by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

The lure of social media is very strong.  Every day, we hear new statistics about its growing popularity, some YouTube video going viral or someone’s tweet (or response). Social media is now the most popular activity on the Internet and its appeal crosses all age and gender demographics. But that doesn’t mean that we should assume it’s the wherewithal for everything.

People used to believe that all they needed to create an Internet business was a website and that prospective customers would be automatically drawn to it.  That turned out to be untrue.  Today, many companies utilize advertising, search engine optimization and campaign planning to help generate Internet business.  “Build it and they will come”, is certainly not a winning mantra.

Social media falls in that same category.  Just because you may have a Twitter or Facebook account does not mean that you will become a social leader or even that people will follow you.  It’s not automatic and it won’t happen overnight.

When using social media, it is very important to create realistic social media goals.  If you’re Oprah, having a million twitter followers is realistic.  If you’re Bruce Newman, it’s not.  (In fact, I wouldn’t even want one million followers but that’s for another article when I discuss quantity vs. quality.)

Rules to live by:

1. Set realistic goals. They can be as simple as writing two articles a week or achieving 150 first level contacts in LinkedIn.  How you reach these 150 contacts, how frequently and to what extent you communicate with them and the building of the relationships is crucial.

2. Create a feasible social media strategy. Depending on your goals, this strategy may be simple or complex but it must be reasonable.  Of key importance is the realistic determination of the amount of time – usually on a daily basis depending on your goals – that it will require.

3. Do not be enticed by large numbers of followers.  It’s easy to generate large numbers of followers.  Along with the development of many social media sites has come the onslaught of automatic marketing programs designed to increase the number of followers.  Interestingly, what these programs don’t tell you is that a smaller number of active people in your network (i.e. followers, true friends, etc.) will provide a far superior response than a much larger number of random people who you count as contacts or followers. 

4. Realize that it takes months to generate a sizeable following.  Building relationships takes time; it doesn’t happen overnight.  As an analogy, think of meeting someone new at a party.  You like them and want to become friends (or more).  It may happen, but will take both time and effort to occur.  The same holds true for social media except that these relationships are instead, digital.

5. Follow the rules of proper social etiquette – be respectful, helpful and authentic.  In short, be yourself.  And be helpful.  

6. Don’t get frustrated. Social media is not a race. Ever hear baseball players say that the baseball season is not a sprint, but a marathon?  Think of social media in a similar fashion, though maybe as a half-marathon.  If your goals are realistic and you don’t reach them, fine.  Adjust them.  That’s the normal sequence of any plan – create and constantly adjust as you move forward.  The key thing here is to not get frustrated and stray from your original goals and plans (provided they were indeed realistic).  Many potentially successful social media campaigns have been prematurely cancelled or extensively re-worked because of insufficient time constraints or frustration.

Social media has opened the world to a tremendously exciting and interactive means of communication.  By properly abiding by its rules, understanding its strengths and limitations and by setting realistic goals, you too can benefit from its enormous potential.

Bruce Newman is the Vice President at The Productivity Institute, LLC, a leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  An expert on social media, Bruce constantly writes and gives talks on many facets of social media including branding, social media strategies and policy.  He has also developed several social media training courses. In addition, Bruce is the editor of the Productivity Institute Newsletter, a free content-is-king newsletter and thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

The importance of social media in business is rapidly increasing.  In fact, Google has already started to include several aspects of social media in its page rank calculations.  What previously worked in achieving a high page ranking may be rapidly losing its effectiveness. 

The list below depicts many of the steps you should take to effectively utilize social networking.  By following some or all of these steps, you will help improve your page ranking while greatly increasing the number and quality of the people who follow you.  Merely signing up on several social media sites is no longer adequate.

1.  Join at least three social networking sites.  The top three are: LinkedIn, Facebook and Twitter.  All have strengths and limitations but most importantly, they have large, vibrant communities and groups you can join.

2. Always ensure that your profile is complete.  Update it regularly as many media sites will automatically publish that updated information.

3. Search for key people in your target area and closely observe their actions and the groups they belong to. This will supply you with insight as you develop your own strategy.

4. Find specific groups that are relevant to your target area. Join them and become active.

5. Add value and content to the groups by blogging and commenting on both articles and forums.  Make sure your contact information and a link accompanies with your comments.

6. Ask questions.  Generally, the more specific the question, the fewer number of responses but they will be of a higher quality.

7. Make friend requests to people who make comments to you.  A direct reply is a powerful additional step you can also take.

8. Publish your articles in your blog and on multiple sites.  Ensure that it can be announced and bookmarked on other sites.

