Category: Business, Organization, and Management

October 25th, 2018 11:19 AM GOOD STUFF: LIFE LESSONS OF A CEO Some of My Favorite, Oft-Repeated Sayings as a CEO: “Understanding is Overrated” “Agreement is an unnecessary luxury” “A consulting company in particular, but a sales organization in general, are first and foremost intelligence agencies.” “An intelligence agency’s strategy is ‘insert and expand’” (that one always got laughs) “The truth is the optimum form of argument. If you can’t argue with the truth you are too ignorant to argue your point.” “Good advertising is the truth spoken elegantly and succinctly” (that’s not mine, but it is the golden rule of marketing and advertising.). “If you’re in fact, any good, overinvest in customer acquisition and retention – win desirable deals. Only play the numbers game if you suck. Most people suck.” “The reason you can’t improve your market position is because no one good enough to change your market position will work for you. Either be a better person for the upper 10% (in actuality, 1%) to work for or replace yourself with someone who is.” “It’s a lot harder to say no, and a lot easier to take bad news, from a an attractive and competent woman. We win deals and make money with our men. We get and keep customers with our women. Most competitors are too stupid to do the same.” “The reason startups and early companies burn out, is that the management team devotes its energies to the simple and internal rather than the acquisition and retention of customers, talent, operational excellence, and knowledge.” “There are maximums that can be captured from to any market. When you approach that maximum, find a new investment that can make use of your customer base, advertising, marketing, sales network.” “Leveraging a brand is always easier to sell to investors, management, and staff, but always the worst idea for customers, market, and success. A product must stand on its own, and pursuit of ‘leverage’ is an excuse to produce a mediocre product that will fail. The only leverage that has any value is the promise to customers that the satisfaction of one purchase from the brand will be met with another of equal satisfaction.” “If I can’t convince the board to agree with me, then I’m either wrong, don’t understand the problem well enough, of have people on the board too stupid to understand. The job is to know which of those is the problem. It’s usually the first or second but not always.” “The CEO’s job is human capital. Customers, Employees, and Organization of people in pursuit of medium and long term objectives. Everyone else does work. If you’re doing anything else you’re not a good ceo.” “Government regulation has largely ruined accounting and financial reporting. And Accountants are justifiably lazy in recording transactions meaningfully, because that requires complexity. Demand (a) profit and loss from operations and operations alone in cash format. (c) profit and loss from administrative costs. (d) profit and loss from asset management, (e) profit and loss from ‘government interference in the business’: EBITDA (before interest, depreciation, and amortization), (f) net profit, and net after taxes. (g) and that both income statement and balance sheet reporting is provided as a rolling eighteen month to thirty-six month view. This is what the people in the business need to understand. Finance is not its own customer. (h) MBA’s are often better CFO’s that are CPA’s for this reason: bias to managing the organization rather than transaction costs of information management in accounting. The more companies you manage the more board members you have, the more useful this information is in suppressing silly questions and bad decisions and worse advice.” “The maximum transparency that does not expose you to competitive pressure if leaked is always preferable to letting people fly in the dark.” “The answer to any problem in your company or a customer’s company is known somewhere by someone – always. They lack the ability or will to circumvent the obstacles to advancing it. Treat every single soul as a source of information and improvement.” “The secret to staff meetings is to ask questions to test whether all opportunities are being seized, and risks mitigated or not. This is quality control by continuous education in urgency. That’s all. If you aren’t driving the business by yearly or semi-annual strategy and goal setting, but are managing in staff meetings you’re incompetent.” “Manage a company as if it is a grad school class, and teach as many people in that class as possible. Distribute organizational goals to all who are willing to participate in that class as homework. Grade them on it. People will value the career development and understanding of the business because they are informed participants constantly implementing adaptive change, not uninformed victims resisting it. If you aren’t good enough to do it, hire someone who is.” “There is a difference between cunning, smart, and moral. And they refer to the stages of a company: startup, immature, and mature. You must be cunning at first, build a management team that is smart, and an organization that is moral. This is why moral people run large companies and immoral people small ones.” “HR is by and large (a) admission that your staff is weak at mentoring and managing, and (b) an agent of the enemy we call the state, (c) constantly advancing the socialist-communist agenda. Have recruiters, an in house lawyer, and put benefits in accounting.” “Almost all middle management is absolutely dead weight and the source of political infighting. Divide tasks and responsibilities to useful people instead.” “Weak people universally overestimate their abilities, and strong people underestimate their abilities. Weak