dismisses it.

Baby Boomers - influenced by Vietnam, Watergate, civil rights, suburbia. Stillman pointed out the 80 million boomers in this demographic has forced them to be competitive in order to stand out from their peers. Growing up in an amazing time, they wanted to, and and still want to do, amazing things. They are masters at internal politics, but flunk at delegating. Aging parents and close knit relationship with their kids has made them a very needed generation, but it has also caused some burnout. Reminding these workers how their work is having a positive impact on not only the job, but themselves and the world will go a long way with keeping Boomers happy.

Generation X - Grew up during a period with high divorce rates, more than 23,000 hours of TV viewing per person and the personal computer. This generation, while often chided as lazy, slacking and pessimistic, doesn't see itself that way. A very self reliant, resourceful and eclectic group, Xers have supply and demand on their side. The relatively few 45 million of them has allowed the group to be less competitive and more independent. Their experiences  have caused them to be more skeptical and rightfully so. Stillman encourages work places to embrace this skepticism, for there is at least a kernel of truth in it usually.  And while members of Generation X are realistic in their understanding that Boomers are not going anywhere so their chances of vertical movement are limited. there is an innate desire to still move, to still learn, to still grow. Providing Xers with more frequent feedback, keeping opportunities for professional development and allowing for additional opportunities to move laterally within the company may satisfy Generation X's workplace need.

Millennials - Influenced by terrorism, technology and their Baby Boomer parents. Concerned about global outlook, more collaborative. We've touched on many of their traits, concerns, and approaches in this blog before, so I won't rehash any of those, except one. Stillman did emphasize that with this group meaning matters, and being able to demonstrate how their job helps accomplish the larger mission goes a long way with this generation that is apt to give back. He also encouraged workers to allow Millennials to be part of the decision making process, even if their approach is naive it still creates an opportunity for them to learn and be mentored.

Great insights from a team I consider the best on the subject of generational behavior. This event was more broad based than the last time Bridgeworks was in town with their Millennial speaker Seth.  It would have been interesting If the two could have switched with David coming to the Power Breakfast and Seth speaking at this event, given the marketed focus of each event. More Millennials and Gen X young professionals need to hear these insights, but at this time and place in their career it might be tough for them to attend events like these on a weekday morning. But scheduling events like these with high demand speakers are never easy. It would also have been nice if Mr. Stillman could have stayed longer for followup and questions. But again, scheduling events like these with high demand speakers are never easy.

Kudos again to the Business Record for bringing him in.

Old School Networking + eSchool Networking = High Network Quotient

Networking on flickr by Art Comments Old School Networking

During my first week as an executive search consultant in the insurance industry - more than a decade ago - I went to a conference in Arizona.  During a break, I introduced myself to the keynote speaker, Carl Van.  I told him that I had just begun my career. We spent about 20 minutes talking in the conference center.

Later, he introduced me to Phil Schreiner, editor of Claims Magazine, a National Underwriter publication and the magazine that sponsored the conference. 

A few months later, Phil suggested to Jim Jones, director of the Katie School of Insurance at Illinois State University, that I would  be a good source for an article he was writing on the recruitment and retention of insurance professionals.  After the article was published, Jim and I were asked to speak at the next national conference on the topic.  We were brought back for two more years.

At one of these conferences I met a manager from Ohio who gave my card to his vice president in Philadelphia, who in turn asked me to do some recruiting for one of his regional VPs in California.

A few years later, Jones introduced me to the VP of a company in Illinois who asked me to recruit a director. I called the Regional VP in California who had since moved to a different company.  He wound up taking the job and moving to Illinois.

I had to hammer the phone, network in person, travel, speak nationally and do all the traditional marketing to develop this high network quotient.

Facebook LinkedinTwitter eSchool Networking

In late 2009, I started following a Des Moines consultant on Twitter. (Or he started following me, I don't know which.) I saw that some of my Facebook friends were following this person, so I invited him to become Facebook friends. 

Eventually, we met at a reception. He told me that he had been reading my blog and had been to my website. He said that he had thought about calling me in the past to learn more about my business.  Naturally, I invited him to meet me for coffee.  After about a month, our schedules finally converged and we got together.

The interesting thing about that meeting compared to many "first meetings" that I had in the dark ages before social media was that we already had built some rapport. Our business conversation went from the shallow to the deep end in no time. By the time I finished my second cup of coffee we had agreed in principle to do business together.  

High Network Quotient

Using social media tools such as Twitter, Linked In, Facebook, and blogs to engage your target market means creates awareness and familiarity with your personal business brand.  It means you make more warm calls - rather than cold - and reduces the time required to establish rapport.

Add some old-school engagement with the community and face-to-face networking skills with the ability to connect online and you will maximize your network quotient.