These steps will help generate a following.  They take more time and effort than just signing up for the numerous automated tools and groups that are available, but it will enable you to become a thought leader with a significant following and most likely, an improved page rank. 

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  Bruce has started writing and giving talks on many facets of social media including branding, social media strategies and policy.  He has also developed several social media training courses. In addition, Bruce is the editor of the Productivity Institute Newsletter, a free content-is-king newsletter and thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

Being the father of a very special needs child opens a person to a wide range of emotions.  I remember when my daughter was born, thanking God for her presence and health.  I hadn’t cared whether my child was female or male; my main concern focusing on his/her health.  My daughter is now a teenager and both physically and mentally handicapped.  Along the way, I learned that special needs people are just that – people, with wants, needs and desires, just like every person on this earth.  My daughter is a wonderful young lady, sweet, curious and quite frankly, a bright shinning light in my life. 

My daughter loves Special Olympics.  For many years she competed in several events and won quite a number of medals.  The thrill exhibited by my daughter - and all of the competitors - can easily be expressed in their radiant smiles of pure joy when winning a medal or ribbon.  (Note: everyone wins a medal or ribbon.)  I remember the first time my daughter ran the 60 meter dash.  When the starting gun went off, she turned around and ran in the opposite direction.  (No matter, race officials quickly intervened and pointed her in the correct direction.)

Last week, Eunice Kennedy Shriver, the founder of the Special Olympics died at the age of 88.  I never spoke with her or met her, but she was a great lady.  What she has done for all of the Special Olympians is monumental.  She created a movement that focused on the individual and celebrated their achievement.  No, my daughter won’t set the world record in the sprint or even a throw a softball more than 15 feet – and that’s okay.  She competed - as did all the participants.  And they received both tangible awards – medals and ribbons and intangible awards – being honored for their achievements.  In this world of high expectations, that they finished and achieved their goals sufficed which by itself, was a cause for celebration.  (Maybe they could teach us a lesson, here.)  One proud participant wore her medal for weeks after the Special Olympics ended – it meant that much to her.

Mrs. Shriver’s legacy is worldwide.  I used to play tennis with a priest – an ex-navy seal and one of the nicest men I’ve ever met.  (I used to joke that I invited the priest over for dinner but not our rabbi.)  After spending five years in this country, he was sent abroad on several long-term missions.  As of our last correspondence (which unfortunately, was several years ago), he was running the Special Olympics in a northern province in India.

Most people work very hard at all phases of life: their job, their family and even the maintaining of their beliefs.  We all get into ruts where we struggle to survive and don’t have the time or energy to look at the bigger picture.  It takes a special person to have the vision, desire and persistence to make it become a reality. 

In this non-stop world in which every moment of our lives is seemingly occupied, it is crucial to recognize the accomplishments of those rare individuals like Eunice Kennedy Shriver who made the lives of hundreds of thousands of special needs individuals a little brighter.

Bruce Newman is the Vice President at the Productivity Institute, LLC, the editor-in-chief of its newsletter and was, for several years, a Special Olympics volunteer.  He specializes on consulting and social media. Bruce can be reached via email and on LinkedIn, Twitter, and Facebook.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

There are two aspects involving traffic to your website and blog: attracting visitors and retaining them once they arrive.  In this article, I will focus on strategies that will bring them to your site.  In a subsequent article, I will discuss various visitor retention strategies.  Both sets of strategies denote the importance of social media and utilizing productive strategies.

1. Provide constant, informative content.  This can be done across a wide variety of media – blogs, video, podcasts, etc., with the key criteria being that it must contain good, relevant content.  And, it must be original.  People receive few accolades (if any) for retweeting articles on Twitter.

2. Make comments.  Find industry leaders and leave meaningful comments on their blogs and articles.  Omit such inane comments as, “I learned a lot from your article”, which are very common and of little value.  In fact, they might negatively predispose people towards you.  Instead, spend a few minutes providing some thoughtful response or even a simple but well thought out question.  People will take note of your comments and may respond directly to you.  Most importantly, make sure that you always include your contact information and a link with your comments.

3. Use keywords.  I can’t stress enough the importance of keywords.  Make sure your articles use them – particularly in the titles or in any paragraphs that use bold or italicized text.  Simply put, search engines love them.  If you are not currently using keywords, start using them immediately.  There are several good programs out there you can use.  There are also many keyword “experts” available but be careful - they can charge megabucks and not deliver much value.  The cost of a good keyword service should be around $500.

