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The Philosophy of Business: Strategy

By on January 12, 2012 | Category: Article

I was 12 years old when I decided I wanted to become a professional musician. That summer I landed my first paying gig, and the rest – as they say – is history. Around the same time, I cultivated a deep and life-long interest in philosophy.

Here is how Wikipedia defines philosophy:

Philosophy is the study of general and fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language. Philosophy is distinguished from other ways of addressing such problems by its critical, generally systematic approach and its reliance on rational argument. The word “philosophy” comes from the Greek φιλοσοφία (philosophia), which literally means “love of wisdom”.

In my opinion, the application of philosophy to business is strategy. Robert Boyden Lamb defines strategic management in the intro to his book, Competitive Strategic Management, as follows:

Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.

What’s the Point?

Philosophy is a way of addressing problems through a “critical, generally systematic approach and… rational argument.” Effective business leaders also address problems rationally, critically and often systematically. How a business positions itself in the marketplace, how the business interacts with clients, and even how a business develops product and service offerings – these decisions demand a rational and critical approach.

The original Greek definition of philosophy, “love of wisdom,” is extremely relevant to modern business strategy. The more knowledge and information that is factored into intelligent decisions, the better the outcome is likely to be. Philosophy is about tackling the big questions, and those questions are just as applicable to business:

  • Why are we here? (Mission)
  • How do we make decisions? (Business Intelligence)
  • What is our relation to the outside world? (Marketing, Customer Service)

What is your philosophy of business?

Image via diametrik


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Two Contrasting Examples of Client Interaction

By on January 3, 2012 | Category: Article

Over the last several weeks, I’ve enjoyed having family that now live out-of-state come to visit, and the holidays were enjoyable. Inevitably, the end of the year is a busy time for businesses and truths about how clients are viewed often come to light. Here are two contrasting examples:

Old Navy

We used to buy a lot of our kids clothes at Old Navy up until about five years ago when we noticed their prices were not as good as they once were. The prices increased but the quality did not. My wife decided to pick up some last minute gifts for our kids a couple weeks ago when things were fairly busy.

My wife was checking out with her purchases – a process that seems to take longer at Old Navy than at other retail establishments, for whatever reason. First, an item she thought was on sale rang up significantly higher than she was anticipating. The clerk, who was also in management, apologized and asked if she still wanted it. She decided against the purchase, so the clerk removed the item from the tally. But then, he removed several other items. She said she still wanted those other purchases, but he sort of smiled. He then put all the items in the bag, including the original item that rang up too high, before thanking her for her business. He then wished her a Merry Christmas.

She ended up with about $45 of “discounts” from the clerk. It made her night. We will definitely be returning to Old Navy – but not because we got free stuff. It is because the clerk/manager valued my wife’s business and satisfaction more than the few dollars of profit.

AT&T

For several years, our neighborhood has been undergoing some infrastructure upgrades. The original utility poles first installed in the early 1950s were taken down after new utility lines were run underground. For me, this meant one thing – Fiber!

Not the fiber that improves digestive regularity… I mean Fiberoptic communication lines which allow for very high speed internet connections. AT&T representatives began selling their U-Verse service in our neighborhood a few months ago. Around Thanksgiving, a salesman visited our home. Here is what we were assured:

  • Faster internet – way faster than that “slow cable internet”
  • Better choices of TV programming for less money
  • No need to install receivers in our bedrooms for TV
  • Overall, a reduction of our bill by about $50

On New Years Eve, our AT&T installer arrived at the house at 9:00. The first thing I learn – without paying additional money for receivers, our bedroom TVs will not have access to basic programming. (Our Cox service has always allowed for this at no extra charge.) Second, the receiver installed in the Master Bedroom would not work with my wife’s old TV. So if we want to watch TV in bed, we would have to buy a new TV. Third, the internet gateway had a built-in wireless network which meant my carefully configured existing network was not going to work anymore.

Then came the deal-breaker. After the installer had finished up and we configured the internet connection, I ran some speed tests. (I use SpeedTest by SpeakEasy.) The download speed was about 30% less than our average download speeds through Cox. The upload speed – very important for video conferencing and uploading content – was 4X slower than our Cox service. The technician called the office and confirmed that our speeds were within the acceptable range.

After the technician left, I called AT&T to cancel the service. The customer service rep was very friendly and apologetic, but understood that they could not compete with the prices and quality of service offered by Cox. Because the sales person lied to us, AT&T will be waiving any and all costs associated with our short-lived account. Unfortunately, I had to figure out how to restore our connection to Cox. I spent the rest of the day tracing cables in and under the house before finally restoring service.

Epilogue

Cox isn’t the greatest service provider in the world. But they are better than AT&T. I am quite happy with my internet connection, but after this whole fiasco, I am over paying high prices for TV. We don’t even watch that much TV!

Our next move is going to be to Roku boxes. We will cancel our cable TV (saving about $110 per month) and use Netflix, Hulu, etc., for content.