Simply put, seek to master both the Old School and the eSchool

“Nobody expects the Spanish Inquisition!” (Legal Defenses to Contracts)

"Nobody expects the Spanish Inquisition!&...Image via Wikipedia

My last post was a sprint through the factors to consider when seeking to avoid contract obligations. In some cases, you may be seeking avoidance due to an unforeseen event where release of obligations is a fair and legally justified result.

 

Contracts for future performance (executory contracts) are formed to promote stability and certainty of business relationships. Although we would like to believe that the best-laid plans will follow through swimmingly, nearly all contracts are premised upon assumptions, which, if incorrect or modified may result in unfairness. Natural disasters, changes in governments and legal systems, or sudden enforcement of orthodoxy laws by an ad hoc tribunal (e.g. The Spanish Inquisition) can render a contract relationship not only undesirable, but absurd.

 

The doctrines of Impossibility/ Impracticability of Performance and Frustration of Purpose are the main avenues used to justify termination of service contracts.  Contracts regarding goods have different rules on this subject governed by the UCC.

 

Impracticability for services contractsImpracticability is more that the etymology of the word suggests. For an unforeseen event to render and contract "impractible", the following must be true: 

(1) occurrence of the event (or the 'condition') must have been assumed not to occur when the contract was made,

(2) that event makes performance extremely expensive or difficult, and

(3) there is no contract provision for "unforeseen events".

 

Impracticability for good contracts: The UCC generally governs contracts for goods. Again "impractability is more than the word suggests. A party who undergoes an event that creates expenses or difficulty  cannot excuse performance, but rather that party must allocate their limited resources between current customers and inform them of change, reason, and the expected timeframe. Increased expense does not usually constitute impracticality under the UCC.


Impossibility: Impossibility mirrors impracticability, except that the unforeseen event renders performance impossible rather than just expensive or difficult.

Frustration of Purpose: This occurs when an unforeseen event removes the principle purpose that one party entered the contact to obtain. To use this defense, both parties had to have known of the principle purpose at the time they entered the contract, and the event that created issue could not have been foreseen at the time of contracting. These situations may appear similar to those in impracticability as one party, typically the paying party, could still perform their aspect of the contract, but their reason for the contract is removed.   

 

Since a legal defense is a justification for terminating a contract, possibly in a manner that is unfair to one party, the party seeking termination needs to make a very good case.  In Mel Frank Tool & Supply, Inc. v. Di-Chem Co., 580 N.W.2d 802 (1998) the Iowa Supreme Court considered a lessee’s claim of impossibility to get out of a warehouse lease that the lessee used to store chemicals. After the lease began, the city passed an ordinance restricting the storage of hazardous chemicals.  The Court stated that Di-Chem did not establish that all their chemicals stored were hazardous and therefore did not meet their burden to excuse performance through the frustration of purpose doctrine.

 

Sophisticated parties may agree to waive the right to the aforementioned legal defenses.  These are commonly called “hell or high water clauses” and typically mandate continued payment in the event of an unforeseen occurrence that would normally frustrate the purpose or render performance impossible/impracticable.

 

Another option is to simply agree which party bears the risk of unforeseen events thorough a “Force majeure” clause.  “Force majeure” is “an event that can be neither anticipated nor controlled.” Black's Law Dictionary 657 (7th ed. 1999).

 

Legal defenses which void contracts are intended to avoid unfair or even absurd results unless parties agree otherwise. Plan for the expected; and plan for the unexpected by agreeing who will be responsible.  Or risk finding yourself in the position of that Monty Python character who said “I didn’t expect the Spanish Inquisition.”

 

- Christine Branstad

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Gaining Perspective Through Adventures

Image of a Bösendorfer piano, taken in the Gut...Image via Wikipedia

Leading is an adventure. Especially in this fast-paced, rapidly-changing world. Regardless of the industry or the marketplace in which you play, few leadership competencies are more critical than perspective:

  • Being able to think globally.
  • Seeing issues and challenges from the broadest possible view.
  • Posing future scenarios with ease.

Where does perspective come from?

It's not about graduating top of the class necessarily or coming up with 50 ways to build a better mouse trap. It comes from living a life as an adventure:

  • enjoying a breadth of diverse interests
  • looking for unique opportunities to experience new cultures, tastes, sensations -- in new and unusual places
  • being curious about how things work, how they connect, and "what ifs"
  • enjoying Qs more than As, and absolutely loving "maybes"

Live life that way -- every day -- and as a leader, you'll have a huge repertoire to draw from when you need a new idea or a strategy for a situation you've never faced before.

Remember's history fascination and admiration of the "Renaissance Man?" It was perspective that fascinated us -- their breadth of knowledge and interests and pursuits.

Develop perspective. Start today, wherever you are on that continuum between "narrow and parochial" and "curious and global." Resist the temptation to "lean in" and select on your iPad or smart phone only those topics and apps that currently interest you. Do what the burgeoning hi-tech industry calls "lay back" by broadening your data stream to include intriguing new topics and options that you've never explored before.