people commit to seize opportunities. Strong people commit to maintain opportunities.” “Power laws apply: 20% do 80% of everything. Of that 20%, 80% do everything useful. Of that 20%, 20% do everything important. Of that 20%, 20% do everything critical. The upper 1% and 10% and 20% of your organization make all the difference. This is true in all aspects of human existence bar none. If people understand this you will have a healthier organization. Truth is always better than fiction.” “People are, in the west, intentionally not educated in economics, finance, and accounting, nor radical differences in employee productivity (pareto rule) nor do they understand how narrow are profit margins and high taxation. They need to be taught. All of them.” (I ran a monthly class to educate all new employees on how money flows through an organization and how long it took for an employee to contribute to profit and how little each of us does. This was a revelation to almost everyone.) “The admin girls will always know everything – they are the optimum intelligence organization. They gossip constantly with every one because they are perceived as low risk. Treat that network as an asset for both collection and distribution of information – that is true.” “Women are, by and large, far, far, better at details, gathering information, maintaining productivity (marathons) understanding others quickly, coercing more gently, and adapting to fit into groups more quickly, and can sell commodities by relationship value alone – which is the only criteria of decidability in commodities. Men are more loyal, will make greater sacrifices, devote more time, more single mindedly (sprinters) are less susceptible to social coercion, are preferred managers for this reason, and will produce more outliers than women. Women are reliable even in the absence of pressures, and will organize themselves slowly. Men are dependable under stress and will organize themselves quickly -and there is a difference. Both will eventually come to similar conclusions. If there are differences in role and compensation it is not due to the direct factors but the indirect factors: men absorb cellular damage on behalf of women and children, and they absorb hardships on behalf of the management team. Don’t pretend people are all the same. They aren’t. Not even a little bit. If they are, then you’re selling a commodity by price alone.” “Gossip and conspiracy in another person’s self interest is a good thing. The opposite is not. Develop an institutional means of advancing compliments and suppressing gossip. This was one of our most important initiatives.” “Technology is eventually a butt-crack trade, rather than a profession, and will evolve mirror the class hierarchy of the construction industry. Make money at it while you can.” “In any decision between doing it better and anything else, do it better until no better will matter.”

October 25th, 2018 11:19 AM GOOD STUFF: LIFE LESSONS OF A CEO Some of My Favorite, Oft-Repeated Sayings as a CEO: “Understanding is Overrated” “Agreement is an unnecessary luxury” “A consulting company in particular, but a sales organization in general, are first and foremost intelligence agencies.” “An intelligence agency’s strategy is ‘insert and expand’” (that one always got laughs) “The truth is the optimum form of argument. If you can’t argue with the truth you are too ignorant to argue your point.” “Good advertising is the truth spoken elegantly and succinctly” (that’s not mine, but it is the golden rule of marketing and advertising.). “If you’re in fact, any good, overinvest in customer acquisition and retention – win desirable deals. Only play the numbers game if you suck. Most people suck.” “The reason you can’t improve your market position is because no one good enough to change your market position will work for you. Either be a better person for the upper 10% (in actuality, 1%) to work for or replace yourself with someone who is.” “It’s a lot harder to say no, and a lot easier to take bad news, from a an attractive and competent woman. We win deals and make money with our men. We get and keep customers with our women. Most competitors are too stupid to do the same.” “The reason startups and early companies burn out, is that the management team devotes its energies to the simple and internal rather than the acquisition and retention of customers, talent, operational excellence, and knowledge.” “There are maximums that can be captured from to any market. When you approach that maximum, find a new investment that can make use of your customer base, advertising, marketing, sales network.” “Leveraging a brand is always easier to sell to investors, management, and staff, but always the worst idea for customers, market, and success. A product must stand on its own, and pursuit of ‘leverage’ is an excuse to produce a mediocre product that will fail. The only leverage that has any value is the promise to customers that the satisfaction of one purchase from the brand will be met with another of equal satisfaction.” “If I can’t convince the board to agree with me, then I’m either wrong, don’t understand the problem well enough, of have people on the board too stupid to understand. The job is to know which of those is the problem. It’s usually the first or second but not always.” “The CEO’s job is human capital. Customers, Employees, and Organization of people in pursuit of medium and long term objectives. Everyone else does work. If you’re doing anything else you’re not a good ceo.” “Government regulation has largely ruined accounting and financial reporting. And Accountants are justifiably lazy in recording transactions meaningfully, because that requires complexity. Demand (a) profit and loss from operations and operations