Image via joeandlindsay


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To Serve Clients: It’s NOT a Cookbook!

By on December 14, 2011 | Category: Link

Allison Shields has a great post up at Lawyerist about client service. While directed at attorneys, the same advice applies to consultants and other professional service providers, in my opinion.

Client service means adequately addressing the needs of your clients. Or as Alan Weiss puts it, “improving your clients’ situation.”

In my experience, many lawyers confuse ‘serving clients’ with billing hours on client files. Just because you are working on a client’s file and billing hours does not necessarily mean that you are providing high quality client service or satisfying your clients.

…

What clients do see and understand is client service. Most of the time, that has nothing to do with your legal education or your technical legal skill. The only thing that matters is the client’s experience with your firm. Service is about how you make the client feel. Do your clients get the impression that you care about them and you take care of them?

via lawyerist.com (Thanks to construction lawyer, Christopher G. Hill for sharing this)


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Understanding Cost-Plus Pricing

By on November 30, 2011 | Category: Article

Jim and Matt Hassett are writing an excellent series of posts about methods of billing for services at their blog, LegalBizDev. The second and latest post in the series: Cost-Plus Pricing.

Here is Wikipedia’s description:

Cost-plus pricing is used primarily because it is easy to calculate and requires little information. Information on demand and costs is not easily available, managers have limited knowledge as far as demand and costs are concerned. This additional information is necessary to generate accurate estimates of marginal costs and revenues. However, the process of obtaining this additional information is expensive. Therefore, cost-plus pricing is often considered the most rational approach in maximizing profits. This approach relies on arbitrary costs and arbitrary markups.

Notice the language there? Cost-plus pricing is a way to maximize profits and relies upon arbitrary costs and markups. Everyone wants to maximize profits in their own business, but as clients, we aren’t as excited about maximizing the profits of vendors. This is why value-based fees represent a more equitable solution to pricing service offerings.

As the Hassetts illustrate in their article:

Cost-plus may or may not be a good basis for setting prices. But if law firms want to stay in business in an ever more competitive world, they must ultimately charge at least as much as they spend. And that starts with understanding their costs.

Link: LegalBizDev


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Take Care of Your Clients, Or Someone Else Will

By on November 3, 2011 | Category: Article

Note: This was originally published on Febraury 5, 2011.

Although much of what I have written about here is focused on growing business, that doesn’t mean that customer/client service is somehow less important or relevant. In fact, good customer/client service is essential to growth.

As many people know, word of mouth marketing can be very powerful. Referrals and unsolicited testimonials have perhaps the greatest potential for growing revenue. But they aren’t going to just fall out of the sky.

From Client To Evangelist

Transforming clients into evangelists for your company isn’t something that happens without effort. And it isn’t going to happen if your clients are less-than-pleased with your company’s services. The first step to getting your existing clients to become cheerleaders for your firm is to make sure that your clients are satisfied with what you provide.

An excellent suggestion that I’ve seen from many project managers and professional marketers is to do a post mortem at the conclusion of every project or engagement with each client. This could be a formalized process, but I think it is best handled in a personal conversation. After a project is completed, schedule some time to sit down with your client to discuss the outcome. Simply ask the client what worked, what needs improvement, and in general, how satisfied they are with the results.

This process involves elements that are integral to business success:

  1. First, this process identifies areas of improvement. Your business and your approach should be living and breathing things that are constantly revised and improved. Who better than an existing client to help you understand what needs to be improved?
  2. It is important to remember that clients are people, too. Your client engages your services to improve their life or business. Was that objective accomplished? How does the client feel about the outcome of the project? This is not a trivial assessment.
  3. Focus on the positive. If the project was a success, this post mortem process will serve to highlight that success. If there are some negative outcomes, this is your chance to demonstrate your commitment to improve your relationship with your client. Offer tangible ways in which you can improve the outcome of the next project.
  4. Finally, this process is all about forward motion. What is the next assignment? How can you help the client in other ways? And here is the clincher: ask your client at the end of a successful project if they would be willing to refer you to other clients or perhaps give you a testimonial. If you don’t ask, it isn’t going to happen.

The post mortem process is one way to ensure client satisfaction and your personal commitment to the needs of your clients. It is a way to emphasize the added value that you bring to the relationship by focusing on positive outcomes and ways to improve. More than anything, it is a statement of solidarity.

If you’re good at what you do, make sure that your clients have the chance to see that. Don’t let the last communication you have with your client on a project be an invoice. Finish the project the way it most likely started: with a friendly conversation discussing your commitment to meeting the client’s needs. Because if you’re not meeting the needs of your clients, someone else will.

Additional Notes

  • Caution: Unless you have more work than you can handle in your business, I don’t think that relying on word of mouth is enough to sustain any company.
  • Don’t even think about charging your client to sit down and do a post mortem. I know there are a lot of people that bill by the hour, or worse, by a fraction of an hour. Charging a client for customer service is a slap in the face.

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