Try these tips and tricks and techniques to enhance perspective.
  • Read international publications and autobiographies of people you've never heard of. Pick a country and study it. Read the Wall Street Journal and Inc. and jot down three interesting things that parallel what's going on with you. Learn to connect what's out there, with what' s in here.
  • Pick something to dabble in that you've not paid much attention to before -- the opera, MTV, learn to play the piano, romance novels, be a Big Brother/Big Sister, learn to juggle. What new connections surface for you? Your brain is gaining perspective without you even working at it.
  • Volunteer for a task force or a cross-functional team at work that requires you to learn other functions, businesses or nationalities, helping you see connections to a broader world and from a number of diverse viewpoints.
And finally, see life as an adventure. It is. But you have to acknowledge that fact and show up that way in order to broaden your perspective and enhance your leadership. Enjoy the ride.
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Eight hard-won lessons on buying a business

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1.  Be proactive in your search for a business. Reactive responses usually create negative results.

2.  Know what you want. Have a clear definition of your requirements before starting the process.

3.  Set limits. Implement strict financial disciplines.

4.  Due Diligence. Look beyond the numbers to the culture fit, the human resources and the strength of the management team.

5.  Be prepared to walk. Do not let emotions dominate the decision making process.

6.  Terms. It is not the sale price, but the terms that make most deals affordable.

7.  Taking over. Have a detailed plan on how the transition will be executed.   Timing is a key issue.

8.  Know what it will be worth if your plans are successful.

Good hunting!

- Steve Sink

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Soft Serve

Icecream_softserve What can I say?  I love Snookie's Malt Shop.  Oh sure, there are plenty of great ice cream shops around Des Moines, but there's just something about the atmosphere at Snookie's that makes it special.  And they do whip up one heck of a great soft-serve ice cream.

There's another kind of soft serve which is really great... it's your people skills.  I'm in the middle of teaching a two-day class for the University of Wisconsin-Milwaukee on Business Analysis.  It is an overview class, so we're covering a lot of material.  When I was developing the curriculum, I asked all of my business analyst friends what their top priorities would be for such a class.  The answer was almost consistently "soft skills."  In project management, we do a lot with plans and schedules and budgets and scope documents; however, knowing how to do all of those will not mean anything if you can't communicate and influence people.  Understanding how to manage office politics, how to be creative at the drop of a hat, how to handle conflict better, and how to sell your ideas effectively.

I know some project managers who are masters of the technicalities of our trade, but who are dismal failures at the practice of project management.  Why?  They've never put an emphasis on the "soft serve" of the job.  As you are working to become a better project manager, please don't neglect the critical skills you really need to know.  And if you happen to be in Beaverdale during the spring and summer months, have some REAL soft serve.

Carpe Factum! 

You Get What You Expect

{{mld |nl=Een icoontje van het icoon thema Cry...Image via Wikipedia

I have worked with a wide range of companies through the years. Large and small, good and not so good, I've tried to capture some simple principles that seem to hold true across all of them. One of those principles is that you get what you expect out of your front-line service providers.

I've witnessed companies who appear to expect that their people are unprofessional slackers who must be constantly monitored so that they can be caught when they make some gross mistake with a customer. Their expectations are low. Their hiring practices, pay scale and organizational structure all reflect the low expectations. The result is, as you might expect, service that is average at best.

Then I've watched companies who expect the best of their people. A high standard is set in professional behavior and service delivery. They set higher standards in their hiring practice, they pay well, they set goals, they educate and equip and they reward excellence while refusing to tolerate behaviors which fall short of the standard. The result is, as you might expect, service that exceeds.

What does you company expect? What do you expect? Are you serving to win, or serving not to lose?

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Will your exempt organization turn into a pumpkin May 15?

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Most people think of April 15 as the big tax day. However, May 15 may be much worse if you are on the board of a little tax-exempt organization.  On May 15 hundreds of thousands of small tax-exempt organizations will suddenly become taxable corporations, required to file Form 1120 and pay taxes every March.  And it's board members of booster clubs, garden clubs, little leagues and so on that will be held responsible.

Why? Because of a largely-unnoticed provision in a 2006 tax bill. The rule requires all nonprofits to file tax forms. Organizations with incomes under $25,000 had been exempt from filing requirements until their 2007 filings were due.  If an exempt organization fails to file for three straight years, you you are no longer a tax-exempt organization.

So if you are on a board of a luncheon club, civic organization or other local do-good outfit, it's time to make sure that filing has been done. Fortunately it's very easy for little outfits. For small charities -- those with income under $25,000 -- the necessary compliance requires only eight pieces of information, with no detailed financial information, to be entered on online Form 990-N. For larger exempt organizations, the IRS will require a Form 990, 990-EZ, or 990-PF. For calendar year returns, these are due May 15. If you need more time for your 2009 filing, you can get a three-month extension on Form 8868. Special exemptions apply to some religious organizations.

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