4. Use social networking.  Remember, it’s not designed to sell – only to inform.  You will get a lot better response by providing the quality content mentioned above than by saying, “Buy my product or service”.  Social media is defined as the sharing of information within groups or organizations.  Join these groups and become active.  The more value you supply, the more people will become aware of your presence and what you have to offer.

5. Join and participate in forums.  A good friend of mine constantly posted to a technical forum, offering quality suggestions and content.  As a result, he received several job offers from companies seeking his expertise – and they approached him.  (He’s also very good.)

6. Offer something for free.  It could be an e-book, a free consultation, information, a contest or survey results (if they participate), etc.  As long as people perceive - and receive - value, you will accomplish two things: first, you will generate buzz and help distinguish yourself as a thought leader and two, you will generate traffic and probably new business.

Building traffic to your website or blog can be a time-consuming and frustrating process.  Furthermore, it rarely happens immediately as it’s truly a gradual process.  However, if done properly and consistently, it should ensure a steadily increasing stream of traffic – and results.

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  Bruce has started writing and giving talks on the power of social media and how to harness it to improve brand awareness and sales. He is also the editor of the Productivity Institute Newsletter, a free content-is-king newsletter and thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

In our last Productivity Institute (PI) newsletter, one title attracted the most attention by far: A Violinist In The Metro – Washington, DC, despite being the last one listed.  In exploring what made this response so popular, we asked this question to many people in LinkedIn and received almost 80 responses.

Our results – which include our summarizations and direct quotes - are listed below.  Based on these results, we would like to extend an offer to you.  That offer is in bold and follows the responses.

The list of titles in our previous issue:

• Why Even Good Marketing Fails – And How To Fix It
• The Problem Of Self Examination
• Knowledge Management Systems: It’s Not What You Know… 
• It’s All In The Details
• People Drive ERP Systems’ Performance
• Defining A Company’s Identity 
• A Violinist In The Metro — Washington, D.C.

The responses to why the violinist stands out:

What does “A Violinist In The Metro” have to do with productivity? I think many people would find the connection so strange that they would have little choice but to find out!

It is a human interest story; something we can visualize.  It also has some mystery.  With these words comes an image of poor violinist playing in the underground to get on living or you just imagine violinist who didn’t find his place in high echelon of musicians elite, all of this emotionalize and you feel sympathy to this poor guy.

It’s the only title one that’s not business related.  The other titles are business jargon centric.

It’s out of context from the business nature of the newsletter.  Would it have stood out if it was in an eclectic collection of essays?

Fluff comes first – like desert, Dilbert and horoscopes. I like the pleasant stuff at the beginning of my reading.

It piques curiosity, especially since it goes against the grain of your newsletter’s typical topics and focus.

The other articles are too technical or something I need to think about.  This article is easy to read.

I instinctively gravitate toward articles that promise to engage me, especially if there’s a human element involved. The headline “A Violinist in The Metro…” does just that. It suggests a story with a twist. I would turn to it first. The other headlines are more generic. They don’t leap off the page at me.

The successful business strategy books “Who moved my cheese?” and “Our iceberg is melting” use parables that are more easy to digest than dry academic research.

It’s a welcome distraction from all the problems of business and life.  Newspapers and magazines have long realized the importance of this type of article.

People were curious to see how that related to the focus of the newsletter.

You can tell from the first paragraph if the other articles will be of interest to you.  In the Violinist, you can’t. The Violinist heading leaves you wondering what’s next, the other headings tell you too much and don’t leave you wondering.

I think it is because it has a personal side. Even in a regular newspaper, if you read it online and it lists the top ten most popular articles, the ones about people (especially something a little unusual) always win out over drier subjects.

It’s real, not theory.

The other articles seem to be business only, and it feels refreshing to have a little human interest at the end.

Into that mix is inserted a topic on music in public transportation. A cognitive dissonance was created which actually compelled more people to click-through.

Our Offer:

Based on our title feedback, we are now seeking 2 – 3 people who would like to write a monthly “light” piece for our newsletter.  If the article has a moral or some type of “catch” at the end, similarly to the “violinist”, that would be highly desirable.  Each subsequent issue will contain at least one such type of article which will appear before our almost 8,000 subscribers along with your picture and blurb. If you are interested, please contact us at newsletter@prodinst.com.

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  Bruce also specializes in evaluating companies to improve their productivity and positive cashflow using CFNA. He is also the editor of the Productivity Institute Newsletter, a free content-is-king newsletter and thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

It is next to impossible to impartially evaluate all aspects of a business.  Whether that business is a non-profit organization or a for-profit business is irrelevant - it must still run as a business.  As such, both entities must generate income, manage expenses and deal with a gamut of business issues every day.