alone in cash format. (c) profit and loss from administrative costs. (d) profit and loss from asset management, (e) profit and loss from ‘government interference in the business’: EBITDA (before interest, depreciation, and amortization), (f) net profit, and net after taxes. (g) and that both income statement and balance sheet reporting is provided as a rolling eighteen month to thirty-six month view. This is what the people in the business need to understand. Finance is not its own customer. (h) MBA’s are often better CFO’s that are CPA’s for this reason: bias to managing the organization rather than transaction costs of information management in accounting. The more companies you manage the more board members you have, the more useful this information is in suppressing silly questions and bad decisions and worse advice.” “The maximum transparency that does not expose you to competitive pressure if leaked is always preferable to letting people fly in the dark.” “The answer to any problem in your company or a customer’s company is known somewhere by someone – always. They lack the ability or will to circumvent the obstacles to advancing it. Treat every single soul as a source of information and improvement.” “The secret to staff meetings is to ask questions to test whether all opportunities are being seized, and risks mitigated or not. This is quality control by continuous education in urgency. That’s all. If you aren’t driving the business by yearly or semi-annual strategy and goal setting, but are managing in staff meetings you’re incompetent.” “Manage a company as if it is a grad school class, and teach as many people in that class as possible. Distribute organizational goals to all who are willing to participate in that class as homework. Grade them on it. People will value the career development and understanding of the business because they are informed participants constantly implementing adaptive change, not uninformed victims resisting it. If you aren’t good enough to do it, hire someone who is.” “There is a difference between cunning, smart, and moral. And they refer to the stages of a company: startup, immature, and mature. You must be cunning at first, build a management team that is smart, and an organization that is moral. This is why moral people run large companies and immoral people small ones.” “HR is by and large (a) admission that your staff is weak at mentoring and managing, and (b) an agent of the enemy we call the state, (c) constantly advancing the socialist-communist agenda. Have recruiters, an in house lawyer, and put benefits in accounting.” “Almost all middle management is absolutely dead weight and the source of political infighting. Divide tasks and responsibilities to useful people instead.” “Weak people universally overestimate their abilities, and strong people underestimate their abilities. Weak people commit to seize opportunities. Strong people commit to maintain opportunities.” “Power laws apply: 20% do 80% of everything. Of that 20%, 80% do everything useful. Of that 20%, 20% do everything important. Of that 20%, 20% do everything critical. The upper 1% and 10% and 20% of your organization make all the difference. This is true in all aspects of human existence bar none. If people understand this you will have a healthier organization. Truth is always better than fiction.” “People are, in the west, intentionally not educated in economics, finance, and accounting, nor radical differences in employee productivity (pareto rule) nor do they understand how narrow are profit margins and high taxation. They need to be taught. All of them.” (I ran a monthly class to educate all new employees on how money flows through an organization and how long it took for an employee to contribute to profit and how little each of us does. This was a revelation to almost everyone.) “The admin girls will always know everything – they are the optimum intelligence organization. They gossip constantly with every one because they are perceived as low risk. Treat that network as an asset for both collection and distribution of information – that is true.” “Women are, by and large, far, far, better at details, gathering information, maintaining productivity (marathons) understanding others quickly, coercing more gently, and adapting to fit into groups more quickly, and can sell commodities by relationship value alone – which is the only criteria of decidability in commodities. Men are more loyal, will make greater sacrifices, devote more time, more single mindedly (sprinters) are less susceptible to social coercion, are preferred managers for this reason, and will produce more outliers than women. Women are reliable even in the absence of pressures, and will organize themselves slowly. Men are dependable under stress and will organize themselves quickly -and there is a difference. Both will eventually come to similar conclusions. If there are differences in role and compensation it is not due to the direct factors but the indirect factors: men absorb cellular damage on behalf of women and children, and they absorb hardships on behalf of the management team. Don’t pretend people are all the same. They aren’t. Not even a little bit. If they are, then you’re selling a commodity by price alone.” “Gossip and conspiracy in another person’s self interest is a good thing. The opposite is not. Develop an institutional means of advancing compliments and suppressing gossip. This was one of our most important initiatives.” “Technology is eventually a butt-crack trade, rather than a profession, and will evolve mirror the class hierarchy of the construction industry. Make money at it while you can.” “In any decision between doing it better and anything else, do it better until no better will matter.”