Determining productive and non-productive costs can greatly affect a company’s positive cash flow.  Productive costs are those functions that produce revenues that are essential to the operation of a business.  One such example is the cost of research and development.  Conversely, non-productive costs are simply expenses.  A company car or unused rental space are simple examples of non-productive costs.

Often, companies are loath to reduce or even acknowledge these non-productive costs.  Usually born in better economic times, they nonetheless remain as vestiges of that foregone era.  This was readily apparent the first time the CEO’s of all three major American automobile companies flew to Washington DC on their company’s corporate jets to ask for bailout money (at a cost per flight of over $20,000, each).  It was merely a function of just how they do business.

Possessing feelings is a part of human nature.  From the time we are infants until our death (hopefully after many years), emotions and feelings are a part of our behavior and the basis for much of our interactions.  Given these innate and learned sensibilities, is it any wonder that we are unable to be impartial when evaluating our employer’s business?

When employees are asked to assess a business, an additional factor may appear: the desire to inflate that person’s value, often to the detriment of someone else.  This inherent conflict of interest requires further explanation.  Let’s say the person doing the evaluation is a senior vice president who has not been particularly effective in his job.  An impartial evaluation will denote his shortcomings, possibly resulting in his termination.  However, a biased evaluation may report his performance as exceptional, depending on how the assessment and report is structured – with another employee receiving the blame.

Impartiality also requires the expertise and knowledge to develop probing questions when evaluating a company.  Asking the question to a CEO and upper management (individually), “What does your company do?” for example, will usually elicit a surprisingly wide range of responses that require further study.  It is unlikely that a high level employee would ask this seemingly simple question to his co-workers and possibly his boss and impartially report and interpret the results.

To more closely examine this issue, consider the different levels of responses you would likely receive to the following statement with the only difference being whether the questioner was an impartial expert or an employee: 

Please rate and comment: The organization has a clearly defined strategy for adding outstanding and unique value in its selected markets.

Would a person suffering from job insecurity or afraid of a – potentially harmful - answer really respond truthfully? 

This raises my final point: the interpretation of the results.  An unbiased, experienced evaluator may look at the study results and draw vastly different conclusions from a company employee, primarily as a result of his perspective and experience - which might also become the basis for further study in determining the cause of a problem and its resolution.

Evaluating a company can greatly affect its positive cash flow and financial flexibility.  It can uncover huge non-productive costs – which are usually recurring, and make recommendations that can enormously benefit the company both in the present and the future.  To accomplish this requires the systematic efforts of an impartial and experienced evaluator.

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  Bruce also specializes in evaluating companies to improve their productivity and positive cashflow using CFNA. He is also the editor of the Productivity Institute Newsletter, a free content-is-king newsletter and thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

Hiring the right consultant has always been a difficult responsibility.  Hire the wrong person and it can hinder a project’s outcome, often resulting in additional costs, decreased morale and rework – along with the hiring person receiving much criticism.  Hire an outstanding consultant and receive little credit for a well designed, appropriately budgeted and timely project that significantly improves productivity. 

In a recent survey by The Productivity Institute, respondents were asked how much time they spent on each search.  46.3% of respondents reported spending 5 or more days doing a consultant search.  This inordinate amount of time reflects the importance of hiring the right consultant.  This percentage jumped to 63.5% when including searches of 2 – 5 days.

This significant period of time in the hiring process reflects both caution and three necessary steps. These steps include: locating consultants, checking their credentials and experience, and somehow assessing their knowledge.  All too often it does not include assessing their communication skills and ability to work with others – which most companies consider the two most important traits, as also reported by our survey.  In lieu of these steps, it is easy to understand how personal referrals often shortcut this entire process, though sometimes with very detrimental results. 

All three steps can be very time consuming.  Locating consultants is usually accomplished through recruiters, personal or business references, going to the websites of the relevant organizations and online searches.  Unfortunately, this can result in the receipt of many resumes and business overviews, each of which needs to be closely evaluated.  Even more troubling is determining accurate evaluation criteria.  Without extensive experience and knowledge, a limited skill set can easily be hidden by a candidate’s good salesmanship.  Knowing exactly what skills and characteristics you are searching for prior to evaluating consultants will greatly increase your chances of selecting an excellent consultant.

The benefits provided by outstanding consultants are both short and long term in duration.  An excellent design or service can benefit a company for many years.  One analogy is to compare their work to a building foundation.  If that foundation is solid and broad, more and more stories can be added to it.  Conversely, a poor foundation is unstable and every addition that is built upon it weakens the entire structure, making it more prone to collapse.  When evaluating a consultant’s performance, it is important to assess the long term benefit of their work, particularly in today’s economically troubled and competitive marketplace.

Assessing the expertise of consultants can be extremely difficult.  Determining which criteria to assess and how to impartially apply it is problematic, particularly when applying it only at one specific instance of time.  Regular reviews are much more accurate since they provide a long-term view of the consultant.  Our survey also showed that personal referrals are the fourth most important background factor when considering a consultant.  In fact, many companies mistakenly hire consultants based on these referrals and do not apply these applicants to the same criteria as other potential consultants – which can be disastrous.

In summary, with a median search time of almost five days, companies are expending significant resources in time and money in the locating and evaluation of consultants.  This is understandable since there are several factors to consider and the decisions they make can enhance or adversely affect their company’s positive cash flow and productivity – along with their own careers.

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in locating, evaluating and matching the specific areas of expertise of consultants to the needs of its clients.  Bruce also specializes in evaluating companies to improve their productivity and positive cashflow. He is also the editor of the Productivity Institute Newsletter, a free content-is-king newsletter (circ. 6,000+) and a thought leader.  Follow him on LinkedIn, Twitter and the Productivity Institute blog.

Preamble: The reaction to our initial Article from members of various Linked In Groups to our article philosophy, THE THREE COMPONENTS OF EVERY BUSINESS  was very strong, outspoken, usually supportive and highly emotionally-charged.  The response we received from “Dave” was so strongly negative that we decided to publically respond to it.

Directly below is the response to Dave by Douglas Castle, followed by the original letter which Bruce Newman and Douglas Castle along with Dave’s strong response.

…………………………………………………………………………….

Our Response to Dave

DOUGLAS CASTLE  
Director/ Founder at THE CASTLE CONSULTANCY

Dear Dave:

I acknowledge your criticisms and their fallacies. 

Now, let me explain why:

1. Not a single one of the companies which you referred to was actually following the “traditional archaic business model” represented in what we had written in regard to CFNA™. Their long-term failure to re-evaluate and contain costs rendered them inefficient, uncompetitive and ultimately destroyed them in point of fact. They became entrenched in endless union negotiations, unwarranted extravagance, theft of services, issuing shareholder propaganda, highly-creative accounting (the indefinite deferral of loss, overvaluation of assets and promulgation of unrealistic projections), misappropriation of the public’s funds and borrowed funds, and colossal compensation packages that were unaffordable by any reasonable standard. Not a single one of these scoundrels cared about 1) value, 2) efficiency, or actual profitability. Now these corporate wastrels are dependent upon government subsidies in order to continue to support their extravagance, excesses, inefficiency and complete failure to plan for the longer term.

The companies which you set forth as examples are terrible examples that support our paradigm. These companies are begging for dollars because of their failure to utilize a systematic, basic, quantitative approach as espoused by CFNA™. In brief, they ignored the fundamentals which we espouse, but which apparently bring out strong negative sentiment in you. I do admit that the fundamentals of business can indeed be boring – especially to those without any quantitative responsibility or those who are uncomfortable with the notion of being evaluated on their utility of performance.

Evaluating your worth, in terms of your contribution to a company does not define your value as a Human Being or as an individual. It merely enables any company to assess its resources and their utilization.

Many persons engaged in developmental and creative activities in companies immediately cringe at the thought of either 1) any budget cut, and 2) not being properly valued for their “true” but often obscure or difficult-to-quantify benefit to the companies which employ them. Perhaps some of this insecurity could be eliminated if an in-depth assessment of their value was made by their employer.  They would also benefit by aptly describing the nature of the benefits that they provide, quantifying those benefits, and presenting what the potential loss would be to their corporate employers (or clients) if their services were to be eliminated.

2. Your choice of three most important factors is just simply wrong.  Without “revenues” or “profitability” there is no company – just bankruptcy and unemployment.  In your “qualitative” approach, where does the money come for expense coverage? You mention marketing and expenses, but it takes revenue to drive them. The same for innovation - someone must still pay the bills.

And if the marketplace changes, just how quickly can you innovate to save your market share? When revenues are shrinking, you must certainly be under a great deal of pressure to innovate. And, the assessments companies require in good times become even more important in troubled times.  You need to pivot instantly in order to innovate and apply new approaches under intense financial pressure – using the application of the simple tenets of CFNA™, you merely have to be pragmatic.

Dave – do you realize that CFNA™ is a way to (pause for breath) plan for uncertainty? It could actually save both the company and some of its employees’ careers.

3. It would seem that you are speaking more about the individual attributes of a desirable entrepreneur and about the attributes of a desirable employment lifestyle, rather than about the issues of corporate survival. Remember, a client would have to be generating some profits (based upon the ancient equation REVENUES – EXPENSES = PROFIT) in order to pay all fees and salaries.

4. While innovation is a key to business survival, every innovation must either work to a) differentiate the nature or quality of a product of service in order to bring in more revenues or in order to open new markets, b) reduce the cost of operations, production, marketing or delivery, or c) making the business otherwise profitable.

5.  We all like to have fun. But we also need to balance our love of leisure with our burden of earning the entitlement to it. Some people enjoy their work and take great pride in it.  For others, it’s a paycheck.  In either case, it’s dangerous if you count on a company to keep you entertained and much more important that you be productive.

Without adhering to some of the CFNA™ fundamentals, your passion leads to poverty. We do work, and sometimes work is simply, well…work.

I agree with at least two out of three of your ideals, though… so dream on. Every great company started with a dream. And any company can fail by forgetting about generating profits. Then, what becomes of the innovators, dreamers and fun-seekers?

Have you noticed, Dave, that innovators, dreams and fun-seekers seldom run large organizations — even if they, themselves started them. Perhaps someone must assume the reins of management in order to keep those innovations and dreams alive.

Faithfully,

Douglas Castle

…………………………………………………………………………….

The Original Article

THE THREE COMPONENTS OF EVERY BUSINESS - YOUR INPUT PLEASE.

Bruce Newman of The Productivity Institute, LLC (www.prodinst.com) believes that every business enterprise, at its highest decision making level needs to re-evaluate itself using a simple program which Bruce and I have co-authored called CRITICAL FACTOR NEEDS ANALYSIS™ (“CFNA™”).

Similar to the concept of Zero-Based Budgeting, this evaluative approach is designed to objectively analyze any organization in terms of: 1) price and revenue sensitivity; 2) variable costs and profit contribution margins; 3) fixed costs – both productive and unproductive.

The end result of the process is to quickly develop and implement a plan to reduce the break even revenue level required in order for the business to maintain maximum survival flexibility despite external economic variables. This can be accomplished without compromising the organization’s ability to expand to meet a better economic climate. The plan can be implemented rapidly, and with minimal trauma involved.

The CFNA™ approach is built on basic cost-accounting principles, but is tightly structured in a very practical format for even the smallest organizations.

Please download Article 1 (in a series of 5) from http://www.mediafire.com/?2jw2ijyzz4z
and review it. We would like your input, ideas and criticisms. Attribution will be given prior to actual publication of the entire work. You can respond by posting here, or by emailing Bruce at info@prodinst.com. 

Your input is very welcome.

Douglas Castle
THE NATIONAL NETWORKER  (http://thenationalnetworkerweblog.blogspot.com)
(Subscribe for free)

…………………………………………………………………………….

Dave’s Response

Dave 

   Purveyor of Powerful Ideas Executed Sensibly

The three components of any [successful] business are as follows:

1. Innovation

2. Marketing

3. Expenses

I am very wary of any ‘plan’ that calls itself ‘tightly structured’. This seems to represent a business format that is antiquated to say the least. Can you think of a business model that had more structure than banking, or more hierarchy than the big three? The plan du jour is design. Any successful business in a climate as uncertain as the one we live in must be built around the idea of constant adaptation. Trying things and then building upon what works and scrapping what doesn’t. There is no end-game in business, there is only the next play.

I think anyone would do well to steer clear of a business model that uses terms like:
* price and revenue sensitivity

* variable costs and profit contribution margins;

* fixed costs – both productive and unproductive

as its selling points. There is no mention in the above of qualitative analysis, no human factor and - oh god, not in a BUSINESS - fun.

to be sure, there is a place for measurement of profit, streamlining systems and general accountancy, but it is not - or should not be - the plan. Great success is a result of passion (and you can have passion for widgets or ball bearings). Answer the question: Is the work worth doing? And if so, why? And then, in my opinion, the most important question: Would I mind if the endeavor was the first line of my obituary? If you can answer these questions and still want to do it, then hire Bruce and Doug to worry about ‘CRITICAL FACTOR NEEDS’ because this is obviously what makes them get up in the morning (and bravo for that).

Download the article, by all means, but save the read for a nice sunny day when you’re tired of being outside doing human things and longing for tax season.
[END OF DAVE’S COMMENT]

Douglas Castle (http://aboutdouglascastle.blogspot.com) operates The Castle Consultancy and is an advisor, managing member and a director of several companies in diverse industries.
Bruce Newman is the Vice President at The Productivity Institute, LLC: www.prodinst.com .

by Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

It has almost always been the accepted norm that the most important characteristic when hiring consultants was their knowledge. This was certainly true in the 1970’s through early 2000 when the key characteristic of most candidates was their knowledge and experience.  Other aspects of a candidate were often deemed secondary.

In a recent survey by The Productivity Institute, respondents were asked to select the three characteristics they deemed most important when hiring a consultant. Surprisingly, the most important deciding characteristic that over 53% of the respondents selected was excellent communication skills, surpassing such traditionally predictable areas as honesty and technical knowledge.  Other characteristics in the PI survey included: professionalism, knowledge, integrity, availability, reliability and several others.  Yet, communication skills easily outdistanced them.  This is very significant. 

Selecting and hiring a consultant is not an easy process or decision; yet, it is crucial for companies to make wise choices, particularly when a consultant can have a direct impact on a company’s productivity.  It is for this reason that The Productivity Institute, LLC, assists organizations in locating and retaining outstanding consultants whose skills and results are excellent.

The ability to work with others was the second most important consulting characteristic, having been selected by 45% of the respondents.  The ability to work with others and good communication skills go hand in hand and allows consultants to fully understand a project’s scope and goals while keeping all project stakeholders appraised of the project’s progress.

These two characteristics surpassed the third most important consulting characteristic: experience. Apparently, in this challenging economy, interpersonal and social skills have become every bit as important (if not more so) than technical skills and experience.  Companies have become aware that successful consulting also requires excellent communications.  Just possessing the appropriate knowledge and experience is no longer adequate. This is quite a departure from the 80’s and early 90’s where the importance of social and interpersonal skills were usually minimized in the selection of consultants.

One common aspect of good project management is the ability of all key parties to regularly and effectively communicate with each other. In many cases, it is the critical factor in determining the success or failure of a project.  It is revealing by this survey that this level of importance has been extended to the hiring of consultants.  

In this frightening economy, where consultants are playing a more important and visible role than ever before, the Human Factors have become a more important decision criterion than they ever had been before. The consultants most in demand are those who are skilled listeners, speakers and team players. For businesses to survive and to thrive in this oppressive economic environment, they are looking for consultants who can play more of a coordinating and leadership role. Consultants have become much more than ‘brains for hire’.

Bruce Newman is the Vice President at The Productivity Institute, LLC, an acknowledged leader in the areas of selecting consultants and improving productivity. He is also the editor of the Productivity Institute Newsletter, a free content-is-king newsletter (circ. 5,400+) and a thought leader.  Follow him on LinkedIn, Twitter, Facebook and the Productivity Institute blog.

by Douglas Castle and Bruce Newman

   This article was originally published in The Productivity Institute (PI) Newsletter

Every business generates its profits, subject to the same basic methods and constraints - regardless of the nature of the products it sells or the services which it renders.

It takes in revenues from sales or service activity, pays out variable costs, meets (by paying) its fixed cost obligations, and ends up with either a pre-tax profit, or a pre-tax loss. In a Not-For-Profit organization, the same dynamics apply, but the nomenclature is different: they collect contributions or donations (in lieu of revenues), and pay out variable and fixed costs. For the purposes of this article, we will address all organizations as if they functioned in a For-Profit environment.

The objective of every going concern is to collect more money than it pays out. Simply put, this means maximizing revenues and minimizing costs, thereby increasing the spread.  As business organizations evolve, they become so filled with complexities, diversions and conflicts, that they lose sight of these simple basics.

There is a need to re-evaluate these business basics periodically – to take a fresh look at the business of the organization instead of at the entire organization as a socially complex entity with a variety of objectives, many of which conflict with or constrain profitability. Stripped of all these factors, one can examine the inherent profitability structure of the business.

At the risk of being politically incorrect, and of sounding callous, CFNA™ (Critical Factor Needs Analysis) does not focus any of its energies on corporate citizenship, environmentalism, jobs creation, and the like. CFNA works precisely because it deliberately eliminates all of these largely qualitative factors from its evaluation approach, working to effectively evaluate a corporation’s well-being and make accurate recommendations.

CNFA also looks at cash inflows and outflows, rather than theoretical accounting constructs such as accruals, amortization and the like. These are good tools for properly matching expenses to the revenue-generating process, but they are not representative of “in the trenches” reality. CFNA™ does not delve into the world of best accounting practices.

The thought here is that substantial stakeholders and directors must understand the nature of a) their market, revenues, price sensitivity, and contribution margins, and b) the structure and nature of their fixed costs.   People are not in business to cover overhead – especially accumulated, non-productive “legacy” overhead.  Rather, they are in business to generate profits by exerting control on every possible and reasonable variable.

Another important thought is that, generally speaking, the more established a business becomes, the more fixed costs are perceived as if they were actually the bottom line – especially where matters of personnel costs, perquisites, esthetically-pleasing offices and other categories of fixed costs are seen as compensatory to some of the business’ management. These fixed costs begin to take over the priority position of actual profits. Companies begin seeing revenues as a way to merely subsidize continued wastefulness or excess.

How businesspersons look at business

Businesspersons have several ways of looking at business, and these mindsets ultimately will affect potential profitability. Here are the several different “schools” of thought:

• We have high fixed costs. We have to generate enough contribution to cover them. We had better generate enough cash flow to meet these “given” costs. Bottom line: We work to pay fixed costs.
• We have high revenues. We don’t have to monitor fixed costs too closely…in fact we can afford the luxury of a growing fixed cost threshold as we become a bigger revenue-generator. Let’s get bigger offices. Let’s get some corporate aircraft (to make a good impression when traveling to meet financiers and [gulp] legislators in Washington, D.C. Life is good. The business should exist to support our improved standard of living (e.g., our growing fixed-cost structure). Bottom line: We will continue to generate increasing revenues, so fixed costs (even a bit of excess) will not hurt us.
• We have to make a profit. Let’s keep the fixed costs to a minimum just in case revenues take a dive. In fact, to be conservative, let’s accumulate some reserves of liquidity in the event that revenues decline significantly. But whatever we do, let’s not get obligated to a high contractual fixed-cost structure. After all, every dollar that goes toward paying off fixed costs would be better if it could be part of profit. The lower the fixed cost threshold, the greater our profit. Bottom line: We should minimize our fixed cost structure, so that we have latitude if revenues decline, and increased profits if revenues increase.

Each of these schools of thought actually exists, but the CFNA™ evaluative model requires that we think in the third way. Fixed costs must continually be evaluated and controlled – especially if we are in a business where:

1. Our product or service is price-sensitive, and we must be prepared to cut prices (and decrease revenues) in order to compete in our marketplace. We are not a monopoly, and cannot exert pressure on prices. Revenues are sensitive, and only partially under our control.

2. Our product or service is considered a luxury or discretionary expenditure by our client or customer base, and we may sell fewer units (and decrease revenues) if market demand decreases. Revenues are sensitive, and, price notwithstanding, are not under our control if the economy turns downward or if our product loses its market share, or market desirability.

3. Our contribution margin is thin (the price per unit is not much greater than the variable cost per unit). Revenues are doubly-sensitive, in that if we lose either some sales, or if prices drop, we will be victimized.

4. Our profit is significant.  However, because of market factors – including increased costs, an economic downturn and/or increased competition, we might not be able to maintain this margin – which can quickly decrease.  To maintain this cushion and not be victimized, we must maximize profits and remain agile.

The thought here is that substantial stakeholders and directors must understand the nature of a) their market, revenues, price sensitivity, and contribution margins, and b) the structure and nature of their fixed costs. We are not in business to cover overhead – especially accumulated, non-productive “legacy” overhead. We are in business to generate profits by exerting control on every possible variable upon which we may reasonably do so.

Another important thought is that, generally speaking, the more established a business becomes, the more fixed costs are perceived as if they were actually the bottom line – especially where matters of personnel costs, perquisites, esthetically-pleasing offices and other categories of fixed costs are seen as compensatory to some of the business’ management. These fixed costs begin to take over the priority position of actual profits. Companies begin seeing revenues as a way to merely subsidize continued wastefulness or excess.

Conclusion

We cannot heal until we know that we are ill, and until we understand the nature of the illness. In all circumstances, objectivity is required, fixed costs must be perceived as an enemy, and not as a hurdle to be met, or as a target objective. This pattern of thinking and associated conduct leads to a mere “breakeven” or “minimal survivalist” conduct that destroys companies. Companies are not in business to cover overhead: the core objective is to be profitable – in both the short and long term, for without profitability everything else becomes merely academic.

Douglas Castle (http://aboutdouglascastle.blogspot.com) operates The Castle Consultancy and is an advisor, managing member and a director of several companies in diverse industries.
Bruce Newman is the Vice President at The Productivity Institute, LLC: www.prodinst.com .